Google’s use of mobile standard-essential patents subject of increased FTC scrutiny

October 10, 2012
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In case you weren’t paying any attention to the mobile wars, these are not fought only stores, but also in courts where the main players in the game are suing and countersuing each other on various patent-related claims.

Of those legal battles, the most interesting ones are fought between various Android players and their main competitors, with Apple and Microsoft being the most important exponents of the competition.

Apple vs Samsung, Apple vs Motorola (Google) and Apple vs HTC are three such fights, but we also have Microsoft and Motorola (Google) engaged in several patent fights.

A fresh New York Times report reveals that these smartphone-related lawsuits are reason of concern for the Federal Trade Commission, which is intensifying its Google patents investigation, part of a broader antitrust case against the Search giant:

The F.T.C. issued subpoenas in June seeking information from Google and smartphone rivals including Apple and Microsoft, and it questioned representatives of the companies as recently as a few weeks ago, said people briefed on the investigation.

Google, itself a holder of a variety of mobile patents, has completed its unexplicably expensive $12.5 billion Motorola buyout this year, and thus it got a hold of an important patent chest comprised of over 17,000 patents, many of them essential for the industry, with the clear purpose of using them to defend against competitors but also hit back when needed.

That’s why Google is being investigated by the FTC in the first place, as the Commission is interested to learn more about how Google used some of those standard-essential patents to sue companies like Apple and Microsoft.

The fear here is apparently that Google would use such patents to try to obtain favorable verdicts that wouldn’t be deserved – either monetary compensation above “fair and reasonable” terms or product injunctions:

In Senate testimony in July, Edith Ramirez, an F.T.C. commissioner, speaking of the potential abuse of standard-essential patents, said, “Holdup and the threat of holdup can deter innovation by increasing costs and uncertainty for other industry participants, including other patent holders.”

[…]

The greatest potential abuse of a standard-essential patent is to get a court injunction to block a product from a market, said Carl Shapiro, a former chief economist in the Justice Department’s antitrust division.

Conventional patents can be used to stop shipment of an infringing product. But in the case of standard-essential patents, “you have made promises to license and that changes the game,” he said. “You’ve agreed to attenuate your property rights to expand the industry as a whole.”

Companies should not be allowed to use standard-essential patents as weapons, said Mr. Shapiro, a professor at the University of California at Berkeley. They should be barred from using such patents to seek market-blocking injunctions, and then pricing disputes should be left to the courts to decide what is fair, he said.

It’s worth mentioning that while this investigation widens, the fact remains that Google has failed to obtain any significant victory against either Apple or Microsoft, no matter what patents it used to sue its competitors. In fact, Motorola (Google) has recently withdrawn a second complaint against Apple with the International Trade Commission, only a few weeks after the ITC agreed to look into it.

Moreover, a few months ago, Judge Richard A. Posner dismissed with prejudice an Apple vs Motorola case in Chicaco, arguing, among other things, that Motorola can’t expect to win any favorable rulings – anything above “fair and reasonable” – in cases based on standard-essential patents:

“Motorola,” Judge Posner wrote, “has provided no evidence for calculating a reasonable royalty.”

Like that’s not enough of a headache for Google, Motorola’s standard-essential patents use in such legal proceedings are investigated in Europe as well, where the European Commission is also looking into Samsung’s own behaviour in courts regarding standard-essential patents

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