Apple's new Motorola suit is message to Google and regulators

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On Monday afternoon, the European Commission announced approval of Google's acquisition of Motorola Mobility, with a caveat. In a statement, an EC official said the approval should not be construed as approval of Motorola Mobility or Google assertions of infringement with regard to standard-essential patents.

It's no coincidence that Apple sued Motorola Mobility for asserting rights to a certain industry-standard patent on Friday, the same day word leaked that European and U.S. regulators intend to grant antitrust clearance to Google's $12.5 billion acquisition of Motorola.
Apple's 16-page complaint, filed in federal court in San Diego by Covington & Burling, asserts that Motorola Mobility is wrongfully claiming Apple infringed a patent that was adopted by an international standard-setting body and therefore essential to smart phone production. When the European Telecommunications Standards Institute agreed to incorporate the Motorola patent in industry-standard technology, Motorola, in turn, pledged to license the patent to smartphone rivals on fair, reasonable, and non-discriminatory (known as FRAND) terms. As Apple's complaint explains, "A promise to license under fair, reasonable and nondiscriminatory terms is the quid pro quo that standards-setting participants extend to the industry in return for the right to collaborate with competitors in creating a standard that has the power to block market access."
Apple alleges that Motorola Mobility's barrage of German suits accusing iPhones of infringing the standard-setting patent amounts to "an aggressive international campaign of litigation that flies in the face of its promise to license its cellular standards-essential patents on FRAND terms." Apple has couched the suit as a contract case, arguing that it obtained rights to the Motorola Mobility patent through Qualcomm, which produces the allegedly infringing chip and has a licensing agreement with Motorola Mobility. But its actual point is more fundamental: Apple is asserting that Motorola Mobility is abusing the monopoly power of its patents to squelch competition.
That's a message directed at Google. As the ever-perspicacious Florian Mueller at FOSS Patents reported on Feb. 8, Google has told regulators that it intends to continue Motorola Mobility's FRAND-unfriendly policy of demanding 2.25 percent of the sales price of smartphones that employ any of its patents, no matter how limited the use of that technology. (Motorola filed its first German suit against Apple last April, before it agreed to be acquired by Google.) Mueller said the Motorola/Google policy is "absolutely out of step with the concept of FRAND and with industry practice." He urged antitrust regulators to press Google to make "an unequivocal commitment to truly reasonable royalty demands and a clear no-injunction policy."
Those regulators, however, were apparently less exercised about Google's avowed intention of continuing Motorola's policy than Mueller -- and than Apple, which said in Friday's complaint that "unlike some in the technology industry," it has "never asserted a standard essential patent in litigation has never used a patent subject to a FRAND commitment to deny market access to a rival."
Apple and Microsoft, meanwhile, are still waiting for antitrust approval of their proposed $4.5 billion acquisition (along with RIM, Sony, Ericcson, and EMC) of thousands of patents from Nortel Networks. I reported back in August that the patent acquisitions by Apple and Microsoft would help Google get the Motorola Mobility deal past regulators, since Google could argue that if Android is to survive as a market competitor, it needs the Motorola patents as leverage in licensing negotiations. It looks as though that argument worked.
So, at the very least, Apple's suit reminds the world -- and the world's antitrust regulators -- that Apple is (in its own eyes) a better antitrust citizen than Google.
(An earlier version of this blog post incorrectly identified the court as being in Los Angeles, instead of San Diego. The blog post was also updated with news of EC approval on Monday.)