Google Settlement With FTC Could Help Reduce Endless Patent Litigation

NEWS ANALYSIS: The Federal Trade Commission settles with Google on allowing competitors to use standard-essential patents, but drops its investigation of search engine bias for lack of clear evidence of consumer harm.

The Federal Trade Commission has ordered Google to abide by its promises to offer reasonable licensing terms for “standard-essential” technology in the mobile industry under fair and non-discriminatory (FRAND) terms.

Patents are considered standard-essential when the technology they cover are incorporated into products in such a way that adherence to an industry standard requires use of the patent. Samsung is currently being investigated by the European Commission for alleged violation of FRAND licensing requirements.

Google inherited the standard-essential patents when it bought Motorola Mobility at the beginning of 2012. Motorola had been filing lawsuits against companies using those standards. “Years ago Motorola promised to license its essential patents on FRAND terms,” said FTC chairman Jon Leibowitz. “Rather than licensing the products as promised, Motorola sought to block critical electronic devices from entering the country. Google inherited this litigation and continued the practice.”

While holding up a first generation Apple iPad to make his point, Leibowitz continued, “Google was ordered to abandon this practice and offer licenses on FRAND terms.” Leibowitz said that he hoped that the FTC action would become a template for future actions. “Companies cannot have a patent included in a standard and then seek an injunction against companies for using it,” he said. In his comments, Leibowitz made it clear that he was considering the action as a solution to some of the other ongoing patent wars.

The FTC also got a consent agreement from Google regarding the use of material from the Websites and search results of other companies, notably Yelp. “Google will stop using content of its rivals to advertise. Google has agreed to a legally binding agreement.” Leibowitz said that Google’s actions undermined competition by presenting material from other companies as its own, effectively keeping companies from visiting the site where the material originated. “Google scraped reviews from Yelp, presented them as its own, and when they complained, threatened to remove entirely from search results.” Leibowitz noted that the material was used without permission.

However the FTC did not choose to take action against Google for complaints regarding biased search results. Leibowitz noted that in many cases Google demoted results that were the result of attempts to game the system, and as a result of this, Google’s arrangement of results was effectively helping consumers.

The FTC’s action was hailed by the Computer and Communications Industry Association. “The FTC’s decision not to proceed with a search case against Google was the right call. Over the course of its far-reaching 19-month investigation, the FTC thoroughly reviewed the facts and the applicable law and made its decision accordingly,” said CCIA president Ed Black said in a press conference held after the FTC announcement.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...