February 22, 2012, 11:07 AM — Microsoft has filed a formal complaint with the European Commission against Motorola Mobility for alleged abuse of essential patents.
Microsoft Deputy General Counsel, Dave Heiner, said on his blog on Wednesday that Motorola was attempting to block sales of Windows PCs, Xbox game console and other Microsoft products. The news comes just a week after Apple made a similar complaint against Motorola Mobility.
The complaints center around the licensing of essential patents. Essential patents, such as those need for 3G, GSM or the video standard H.264, are those which are required in order for products to operate according to developed industry standards. They were defined by industry leaders in order to allow companies to build compatible products.
Because they are crucial for all market players, standard-setting organizations require the holders of standard essential patents to license them to any interested third parties on fair, reasonable and non-discriminatory (FRAND) terms. The European Commission also expects strict adherence to FRAND principles.
Motorola holds many of these essential patents, including the H.264 codec, and had promised to make them available under FRAND terms. However according to Heiner, "Motorola has broken its promise."
"Motorola is on a path to use standard essential patents to kill video on the web, and Google as its new owner doesn't seem to be willing to change course. Microsoft is certainly prepared to pay a fair and reasonable price for use of others' intellectual property. Unfortunately, Motorola has refused to make its patents available at anything remotely close to a reasonable price," he said.
Last week European regulators gave Google the green light to take over Motorola Mobility. By buying Motorola Mobility, Google will gain control of around 17,000 smartphone patents, including standard essential patents.
In approving the merger, Competition Commissioner Joaquín Almunia warned that the Commission "will continue to keep a close eye on the behavior of all market players in the sector, particularly the increasingly strategic use of patents." He also went on the record saying that he was prepared to use all measures available, such as fines of up to 10 percent of a company's global turnover, to enforce the rules.
"Standardization processes must be fair and transparent, so that they are not in the hands of established firms willing to impose their technologies. But it is not enough. We must also ensure that, once they hold standard essential patents, companies give effective access on fair, reasonable and non-discriminatory terms," said Almunia.
According to patent expert Florian Mueller: "If every owner of standard-essential patents behaved like Motorola, this industry would be in chaos, and grind to a halt. Standard-essential patents aren't powerful because of their technical merits. Most of the time they aren't particularly innovative. They're just critical because they cover mandatory parts of standards."
"I'm profoundly concerned about the new and growing phenomenon of "FRAND abuse tourism": companies like Samsung and Motorola start litigation in places like Germany only because they see better chances of winning injunctions based on standard-essential patents than, for example, in the United States," continued Mueller. Mueller, who is sometimes paid for his work by companies including Microsoft, has been reporting and writing extensively about the patent battles among leading technology companies.
The Commission has not confirmed whether it will launch a formal investigation, but with such high-profile complaints on the table and Almunia's avowed wish to enforce FRAND for essential patents, it seems likely that formal proceedings will at least be considered.
Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.
