As if we needed someone to tell us that the ongoing patent lawsuits between Apple and Motorola in Germany were getting a little out of control… Today the European Commission has finally stepped up calling Motorola’s enforcement of an injunction against Apple with mobile standard essential patents “abuse of a dominant position prohibited by EU antitrust rules.” The EU Commission, however, does note that the statement of objections sent to Motorola does not reflect the final outcome of its investigation into its use of standard essential patents (SEPs):
The Motorola Mobility SEPs in question relate to the European Telecommunications Standardisation Institute’s (ETSI) GPRS standard, part of the GSM standard, which is a key industry standard for mobile and wireless communications. When this standard was adopted in Europe, Motorola Mobility gave a commitment that it would license the patents which it had declared essential to the standard on FRAND terms. Nevertheless, Motorola Mobility sought an injunction against Apple in Germany on the basis of a GPRS SEP and, after the injunction was granted, went on to enforce it, even when Apple had declared that it would be willing to be bound by a determination of the FRAND royalties by the German court.
The EU Commission essentially states that Apple should be able to license the technology under fair, reasonable and non-discriminatory terms decided by a third-party, and that Motorola’s approach with its latest injunction could “distort licensing negotiations and impose unjustified licensing terms.” Back in February of 2012, Apple was for a short while forced to remove all 3G devices from its online store in Germany following the injunction, and at the time Apple noted that “Motorola repeatedly refuses to license this patent to Apple on reasonable terms, despite having declared it an industry standard patent seven years ago.”
Today’s Statement of Objections sets out the Commission’s preliminary view that under the specific circumstances of this case – a previous commitment to license SEPs on FRAND terms and the agreement of Apple to accept a binding determination of the terms of a FRAND licence for SEPs by a third party – recourse to injunctions harms competition. The Commission is concerned that the threat of injunctions can distort licensing negotiations and lead to licensing terms that the licensee of the SEP would not have accepted absent this threat. This would lead to less consumer choice.
The Commission will not come to a final decision in the investigation, which was originally opened in April of 2012 following the injunction in Germany, until both parties have had an opportunity to enter a defence. It could then possibly “issue a decision prohibiting the conduct and impose a fine of up to 10 % of a company’s annual worldwide turnover.”