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Monday, August 13, 2012, 12:38 pm PT (03:38 pm ET)

Apple FRAND win over Motorola slashes Google's patent power

A federal judge's ruling in Apple v. Motorola Mobility has strengthened the case that parties who provide patents to standards bodies must uphold their commitments to offer licensing under "Fair, Reasonable and Nondiscriminatory" terms.

The series of summary judgement requests Apple was granted in the case by Judge Barbara B. Crabb means that Apple "is in pretty good shape with a view to the Wisconsin FRAND trial," notes Florian Mueller of FOSS Patents.

Motorola was seeking to collect a 2.25 percent royalty rate from Apple over any iOS devices that use industry standards such as wireless UMTS 3G which involve Motorola's patents. Apple argues that the royalty rate Motorola is demanding is inconsistent with the FRAND restrictions on such standard essential patents (SEP).

The ruling is a major blow to Google's strategy of montizing Motorola Mobility's largely "standards essential" patent portfolio, and comes just days after Google announced plans to layoff a fifth of the company it announced plans to acquire nearly a year ago. The $12.5 billion deal was finalized in May.

Government regulators in the US and elsewhere approved the acquisition only after noting reservations about Google's commitments to FRAND licensing.

This year, the European Commission and the U.S. Federal Trade Commission both began actively investigating Google and Motorola over suspected FRAND abuse.

SEP and FRAND

Unlike proprietary patents covering technical feature or design elements, SEPs are something vendors can usually not work around by avoiding a particular implementation, because they must use the SEP to make products compatible with various industry standards (such as WiFi or 3G).

That's why standards bodies require members to license their SEPs under FRAND terms. However, a number of companies have sought to force Apple to license its valuable design and technical patents by holding up licensing of SEPs in retaliation, ignoring the FRAND commitments those firms made.

"So far there's a clear trend across multiple federal districts that FRAND is anything but the empty word that certain notorious abusers would like it to be," Mueller observed.

Obey the FRAND

Mueller noted that Judge Crabb's findings include that:

• Motorola entered into binding contractual obligations with ETSI and IEEE [standards bodies] to license its declared essential patents on fair, reasonable and nondiscriminatory terms

• In submitting technical proposals to ETSI for inclusion of Motorola technology in ETSI standards, Motorola was obligated by ETSI policy to make a bona fide effort to identify essential intellectual property rights that might be required by the technical proposal before the adoption of the technical proposal into the standard.

• Motorola was obligated to make a bona fide effort to disclose the applications leading to the issuance of its United States patents 6,175,559, 6,359,898 and 6,246,697 [the '697 patent is the one that an ITC judge held Apple, on a preliminary basis, to infringe] to ETSI before the adoption of Motorola's technical proposals, even when those patent applications were unpublished.

• Motorola disclosed the patent applications issuing as the '898, '559 and '697 patents after the adoption of the standards to which Motorola contends those patents are essential.

Apple now has to demonstrate proof that Motorola's licensing demands are not compatible with its FRAND licensing terms, but Mueller notes "the issues have been narrowed considerably."

Mueller added that the decision means Google's ability to threaten to block U.S. imports of Apple's iOS devices (or Microsoft's Xbox, involved a separate lawsuit) using its newly acquired Motorola's FRAND-pledged standards essential patents is increasingly unlikely, calling the ruling "the latest event of many that call into question the patent strategy behind that $12.5 billion impulse buy."