Microsoft, Apple Allege Patent Abuse By Motorola
February 22, 2012

Microsoft, Apple Allege Patent Abuse By Motorola

Two odd bedfellows, Microsoft and Apple, have both filed an antitrust complaint with the European Commission alleging that Motorola is attempting to use online video patents to squelch competition and “kill video on the Web.”

What´s more, they also used the opportunity to take a crack at Motorola´s soon-to-be owner Google, alleging that the Internet giant has done nothing to rein in the patent abuse by its recent $12.5 billion acquisition.

Nevermind the fact that Bill Gates´ Microsoft has spent roughly the last two decades perfecting the art of suppressing potential competitors via the aggressive use of existing patent laws. The company is now arguing that Motorola is refusing to make essential patents available on reasonable terms.

Specifically, the alleged competition-inhibiting behavior relates to patents held by Motorola which involve how devices such as Windows PCs and Xbox access and play Web videos.

Dave Heiner, Deputy General Counsel at Microsoft, says that Motorola has essentially made the unreasonable demand that Microsoft pull entire products like Windows PCs and Xbox 360 consoles from the market “or else remove their standards-based ability to play video and connect wirelessly.”

According to Heiner and a host of Microsoft attorneys, that is quintessential antitrust conduct, adding that Motorola is demanding well over 1,000 times the going rate in royalty payments typically charged by patent owners in similar instances.

In a Wednesday blog post, Heiner stated: “The only basis for [Motorola´s] actions is that these products implement industry standards, on which Motorola claims patents. Yet when the industry adopted these standards, we all were counting on Motorola and every contributor to live up to their promises.”

These “promises” essentially entail the agreement to follow the so-called FRAND protocol — an obscure legal acronym (“fair, reasonable and nondiscriminatory”) that represents a sort of intellectual property etiquette in the tech industry. FRAND is based on the idea that some patents have become such integral parts of the industry that they have to be shared on fair terms in order for the whole industry to function properly.

In the blog post, Heiner went on to explain that this sort of patent abuse doesn´t simply jeopardize Microsoft and Apple´s earnings, it also threatens the consumer´s freedom to enjoy Internet videos.

“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.”

Industry-wide standards play an increasingly fundamental role in the tech sector, allowing an array of hardware and software components from various rival companies to be integrated for a smooth, streamlined user experience. However, as numerous economists and legal scholars have observed, patents on some of the most basic elements of these industry standards are increasingly being used by the companies that hold them as weapons to hamstring potential competitors.

And for a growing chorus of academics, this malicious, anti-competitive use of patent law is completely contrary to the core legal rationale behind intellectual property: to encourage innovation and creativity.

But more immediately relevant than such theoretical concerns, industry observers believe that Motorola´s exorbitant royalty demands also violate EU competition rules which require that holders of industry-essential patents permit other companies to use them for a fair price.

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