Microsoft Raises Motorola Dispute to EC Level on Essential Video Patents
A complaint by Microsoft was filed with the European Commission on Wednesday about standard-essential patents licensing terms set by Motorola Mobility. This comes on the heels of Google's plans of buying the company.
Standard-essential patents are intellectual properties that are deemed necessary for companies to use when deploying standards-based technologies in their products. The technologies are expected to be licensed on "fair, reasonable and nondiscriminatory" (FRAND) terms in Europe or "reasonable and nondiscriminatory" (RAND) terms in the United States. In its complaint before the European Union's competition regulatory authority, Microsoft is basically saying that Motorola Mobility is price gouging on licensing these standard-essential patent technologies, and that Google will continue that policy once it acquires Motorola Mobility and its patent portfolio.
This latest salvo arises from a particular context -- namely, an ongoing patent feud between the two companies that heated up about two years ago. In October 2010, Microsoft filed suit against Motorola alleging that Motorola's use of the open source, Google-backed Android OS in some of its devices violates Microsoft's patents. That case was not about FRAND/RAND patents but concerned user interface software patents. A month later, Microsoft filed another suit against Motorola, this time accusing it of charging "excessive" royalties for the use of wireless LAN and H.264 video codec technologies that Microsoft uses in its Xbox gaming console. This latter lawsuit was all about FRAND licensing.
In response to Microsoft's second lawsuit, Motorola accused Microsoft of infringing 16 of Motorola's patents in multiple products. "Motorola Mobility has requested that Microsoft cease using Motorola's patented technology and provide compensation for Microsoft's past infringement," the company said at the time.
Now, Microsoft has escalated its complaints on FRAND licensing to the European Commission. In particular, Microsoft is accusing Motorola Mobility of charging exorbitant fees for online video patents used in several Microsoft products.
"We have taken this step because Motorola is attempting to block sales of Windows PCs, our Xbox game console and other products," wrote Dave Heiner, Microsoft's deputy general counsel, in a blog post on Wednesday. "Their offense? These products enable people to view videos on the Web and to connect wirelessly to the Internet using industry standards."
Heiner noted that Apple has taken action separately on the FRAND licensing issue, but he claims that the issue is much broader, affecting the industry using video technologies. Google will continue this same Motorola Mobility policy once the acquisition is completed, Microsoft contends. Google has affirmed that position, and indicated it would offer FRAND licensing amounting to 2.25 percent on each unit sold that uses its standard-essential patents. That royalty charge amounts to death for the industry, according to Heiner.
"Motorola is on a path to use standard essential patents to kill video on the Web, and Google as its new owner doesn't seem to be willing to change course," Heiner wrote.
He pointed to Motorola's proposed royalty fees for the video patents as an example of the company's violation of FRAND terms:
"For a $1,000 laptop, Motorola is demanding that Microsoft pay a royalty of $22.50 for its 50 patents on the video standard, called H.264. As it turns out, there are at least 2,300 other patents needed to implement this standard. They are available from a group of 29 companies that came together to offer their H.264 patents to the industry on FRAND terms. Microsoft's patent royalty to this group on that $1,000 laptop?
Microsoft is no stranger to patent disputes outside the FRAND/RAND world. Besides its Android patent suit against Motorola from 2010, it is also currently locked in a legal battle with bookseller Barnes & Noble over the use of Android in Nook e-readers. Microsoft has signed intellectual property deals with 70 percent of Android hardware makers, which allows Microsoft to profit from Android use. Some calculate that Microsoft makes more from intellectual property licensing associated with Android than it does from licensing its own Windows Phone OS.
Heiner maintains that Microsoft's approach to patents is different from Google's. For instance, Microsoft claims to adhere to FRAND licensing principles on standard-essential patents. And while it charges for intellectual properties that aren't essential to a standard, it still makes that licensing available, which it isn't required by law to do.
"Microsoft is not seeking to block Android manufacturers from shipping products on the basis of standard essential patents. Rather, Microsoft is focused on infringement of patents that it has not contributed to any industry standard," he wrote. "And Microsoft is making its patents -- standard essential and otherwise -- available to all Android manufacturers on fair and reasonable terms."
Microsoft's complaint comes just a few days after Apple also accused Motorola Mobility of violating FRAND practices and less than a month after the EC began an investigation into alleged FRAND violations by Samsung Electronics, particularly Samsung's suit against Apple over the alleged infringement of Samsung patents considered essential to 3G standards. The FRAND issues are equivalent, according to Florian Müller, a nonlawyer consultant who currently has a contract with Microsoft on compiling a FRAND study.
"If Samsung's conduct warrants an investigation, so does MMI's [Motorola Mobility Holdings Inc.'s] in my view," Müller noted. "I watch the litigation activity of both companies and differences are only gradual."
Microsoft and Apple have both expressed support for FRAND principles and said that they will not seek injunctions on products that use standard-essential patents. However, Google has been more ambivalent, according to regulatory authorities. While the Google-Motorola Mobility deal has been approved by the EC and the U.S. Department of Justice, the latter called out Google for its stance on standard-essential patent licensing:
"During the course of the division's investigation, several of the principal competitors, including Google, Apple and Microsoft, made commitments concerning their SEP [standard-essential patent] licensing policies. The division's concerns about the potential anticompetitive use of SEPs was lessened by the clear commitments by Apple and Microsoft to license SEPs on fair, reasonable and non-discriminatory terms, as well as their commitments not to seek injunctions in disputes involving SEPs. Google's commitments were more ambiguous and do not provide the same direct confirmation of its SEP licensing policies."
According to Müller, "While Apple and Microsoft have a clear 'no injunction' policy on standard-essential patents, Motorola tells the courts that a standard-essential patent is a lethal weapon and therefore entitles [the patent owner] to huge royalties and other demands." It remains to be seen whether Google, upon acquiring Motorola Mobility, will continue that company's hard-line approach to patent-protection, or amend it to better fit FRAND standards.