EU regulator finds Motorola violated FRAND patent terms

In a preliminary antitrust finding, the European regulator today determined that Google's subsidiary Motorola Mobility had abused its dominant position in wireless communications patents while seeking an injunction against Apple's iPhone in Germany.

The European Commission (EC) said that while companies can take recourse to injunctions as a possible remedy for patent infringements, such conduct may be abusive where standard-essential patents (SEP) are concerned, especially when the rival company is willing to pay for using the patent on Fair, Reasonable and Non-Discriminatory (so-called "FRAND") terms.

"The protection of intellectual property is a cornerstone of innovation and growth. 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," said Joaquín Almunia, vice president in charge of competition policy at the EC.

The EC launched a formal probe into Motorola in April 2012 after Apple and Microsoft accused it of seeking injunctions to block the use of patents under FRAND, which Motorola was refusing to licence.

Motorola's SEPs in question relate to the GSM standard, which is a key industry standard for mobile and wireless communications. When this standard was adopted in Europe, the EC said that Motorola had committed to license the patents, which it had declared essential to the standard on FRAND terms.

The Brussels-based regulator alleges that despite this, Motorola sought and was granted an injunction against Apple in Germany on the basis of a GPRS SEP and went on to enforce it, even though Apple was willing to pay FRAND royalties as determined by the German court.

Apple has alleged that Motorola had repeatedly refuses to license this patent on reasonable terms, despite having declared it an industry standard patent seven years ago, while Motorola said that Apple wants to pay less than the market rate for licensing the patents.

The EC said that its statement of objections holds a preliminary view that the threat of injunctions can distort licensing negotiations and lead to licensing terms that the licensee of the SEP would not have accepted absent this threat. This would lead to less consumer choice.

Both companies can now respond in writing and request an oral hearing, and the EC can impose a fine of up to 10 per cent of a company's annual worldwide turnover if it finds that there is sufficient evidence of violation of EU rules.

Google had acquired Motorola Mobility in 2012 for $12.5 billion.