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Google to continue Motorola's FRAND licensing that seeks to monopolize H.264, UMTS

Google's worst fears about greedy H.264 patent holders and "bogus patent" warfare involving Android are coming true, albeit at the hands of Motorola, a company it seeks to acquire. Google is now promising to continue this same behavior itself after it buys the increasingly unreasonable and (outside of patent claims) unprofitable Android licensee.

Google declared war on H.264 early last year, describing it as patent encumbered and an enemy of open video distribution. It subsequently began decrying "when patents attack" last year, a complaint that accused Apple, Oracle and Microsoft of using patents as "a weapon" to stop innovation.

According to a report by Bloomberg, Google is now seeking to assure EU regulators and standards bodies that it will continue to license Motorola's patents under the same fair reasonable and non discriminatory or "FRAND" terms Motorola has.

The problem is that Motorola is currently waging patent wars that make a mockery of FRAND licensing, recently demanding from both Apple and Microsoft a 2.25 percent royalty on their sales related to a single patent involved with 3G/UMTS wireless standards in the case of Apple, and a single H.264 video standard patent in the case of Microsoft.

Google's outrageous patent hypocrisy

Last August, Google's David Drummond, Senior Vice President and Chief Legal Officer took to the company's blog to complain that, in regard to Android patent infringement claims, "our competitors want to impose a 'tax' for these dubious patents that makes Android devices more expensive for consumers."

And yet that's exactly the strategy Google's acquisition target Motorola has taken, demanding 2.25 percent royalties from Apple for all of the company's products using 3G data networks based on a patent Motorola holds in the open (but not free) industry specification involving UMTS.

Credit: Foss Patents

In a separate case profiled by Florian Mueller of FOSS Patents, Motorola is demanding the same royalty rate from Microsoft related to a single patent among 17 patents Motorola has contributed to the similarly open (but not free) H.264 patent pool.

In both cases, Motorola promised to license the patents under FRAND terms, yet in both cases, it is demanding a rate that is neither fair and reasonable nor nondiscriminatory. Instead, Motorola's expert report explained that the value of a FRAND licensed patent in a larger patent pool like UMTS or H.264 is worth at lest as much as the entire patent pool collectively, because, in his words forwarded by Motorola, "it only takes one bullet to kill."

FRAND licensing commitments are intended to give all the participants of a patent pool, such as the H.264 video standard, a proportional fair share of the relatively small, collective royalties that all licensees of the standard pay.

Motorola's argument, however, is that any standard that has incorporated a patent owned by the company should have unilateral bargaining value, the very issue Apple began complaining about when it called out Samsung and Motorola for their efforts to effectively monopolize the standards process leveraging patents the companies had already committed to FRAND licensing.

Mueller calculated that Motorola is demanding a rate from Microsoft for a single patent related to H.264 that is between 73 and 146 times greater than the entire H.264 licensing royalties sought by MPEG LA for use of the entire patent pool. Retaliatory attempts to extort such royalties as a bargaining chip in a patent dispute defy every letter of the FRAND acronym.

Google promises business as usual after Motorola acquisition

In the case of H.264, Google and its supporters originally insinuated that Apple and Microsoft were primary patent contributors of the video standard and were therefore pushing it upon the web in order to financially gain from its use. In reality, Apple is a minor contributor of H.264 patents, despite contributing the foundational package format from QuickTime (which it did royalty-free). Microsoft has stated that it pays in about as much as it gets from royalties.

Google is now in the process of finalizing its $12 billion acquisition of a profitless company that holds at least 17 H.264 patents, an acquisition that it expressly noted was done primarily to "protect the Android ecosystem," despite the fact that Motorola does not appear to have valuable defensive patents applicable to modern smartphones.

Instead, Motorola has used its FRAND licensed standards patents to bring new suits against Apple and Microsoft that do nothing to "protect" Android, and instead only seek to profit from its technology that has already been committed to standards that have no direct relationship to the Android platform.

To curry favor for its acquisition plan among EU regulators, Google reportedly "plans to send a letter to standards organizations reassuring them it will license Motorola Mobility Holdings Inc. patents on a fair and reasonable basis," but it appears Google is already aware of Motorola's FRAND-centric legal strategy because it has been feeding the company with ammunition to use in its various patent cases.

Google is apparently aware, for example, that Motorola's FRAND patent against Apple, which demands a royalty of around $10 per iPhone, is nowhere near the typical FRAND rate for licensing industry standards. Mueller notes that Via Licensing's WiFi patent pool ranges from a nickel to 55 cents per device.

When Apple attempted to charge $1 per device for licensing FireWire, the industry recoiled in horror. And yet Google appears to be promising to continue Motorola's push to demand $10 per iPhone, for a single patent among the entire pool that Apple already pays for, and for which its component makers already pay to license collectively.