Abusive? Google, Motorola try to argue for Apple FRAND 'abuse'

There's a new chapter in the smartphone wars opening up, Apple [AAPL] is on the edge of entering direct battle with Google in Europe, where the European Commission will hear Motorola Mobility's argument that it has not used patents to harm competitors (Apple).

Why you should stick with your FRANDS

Certainly I recognize the endless litigation that has characterized the battle between Android and iOS has become less interesting as the dreadful tale rumbles along, but there are many reasons to sit up and pay attention to what European regulators decide in this case.

  1. Motorola Mobility is accused of using SEPS patents to make life challenging for Apple.
  2. In the US, Samsung's use of similar types of patent saw a Presidential decree that nullified judgment against Apple in a patent-related case.
  3. At that time, the President warned firms that honoring the spirit of industry standards is essential.
  4. There's no quid-pro-quo to this, the President did not quash a later Apple patent-related judgment against Samsung, as it did not relate to industry standards.
  5. What US regulators see take place in Europe may inspire similar decisions in the US, decisions that are designed to protect industry standards and, by implication, the industry itself.

What's happening in Europe today is that Motorola Mobility and its new master, Google, will be arguing against EU accusations that the former firm used patents to hinder competitors, including Apple.

The arguments are now being delivered within a one-day oral presentation. It is not expected a final judgment on this case will emerge subsequent to this meeting. Motorola Mobility is accused of abusing its dominant position by "seeking and enforcing" injunctions against Apple (in Germany) on the basis of patents that are seen as essential for use within industry standards. The EU began its formal probe of Motorola in April last year.

Why it matters

I fail to see how anyone could object to the European regulator's aim in this case. It's a really, really important aim: to protect those voluntarily provided patents on technologies used in industry-approved standards, such as 3G. In order to be included within industry standards firms who developed those technologies agree to provide licenses for use of their technologies on a "fair, reasonable and non-discriminatory" (FRAND) basis.

Any deviation from that promise skews industry development. It's a one rule for all affair that firm's agree to on a voluntary basis. They don't have to agree -- standards bodies would simply use similar technologies within the standard.

However, for standards to work they need to be based on the same technologies. Without such standards then you can take the dreams of things like interoperability and network communications and chuck them in the OS 7 Trashcan. Standards are essential to industry development.

The EU opened its investigation in response to complaints from Apple and Microsoft.

"They accused Motorola Mobility of seeking injunctions to block their use of patents they said the Google unit had declared essential for the production of standard-compliant products and had promised to license on terms that are “fair, reasonable and non-discriminatory.” (Reuters).

Samsung backed down in Europe

There's no saying how the Motorola investigation will play out. It is, however, quite telling that Samsung offered to settle a similar probe into its handling of FRAND patents with the EU last week.

Earlier, Samsung had already stopped litigation on the basis of these standards in the EU. These are the same standards it successfully fought for with the ITC, a move that was later vetoed by the US President.

This is the key part of the Obama administration response to that earlier decision:

"The Policy Statement expresses substantial concerns, which I strongly share, about the potential harms that can result from owners of standards-essential patents ("SEPS") who have made a voluntary commitment to offer to license SEPs on terms that are fair, reasonable and non-discriminatory ("FRAND"), gaining undue leverage and engaging in "patent hold-up."

What is interesting here is that in this fight with Motorola Mobility, Apple is at last in direct confrontation with Android developer, Google, which now owns Motorola. In the event Google's company were to continue the fight on the basis of FRAND patents, would Google then lay itself open to anti-trust investigation into its abuse of industry power, particularly as its operating system now dominates the smartphone sector?

My take? These boring litigation stories will roll along until all participants can figure a more positive way in which to do business alongside each other. Such an outcome would likely be the best outcome for consumers and news reporters, but seems unlikely as I consider it highly probable Apple would insist on some recognition for its contribution to the evolution of the industry from its direct competitors. And this is something they will not freely agree to.

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