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Antitrust regulator considering investigation into Motorola's standard-essential patent licensing

The European Commission is considering investigating whether Motorola's use of standard-essential patents has been anti-competitive.03 Apr 2012

EU Competition Commissioner Joaquín Almunia said taking enforcement action against Motorola could offer "clarity" in how standard-essential patents should be licensed in order to comply with competition law.

"We have recently opened an investigation against Samsung to make sure that the company has not failed to honour the commitments it had taken back in 1998 to make its standard-essential patents for mobile phones available in fair, reasonable and non-discriminatory terms," Almunia said in a speech.

"We have also received similar complaints by Apple and Microsoft against Motorola. I am considering whether we need to investigate these complaints formally to help bring more clarity into this area of competition control," he said.

Standards are agreed technical specifications to ensure that a single technology is used across an industry, often with the goal of achieving interoperability of products regardless of the manufacturer. Companies can opt to send experts to help develop standards but, in return, most standards setting organisations insist that companies agree to licence any intellectual property they own that is essential to implementation of that standard on fair, reasonable and non-discriminatory (FRAND) terms.

Earlier this year the European Commission approved Google's takeover of Motorola after determining that the internet giant was "unlikely" to prevent Motorola's competitors from using its Android operating system.

However, it said its decision to allow the acquisition to go ahead was "without prejudice to potential antitrust problems related to the use of standard essential patents in the market [for operating systems for smartphones and tablet devices] in general".

Motorola owns approximately 17,000 patents and has made a further 6,000 applications in relation to mobile devices. The company's portfolio includes "hundreds" of standard-essential patents, the US Department of Justice has previously said.

"The transaction would not significantly impede effective competition in the [European Economic Area] or any substantial part of it," the Commission said in February. "Today's decision is without prejudice to potential antitrust problems related to the use of standard essential patents in the market in general. However, any such issues would not arise specifically as a result of the proposed transaction."

At the time Almunia, said the Commission would "continue to keep a close eye on the behaviour of all market players in the sector, particularly the increasingly strategic use of patents".

In his speech last week the Competition Commissioner said he was "determined" to use enforcement tools against patent rights holders that "effectively hold up the entire industry with the threat of banning the products of competitors from the market".

Earlier this year the Commission opened a "formal investigation" into whether Samsung distorted competition in the mobile phone industry. The Commission said that Samsung was obliged to licence the use of patents relating to 3G mobile and wireless technology to rivals on FRAND terms but may have breached this requirement when trying to enforce its patent rights against those rivals in court.

The South Korean technology company has been embroiled in legal battles around the world with US software giant Apple with both companies claiming the other has infringed its intellectual property rights. Apple has accused its rival of infringing design rights it owns for its iPad tablet. It has said Samsung had engaged in "blatant copying" in its design of its Galaxy Tab 10.1 device.

Samsung has also sued Apple over the use of its patents. Apple previously claimed that this is an attempt by its rival to "coerce" it into "tolerating" Samsung's "imitation" of its iPad.

The European Commission is responsible for investigating possible abuses of dominant market position under the Treaty on the Functioning of the European Union (TFEU).