Friday, June 1, 2012

Google's EU antitrust allegations against Microsoft and Nokia were dismissed by the ITC

The latest news on the smartphone patents front is old wine in new bottles: Google filed an EU antitrust complaint against Microsoft and Nokia, blaming the two companies for collusion involving a non-practicing entity, Mosaid, which acquired 2,000 patents from Nokia in September 2011. It's not just "old wine" but actually a concoction that failed to pass even the low hurdle of a basic plausibility test by the United States International Trade Commission. It failed that test at the ITC no less than three times: the Office of Unfair Import Investigations (which defends the public interest in ITC investigations), Judge Theodore Essex (in a summary determination) and the six-member decision-making body at the top of the ITC all agreed that there was no antitrust-related or other kind of patent misuse claim against Microsoft and Nokia. An entire set of "patent misuse" theories including the Mosaid story was considered so frivolous that the ITC didn't even want to waste time on this at a trial at which an all-star team of antitrust lawyers wanted to square off with Microsoft.

Interestingly, Barnes & Noble, the company that formally hired those lawyers (though Google may have contributed to the effort), has meanwhile entered into a strategic partnership with Microsoft, something that B&N certainly wouldn't ever have considered if it had truly believed that Microsoft was evil. On a related note, Google itself did a patent deal with Mosaid (at about the same time as the Nokia-Mosaid deal).

The ITC is a trade agency with quasi-judicial authority, not a court, but it does look at antitrust defenses, provided that they're remotely plausible. The chairman of the United States Federal Trade Commission, a competition authority, indicated at a conference this week that the FTC may formally file its concerns about the pursuit of injunctive relief over standard-essential patents (SEPs) with the ITC. Google subsidiary Motorola Mobility is trying to win import bans and cease-and-desist orders against Apple and Microsoft over SEPs. But the ITC already has Google/Motorola figured out: in an initial determination, Judge David Shaw concluded that "Motorola was not interested in good faith negotiations and in extending a [F]RAND license" to Microsoft and made demands that no reasonable company could have accepted in Microsoft's position.

That flagrantly unFRANDly behavior on Motorola's part -- which Google endorsed and apparently intends to continue (if not to ratchet up) -- is the reason for which the European Commission launched two formal antitrust investigations against the now-Google subsidiary in April.

Now that it's bought into Motorola's antitrust problems, Google as a corporate group has a greater diversity of antitrust problems than any company in the history of this industry has ever had on its plate. IBM had mainframe-related antitrust problems for decades. Microsoft was fined by the European Commission on two counts (Media Player and file server interfaces). But Google faces a host of antitrust issues. Europe's top competition enforcer, European Commission Vice President Joaquín Almunia, just gave Google an ultimatum to come up with proposals relating to several claims of abuse of its dominant market position in search (article, statement as Word document). And there are the two Motorola investigations. Also, South Korea's Fair Trade Commission just raided Google's Seoul office again over Android-related abuse suspicions.

Being suspected of abuse is not the same as being convicted. However, where there's so much smoke, it's hard to imagine that there's no fire. Vice President Almunia wouldn't have given Google an ultimatum in public if the hard investigate work of his Directorate-General for Competition (DG COMP) had not uncovered some serious evidence.

By contrast, the ITC didn't have any such thing as evidence against Microsoft, Nokia and Mosaid in its files after about a year.

Google's complaint comes down to transparent diversionary tactics. Instead of addressing the European Commission's concerns, especially the ones concerning Motorola (which the ITC and FTC apparently share), Google makes the proverbial Hail Mary pass and attempts to conflate the serious issues surrounding its own conduct with a conspiracy theory that the ITC already threw out.

As a European taxpayer, I think companies from all over the world should have access to our world-renowned EU antitrust regulators, but they shouldn't waste the scarce resources of those agencies with conspiracy theories that were already found wanting by governmental agencies in their own countries. So far I don't see why Mosaid is a particularly European issue. I've eyewitnessed at European courts what Motorola and Samsung are doing with their patents over here, but I'm not aware of any wrongdoing by Mosaid at this stage (all I read about is that they filed a U.S. lawsuit against Apple over some of those former Nokia patents). I'm against patent abuse by anyone, but Google doesn't appear to have any factual basis. For now, it just cries "conspiracy!"

Unless Google provides some serious evidence, the European Commission can reject this complaint without any risk of appearing biased. The hurdle for such evidence must be reasonably high given the ITC's consistently negative conclusions.

[Update] Nokia calls Google's complaint "frivolous" and a waste of time and resources. [/Update]

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