Wednesday, November 23, 2011

Motorola Mobility's use of FRAND patents against Apple and Microsoft may be investigated by the European Commission

Yesterday, the EU's chief competition enforcer, European Commission Vice President and competition commissioner JoaquĆ­n Almunia, told reporters that the ongoing antitrust inquiry into the use of patents related to mobile communications standards in connection with the dispute between Apple and Samsung is "not the only case", leaving the door open to a broadening of the investigation.

I think Motorola Mobility is the likely next recipient of a questionnaire from Brussels. While Samsung is asserting 3G-related patents against Apple in at least five EU member states, Motorola Mobility is litigating in the largest EU member state -- Germany -- against both Apple and Microsoft over at least three patents declared essential to two different industry standards:

  • Earlier this month, Motorola Mobility won a default judgment against Apple over two patents, one of which was, according to an Apple court filing in the U.S., declared essential to ETSI standards (presumably 3G/UMTS). (The other patent at issue in that litigation is not claimed to be standards-essential.)

  • A recent filing by Motorola Mobility with the United States District Court for the Northern District of California reveals litigation between Motorola Mobility (including its wholly-owned subsidiary General Instrument Corporation) and Microsoft in Germany (click here to access the complete filing or on the image to enlarge it):

    I will list five of the seven patents-in-suit and several hearing dates further below. For now, I'll focus on FRAND.

    The two patents asserted by General Instrument Corporation against Microsoft are, based on my research, FRAND-pledged patents related to the AVC/H.264 video codec:

    • EP0538667 on an "adaptive motion compensation using a plurality of motion compensators"

    • EP0615384 on an "adaptive compression of digital video data"

    More than a year ago, Microsoft already brought a lawsuit in the Western District of Washington over Motorola's alleged failure to honor its FRAND commitments to two standard-setting organizations (SSOs). In that complaint, Microsoft stated that the "H.264 technology was developed as a standard set of technologies at least in part through the auspices of the International Telecommunications Union ('ITU')". Motorola has been an ITU member for a long time. Unlike ETSI, the ITU is based in a country that is not an EU member state (Switzerland), but the European Commission enforces EU competition law in connection with behavior that distorts competition in its Single Market.

    Most H.264-related patents are available through the MPEG LA aggregator. Motorola did not contribute its codec patents to that pool, but it apparently made a FRAND licensing commitment to the ITU under that organization's Common Patent Policy.

If the European Commission continues to look into the Samsung case, I can't see how it would not take Motorola Mobility to task as well. If it hasn't already happened, I believe MMI is somewhat likely to receive a request for information. The recent default judgment and the Northern California filing aren't conclusive evidence of abuse, but it's now official that MMI is asserting declared-essential patents in ways that triggereed FRAND defenses just like many of Samsung's assertions against Apple did.

It's worth nothing that the Commission started its inquiry into the Apple-Samsung dispute at its own initiative.

Google's proposed acquisition of Motorola Mobility still under merger review

More than three months after Google's announcement of its plans to acquire MMI for $12.5 billion, the deal is still waiting for regulatory clearance. Based on yesterday's closing price, there's a $1.54 spread. Investors buying the stock now could generate a quick 3.7% return if the deal closes quickly, but they also have a risk of the deal being blocked or considerably delayed. The spread indicates there's significant concern on Wall Street.

Against this background it's particularly interesting that Carl Icahn, the activist shareholder who pressured MMI to sell itself or its patents, just sold almost 10% of his MMI shares. He appears to be hedging his bets.

If there's regulatory concern over the deal, I believe that vertical integration -- the prospect of Google becoming a major device maker -- and the effect of cementing Google's dominant market position in search and online advertising are front and center, but the ways in which Google may use MMI's standards-related patents after the acquisition could also raise regulatory concerns.

More on the German Motorola-Microsoft litigations

It's an oddity that I live in Germany but need to read U.S. court filings to find out about litigation going on in my backyard. But we don't have a PACER equivalent in Germany, and even by physically going to the court, one can only obtain information by attending public hearings or when hearing dates are published.

While I have a project-specific working relationship with Microsoft, they don't share confidential information on their lawsuits with me.

Anyway, thanks to the transparency of U.S. court proceedings, I found out that Motorola Mobility and its wholly-owned subsidiary General Instrument Corporation brought lawsuits in Mannheim, while Microsoft filed actions over three patents with the Munich I Regional Court (Munich has two district courts, with Munich I covering the city of Munich and Munich II the outskirts).

The Mannheim Regional Court was kind enough to answer my question about the hearing dates in those actions. Hearings in Mannheim have been scheduled for Friday, January 20, 2012 (at 1 PM and 2 PM; earlier that day, at 9 AM, a ruling on one of Samsung's Mannheim lawsuits against Apple will be handed); Tuesday, January 24, 2012, at 2 PM; and Friday, March 16, 2012, at 11 AM. I hope to find out about the Munich hearing dates as well (I live near Munich). Those dates are probably later, given that Mannheim is the absolute rocket docket among German regional courts for patent disputes. On Twitter, IT journalist and consultant Dana Blankenhorn refers to this as a "Mannheim steamroller" (Mannheim Steamroller is the name of an American band).

These are the two patents Motorola Mobility (and not its subsidiary General Instrument Corporation) is asserting against Microsoft in Mannheim:

Microsoft is asserting the following three patents in Munich:

  • EP0669021 on "multi-lingual computer programs"

  • EP1304891 on "communicating multi-part messages between cellular devices using a standardized interface"

  • EP0651328 on an "event architecture for system management in an operating system"

In the United States, Microsoft is asserting 21 different patents against MMI, and MMI 19 different ones against Microsoft.

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