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Sunday, October 14, 2012

Is Google’s acquisition of Motorola working out?

Is Google’s acquisition of Motorola working out?

The patent situation

Part of the reason Google bought Motorola Mobility was for its portfolio of 17,000 patents (and more than 7,000 pending patent applications) many of which are directly applicable to mobile technologies. Prior to buying Motorola, Google had just lost out on a portfolio of some 6,000 patents that had belonged to the bankrupt Nortel. A consortium from Microsoft, Sony, RIM, and Apple bought those up for $4.5 billion. The deal left Google out in the cold and touched off one of Google’s now-infamous screeds against the patent system.
Google has admitted to focusing more on innovation than patent protection — with the result that Android may be dangerously exposed to the likes of Apple and Google (even if the monster that was Oracle has now been dispatched). Google wanted to go after the Nortel patent portfolio so it would have bargaining chips when — not if — other companies came after Android. With a deep patent portfolio of its own, Google would be in a better position to apply pressure, cut deals, and (hopefully) keep Android free and open so as to foster the growth of the Android ecosystem. When the Nortel patents slipped away, Google was forced to look for another cache of patents… and settled on Motorola Mobility.
So how have Motorola’s patents helped Google? So far, not much.
Aside from the high-profile Apple-versus-Samsung and Google-versus-Oracle battles that have taken place in the United States, one of the most active patent battleground has been in Mannheim, Germany. Rulings in Germany don’t apply to any other jurisdiction, but give Google, Microsoft, Apple, Samsung, and others leverage in their broader patent litigation battles.
Google and Motorola did just win a victory against Microsoft in the Mannheim regional court, which ruled that Motorola was not infringing on a Microsoft patent that covers single applications that can run on multiple handset devices. However, that ruling is an exception is a so-far-bleak battle. Right now, no Motorola Android devices are available for sale in Germany, thanks a series of three rulings in Microsoft’s favor. (The onslaught isn’t over: Microsoft also claims Motorola’s use of Google Maps infringes on a European mapping patent.) Microsoft has been able to leverage its own patent portfolio to negotiate license agreements with almost all Android device makers. Google may say Android is free and open, but essentially every Android device maker but Motorola is paying money to Microsoft for every device they make. Motorola claims it is “reworking” its offerings for the German market and phasing out lower-end devices.

Ya gotta have standards

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Motorola has been asserting patents of its own that cover aspects of the H.264 video encoding standard, claiming infringement from Microsoft in both Windows and the Xbox 360. Motorola even won an injunction on the sale of Xbox 360 systems in Germany, although a U.S. court has ruled Motorola can’t enforce that injunction. Yes, it’s weird that a U.S. court can rule a decision by a German court unenforceable, but the German court ruled that U.S. law has precedence because the dispute is between two U.S. companies.
The pressure Motorola is applying to Microsoft is more complicated. The H.264 video patents are supposed to be available to anybody under Fair, Reasonable, and Non-Discriminatory (FRAND) terms. Motorola is reportedly insisting on a 2.25 percent royalty rate for every Xbox 360 sold; Microsoft argues those terms are utterly unreasonable and would have Microsoft paying around $4 billion a year just for those video encoding patents.
In fact, many of the patents Motorola (and now Google) have been asserting against Apple and Microsoft fall in the same category. Both Apple and Microsoft have claimed that Motorola and Google have been using these patents as weapons, and seeking injunctions barring products using related standard technologies.
Google’s use of Motorola’s standards-essential patents has also drawn the attention of regulators: The Federal Trade Commission has been seeking information from Google, Motorola, Apple, and Microsoft since at least June. And even as it approved Google’s acquisition of Motorola, the U.S. Justice Department noted that Google never promised it wouldn’t use standards-essential patents to keep rival’s products out of the market.
In a statement via email, Google wrote “We take our commitments to license on fair, reasonable and nondiscriminatory terms very seriously, and we are happy to answer any questions.”
And how is Google using Motorola patents to keep Apple at bay? Back in August, Google filed a complaint with the U.S. International Trade Commission claiming Apple was infringing on seven Motorola patents; last week, FOSS Patents’ Florian Mueller noticed Google had quietly withdrawn the complaint — and there’s no settlement or agreement between the companies. Maybe it will come back again soon in another form, but for now Google and Motorola’s strategy seems inconsistent at best.

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