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EC: Motorola abused its patents in Apple iPhone spat

Injunctions violated EU antitrust rules

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Google's Motorola Mobility division was dealt another blow in Europe on Monday, when the European Commission (EC) informed the company that its use of standard-essential patents (SEPs) likely constitutes a violation of EU antitrust rules.

The preliminary decision comes following two yearlong investigations launched in April 2012 at the behest of Apple and Microsoft, each of which claimed that Motorola had reneged on commitments to license its SEPs under fair, reasonable, and non-discriminatory (FRAND) terms.

Specifically, the EC says it believes that Motorola having sought and enforced an injunction against Apple based on its mobile phone–related SEPs "amounts to an abuse of a dominant position."

"The protection of intellectual property is a cornerstone of innovation and growth," EC competition policy veep Joaquín Almunia said in a canned statement on Monday. "But so is competition. I think that companies should spend their time innovating and competing on the merits of the products they offer – not misusing their intellectual property rights to hold up competitors to the detriment of innovation and consumer choice."

The EC isn't alone in its criticism of Motorola's tactics. In March, a group of economists with the Competition Policy International think-tank issued a paper urging standards-setting bodies to curb the use of injunctions and require members to settle disputes out of court (or at least try).

"The expensive nature of litigation creates frictions in the market for ideas, is a high transaction cost for licensees, and renders this market less accessible for smaller firms," the econ-thinkers wrote.

In its Statement of Objections issued on Monday, the EC stated its view that "dominant" SEP holders such as Motorola Mobility "should not have recourse to injunctions," arguing that such practice could ultimately hurt consumers.

Monday's ruling is just the latest setback for Motorola in Europe. In addition to the two separate antitrust investigations – one for Apple and one for Microsoft – in March of last year, a German court found that Motorola had itself infringed on Microsoft's patents.

Meanwhile, courts around the world are growing increasingly tired of seeing Motorola and other mobile tech companies in their docks. In April, a US district court judge scolded Apple and Motorola for their "obstreperous and cantankerous conduct," saying that they were improperly using the courts as a business strategy.

In Motorola's case, it appears at least part of that strategy may have actually violated EU trade rules. But before that decision becomes final, Motorola has the opportunity to answer the EC's criticisms in writing and to request an oral hearing to make its case.

If Motorola fails to convince the Commission, however, the consequences could be severe. Under EC law, if Motorola is found to have infringed, it can be slapped with a fine equal to up to 10 per cent of its worldwide annual revenue. ®

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