Google and the Courts

Featured: Smartphone Patents Put Google in Hot Seat with FTC Again

October 11, 2012 - Written By Michael Roberts

Google and the Federal Trade Commission have been getting to know one another quite well for more than a year now as the FTC has been investigating the search tech company in a number of areas. Most recently, the FTC has sets its sights on Google’s interest in mobile.

When Google bought Motorola Mobility for $12.5 billion, the company purchased 17,000 patents. Between this large influx of new legal armor and what Google already had claim to, the company is in possession of many “standard-essential patents.” This means that Google has patents on core technologies that enable smartphones and tablets to work. The FTC is concerned that Google is not playing nice with all of the other smartphone and tablet companies out there who want to compete in the U.S. market.

The Google Motorola unit offered assurances of “fair and reasonable” terms for licensing, but apparently not everyone is convinced. On Tuesday, Google said in a statement, “We take our commitments to license on fair, reasonable and nondiscriminatory terms very seriously, and we are happy to answer any questions.”

The government has fair reason to be concerned over an issue like this, not only for the mobile tech industry but any industry. When companies who hold several standards-essential are resistant to working with other brands, the entire industry – and customers – suffer. Edith Ramirez, and F.T.C. commissioner, told the Senate in July that the “Holdup and the threat of holdup can deter innovation by increasing costs and uncertainty for other industry participants, including other patent holders.”

It’s not just Google that wants to buy up all the patents. Apple and Microsoft were among six companies working together to outbid Google on a bundle of 6,000 patents. Altogether, the companies raised $4.5 billion for the deal, and they have pledged to license standard patents at reasonable terms, much to the delight of the Justice Department.

Turning back to Google’s behaviors, a Justice Department statement said, “Google’s commitments were more ambiguous and do not provide the same direct confirmation of its standard-essential patent licensing policies.”

Apple plays hardball all the time with their patents, but there is a big difference in the way that courts view the behavior. Apple focuses its patents on design and the user interface, which aren’t standard-essential patents.

Former antitrust division chief economist Carl Shapiro clarified that with standard-essential patents, “you have made promises to license and that changes the game. You’ve agreed to attenuate your property rights to expand the industry as a whole.”

If Google is found to be bullying the rest of the industry with their patents, they could deal with severe penalties from the U.S. government.

Source: New York Times