EC Seeks To End Patent Abuse With Motorola And Samsung Rulings

The European Commission (EC) has made moves to ensure that consumers are not made to suffer from sales bans imposed by smartphone manufacturers warring over standards essential patents (SEPs).

Joaquin Almunia, Vice President of the European Commission responsible for Competition policy, says the EC’s ruling that Motorola Mobility abused its position by seeking an injunction against Apple in Germany over the alleged infringement of a patent essential to the 2G wireless standard establishes a precedent that such bans cannot be sought over SEPs.

The EC says Motorola had committed to license the SEPs on fair, reasonable and non-discriminatory (FRAND) terms and that in the case of a dispute, a German court would set the applicable rate and Apple would pay the royalties accordingly.

Play nice with patents

Despite this agreement, Almunia says Motorola persisted in using the threat of an injunction to force Apple into a restrictive settlement and was forced to give up its ability to contest the SEPs in a German court – a right which the EC says potential licensees should remain entitled to.

“In such a case, the recourse to an injunction cannot be objectively justified and may become an anti-competitive tool in licensing negotiations,” says Almunia. “Such a practice could lead SEP holders to extract high royalty rates or other restrictive conditions. This could have a negative impact on consumer choice, prices and innovation.”

However despite Motorola’s apparent breach of European law, it will not be fined because it is the first case of its type.

The EC has also entered into an agreement with Samsung following its pursuit of sales bans in a number of European nations. The Korean manufacturer is now legally forbidden to seek injunctions for five years against any potential licensee who agrees to a framework for SEPs.

This framework comprises a mandatory negotiation period of up to 12 months and if an agreement is not reached by that point, FRAND terms will be set by a third party, such as a court.

Patent wars

“Today’s decisions reflect the Commission’s balanced approach with respect to intellectual property rights and competition rules,” says Almunia. “Both competition and the protection of intellectual property are essential to innovation and growth. This means that IP rights should not be misused to the detriment of competition and ultimately consumers.”

Google purchased Motorola in 2012 for £8 billion in a move to gain access to the company’s catalogue of intellectual property to assist Android manufacturers targeted by patent lawsuit from the likes of Apple and Microsoft. However Google failed to gain any leverage from the patent portfolio and has since sold Motorola’s handset operations to Lenovo, although the search giant has retained ownership of the patents.

Both Samsung and Motorola are currently embroiled in patent lawsuits with Apple in the US, with a court of appeal recently ruling that the Cupertino-based company can revive a lawsuit against Motorola that was dismissed by a US District Judge two years ago.

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