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Motorola Mobility Risks Complaint Amid Race for EU-Google Pact

April 24, 2013

Motorola Mobility Risks Complaint Amid Race for EU-Google Pact

Motorola Mobility, which Google bought last year for $12.4 billion, is suspected by the EU’s antitrust regulator of blocking competition by hampering rivals’ use of its essential technology patents. Photographer: Tim Boyle/Bloomberg

As Google Inc. (GOOG:US)’s antitrust clash over search-engine fair-play nears a possible settlement, its Motorola Mobility Holdings unit is embroiled in a separate European Union probe into its control of key patents in gadgets from Apple Inc. (AAPL:US) iPads to Microsoft Corp. (MSFT:US)’s Xbox console.

Motorola Mobility, which Google bought last year for $12.4 billion, is suspected by the EU’s antitrust regulator of blocking competition by hampering rivals’ use of its essential technology patents. It faces a possible formal complaint from the European Commission as a result of the probe, according to three people who asked not to be named because the process is private.

The EU is cracking down on patent abuses as Motorola Mobility, Microsoft, Apple and Samsung Electronics Co., trade victories in divergent court rulings across the world on intellectual property. Joaquin Almunia, the EU’s antitrust chief, already sent Samsung a formal complaint over its patent- use and is targeting “rules of the game” to prevent companies from unfairly leveraging their inventions to thwart rivals.

“If they send statements of objections does that mean that they think standard-essential patents are abused? I don’t think it does, because all these cases are about very specific circumstances,” said Douwe Groenevelt, an EU antitrust lawyer with law firm De Brauw Blackstone Westbroek in Brussels. “The commission wants to come across as taking the issue seriously, but these statements of objection do not at all signify that the commission thinks these patents cannot be used for injunctions.”

Android Software

The EU opened a formal probe into Motorola Mobility, which makes smartphones that run on Google’s Android software, last April, following complaints by Microsoft and Apple. The two U.S. companies accused Motorola Mobility of seeking injunctions to block their use of patents they said the Google unit had declared to be essential for the production of standard- compliant products and had promised to licence on terms that are “fair, reasonable and non-discriminatory.”

Motorola Mobility’s patent licensing practices “comply with the law in the EU and all other countries where Motorola operates,” Katie Dove, a spokeswoman for the unit, said by e- mail. “We don’t take injunctions lightly, and only use them in cases where we’re dealing with an unwilling licensee.”

Industry-standard technology helps ensure products such as mobile phone antennas and global-positioning system software can operate together when made by different manufacturers.

Almunia declined to comment on the EU regulator’s next steps in the probe as part of an e-mailed response to questions from Bloomberg News.

Top Court

A German tribunal’s request for guidance from the bloc’s top court in a case involving Huawei Technologies Co. is a potential precedent-setter, said Nicolas Petit, a law professor at the University of Liege in Belgium.

Almunia has said there’s no need for the commission to wait for judges at the European Court of Justice to take the lead on clarifying what the technology companies can and can’t do.

The commission needn’t delay “if we are ready to adopt decisions setting for the first time -- from the antitrust point of view -- a doctrine on the use of standard-essential patents and the licensing of those patents,” he told an American Bar Association event in Washington earlier this month.

His interest in Motorola Mobility coincides with attempts to wring concessions from its parent company, the world’s biggest search engine company, in a bid to settle a probe dating back to 2010.

U.S. Probe

Competitors, such as Microsoft, want the EU to extract changes after the U.S. closed a 20-month investigation into whether Mountain View, California-based Google unfairly promoted its own services in search results. The Federal Trade Commission in January concluded that Google was motivated more by wanting to improve its search results than by a desire to stifle competition.

Almunia has said he’s preparing to seek responses to Google’s recently submitted remedies from rivals and consumers.

The commission may be trying to exert pressure on Motorola Mobility to reach “a settlement such as the one it has been pursuing with Google,” Petit said in a phone interview.

“These are complex cases in the sense that the commission needs to come up with a new test,” Petit said. “These cases would be very difficult for the commission to make.”

Almunia has said the EU investigation on patents differs from corresponding parts of the U.S. probe into Google that ended earlier this year when the company agreed to lift injunctions for patents it inherited from Motorola Mobility.

The situation “in the European market and in the cases we are dealing with in Europe is not the same,” Almunia said at the time.

Mixed Success

The commission has had mixed success with antitrust cases over patents. It settled a probe of memory-chip designer Rambus Inc. (RMBS:US) in 2009 over so-called patent ambush but dropped a four-year investigation into Qualcomm Inc. (QCOM:US), the biggest maker of chips for mobile phones, after companies withdrew their complaints over excessive royalties on technology patents.

After receiving the commission’s objections, companies can defend themselves in writing or at an oral hearing before the EU’s antitrust authority decides to impose fines.

An EU settlement avoids any fines and a decision on whether a company broke antitrust rules. Companies can be fined as much as 10 percent of their annual revenue if they break the terms of a legally binding settlement.

To contact the reporter on this story: Stephanie Bodoni in Brussels via sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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