European Commission opens antitrust investigation of Motorola Mobility

Europe's top competition regulator has launched two antitrust investigations into Motorola Mobility.

Following complaints by Apple and Microsoft, the European Commission will assess whether Motorola Mobility has failed to license standards-essential patents on fair, reasonable and non-discriminatory (FRAND) terms as required by both the Commission and standard setting organizations.

Standards-essential patents are those that must be licensed in order for products to operate according to developed industry standards such as 3G, GSM or the video standard H.264. Because the patents are crucial for all market players, standards bodies often require that patent holders such as Motorola Mobility that are party to the development of the standards must license their patents on FRAND terms.

In February Microsoft complained to the European Commission that Motorola Mobility was charging too much for use of its patents essential to standards including the H.264 codec, used in some Microsoft products.

Although Motorola Mobility is innocent until proven guilty, formal investigations are only opened after a reasonably thorough preliminary probe indicating that the Commission feels there is some sort of case to answer.

Motorola Mobility recently asserted its patents to seek injunctions against Apple, seeking to stop distribution of its iPhone and iPad, and against Microsoft seeking to block sales of Windows 7 and the Xbox game console. The second antitrust case will examine whether this move amounts to an abuse of a dominant market position.

Competition Commissioner Joaquin Almunia is keen to take a stand against abuse of standards-essential patents.

"The holders of standard-essential patents have considerable market power. This market power can be used to harm competition and I am determined to use antitrust enforcement to prevent such hold-up by patent holders," he said at a speech in Washington on Friday. Those antitrust enforcement measures include fines of up to 10 percent of a company's global turnover.

In January Almunia has opened similar proceedings against Samsung.

Google Inc, which is in the process of buying Motorola Mobility, has said it will offer Motorola patents on fair and reasonable terms once the deal is completed.

Europe's top competition regulators have launched two antitrust investigations into Motorola Mobility.

Following complaints by Apple and Microsoft, the European Commission will assess whether Motorola Mobility has failed to license standard-essential patents on fair, reasonable and non-discriminatory (FRAND) terms as required by both the Commission and standard setting organizations.

Essential patents, such as 3G, GSM or the video standard H.264, are those which are required in order for products to operate according to developed industry standards. Because they are crucial for all market players, patent-holders such as Motorola Mobility, must adhere to FRAND principles.

In February Microsoft complained to the European Commission that Motorola Mobility was charging too much for use of its essential patents in Microsoft products in particular the H.264 codec. Although Motorola Mobility is innocent until proven guilty, formal investigations are only opened after a reasonably thorough preliminary probe indicating that the Commission feels there is some sort of case to answer.

Motorola Mobility recently sought injunctions against Apple and Microsoft products such as iPhone, iPad, Windows and Xbox on the basis of its patents. The second case will examine whether this move amounts to an abuse of a dominant market position.

Competition Commissioner Joaquin Almunia is keen to take a stand against abuse of essential patents.

"The holders of standard-essential patents have considerable market power. This market power can be used to harm competition and I am determined to use antitrust enforcement to prevent such hold-up by patent holders," he said at a speech in Washington on Friday. Those antitrust enforcement measures include fines of up to 10 percent of a company's global turnover.

In January Almunia has opened similar proceedings against Samsung.

Google Inc, which is in the process of buying Motorola Mobility, has said it will offer Motorola patents on fair and reasonable terms once the deal is completed.

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Jennifer Baker

IDG News Service
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