Commission slams Motorola in FRAND ruling
The European Commission has said Motorola Mobility abused its market position by seeking and enforcing a patent injunction against Apple, but has decided against fining the mobile phone company.
In a separate but related decision, the commission closed its investigation into Samsung’s enforcement of standards-essential patents (SEPs) after accepting a proposal by the company.
The rulings, published today, April 29, clarify how EU competition rules apply when companies seek and enforce injunctions based on SEPs.
SEPs are those that are technically essential to implement a specific standard, such as 2G or 3G, and therefore must be implemented on fair, reasonable and non-discriminatory (FRAND) grounds.
But disagreements on what constitute FRAND terms have led some SEP holders to seek and enforce injunctions before courts in Europe. These include Motorola Mobility, which was sold by Google to Chinese tech company Lenovo for $2.91 billion this year, and Samsung.
In the first case, involving a disputed 2G Motorola patent in Germany, Apple agreed in 2012 to pay its rival licensing fees after a court set the correct FRAND rate.
However, Motorola pursued and succeeded in (temporarily) enforcing an injunction against Apple, before making the US company sign a “very restrictive” settlement.
“In such a case, the recourse to an injunction cannot be objectively justified and may become an anti-competitive tool in licensing negotiations,” the commission found.
“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.
“Moreover, following the threat of an injunction by Motorola, Apple was forced to give up its ability to contest Motorola's patents before German courts,” it added.
The commission said the decision establishes “clearly” that a potential licensee is to be considered willing if, in case of dispute, it agrees to a court’s determination of FRAND terms.
“This constitutes a ‘safe-harbour’ against SEP-based injunctions. A licensee should also remain entitled to challenge the validity and infringement of the SEPs it has to licence,” the commission said.
The decision against Motorola should set a precedent and provide guidance to the industry, the commission ruled.
But because this is the first case of its kind, and national courts have expressed diverging views, the commission decided not to fine Motorola.
Samsung, which asserted several 3G patents against Apple in various EU member states, also avoided a fine, more than three years after the commission began investigating the electronics company.
In Europe, Samsung had already agreed not to seek SEP-based injunctions covering smartphones and tablets for five years against any potential licensee that agrees to accept a specified licensing framework.
This licensing framework consists of a mandatory negotiation period of up to 12 months and, if the negotiation fails, a determination of FRAND terms by a third party—either a court or an arbitrator.
The commission made these commitments legally binding in today’s decision.
