Google antitrust settlement reshapes patent disputes

The patent provisions of the deal with the U.S. FTC gives Google less negotiating power, patent experts say

The patent injunction portion of Google's antitrust settlement with the U.S. Federal Trade Commission this week won't mean an end to patent disputes between Google and mobile device makers, but it does take away one major threat Google has used against competitors, some patent experts said.

Google, in the settlement announced Thursday, pledged to not seek injunctions in most patent disputes involving standards-essential technologies in the mobile and Web markets. The FTC accused Google, after its US $12.5 billion acquisition of Motorola Mobility in May 2012, of reneging on commitments to offer some patents on fair, reasonable and non-discriminatory, or FRAND, terms.

In its statement on the settlement, the FTC said Google engaged in "unfair methods of competition" and "unfair acts and practices," in violation of U.S. law.

The patent portion of the FTC settlement will be important for Google's competitors in the mobile industry, said Darren Hayes, chairman of the computer information systems department at Pace University in New York City.

Hayes questioned why the FTC wasn't tougher in other sections of the settlement, but suggested that the patent provisions take away some of Google's negotiating power in patent infringement disputes.

"This is a big deal, because I think that the FTC recognized that Motorola Mobility held so many important patents, in terms of the advancement of smartphone technology," Hayes said. "If they didn't force Google to relinquish the control of those patents, it was going to affect the advancement of smartphone technology very seriously."

Google's commitment to stop seeking most injunctions against products it believes to be infringing its patents means the company has one less tool at its disposal in patent infringement disputes, but the disputes will continue, said David Long, an intellectual property lawyer in the Dow Lohnes law firm in Washington, D.C. The FTC settlement doesn't prohibit Google from seeking injunctions, but requires they go through six months of negotiations and an arbitration proceeding before doing so.

The settlement "gets rid of some of the ambiguity and risk associated with being confronted with a standards-essential patent," Long said. "Injunctive relief is off the table."

The settlement gives Google little chance for seeking injunctions, but disputes over the Motorola patents could continue, with the arguments in the future over what constitutes a FRAND licensing deal, Long said. In some cases, courts may need to decide between Google's idea of FRAND licensing and a potential licensee's idea, he said.

"Fair, reasonable and nondiscriminatory is in the eye of the beholder," Long added.

A judge in U.S. District Court for the Western District of Washington is due to rule soon on FRAND licensing terms in a case involving Motorola and Microsoft, Long noted.

The patent provision in the settlement is "a good thing for the tech industry," added Chandran Iyer, a partner in the intellectual property law firm Sughrue Mion in Washington, D.C.

The deal "provides great certainty and predictability to these rival companies that make competing products" in the smartphone hardware and operating system markets, he said in an email.

The settlement could have a big impact, including fewer mobile patent lawsuits, he said.

The deal "will allow the mobile patent wars to be resolved amicably at a negotiating table instead of at the courts," he added. "Since a FRAND license provides greater predictability with respect to a company's cost in making a product, one long-term impact of this agreement is that customers will not have to pay higher prices for technology because companies no longer will need to pass the cost of litigation down to their customers."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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