Investigations of Google Inc.’s Acquisition of Motorola Mobility Holdings Inc. and the Acquisitions of Certain Patents by Apple Inc., Microsoft Corp. and Research in Motion Ltd. (Feb. 13 2012).
On Monday, February 13, 2012, the Antitrust Division of the U.S. Dept. of Justice approved the merger between Google Inc. and Motorola Mobility Holdings Inc. as well as the acquisition of additional patents by Apple Inc., Microsoft Corp., and Research in Motion Ltd.
The Dept. of Justice’s decision allows the acquisitions, which concentrates technology patents in fewer hands, to go forward. Google, once it completes its merger, will acquire approximately 17,000 patents from Motorola as well as an additional 6,800 pending patents. Microsoft, Apple, RIM and others organized as a group under the name Rockstar Bidco will be able to complete their acquisition of approximately 6,000 patents and patent applications that they purchased from the Nortel bankruptcy auction. In addition, Apple will be able to separately acquire an undisclosed number of patents from CPTN Holdings, LLC, which were formerly owned by Novell.
After the purchases, Microsoft and Apple committed to supporting the existing licensing commitments made by Nortel and Novell. However, Google has not made a similar firm commitment with regard to the Motorola patents.
Steven J. Vaughan-Nichols, blogging for ZDnet, suggests that the Motorola merger is a move by Google to constrain Apple’s ability to initiate future lawsuits without needing to enforce its patents. According to Vaughan-Nicols, by agreeing to license its patents on fair, reasonable and non-discriminatory (“FRAND”) terms, Google is making a gesture of peace that Apple will reciprocate, rather than risk injunctions against its next generation of iPhone and iPad releases. PC Magazine suggests that Google’s purchase of Motorola may have been motivated by its inability to acquire any of the Nortel patents. However, the Antitrust Division Report notes that Google’s commitment to the FRAND standard is less clear than the commitments made by Microsoft and Apple.
All purchasing corporations will be acquiring a number of Standard Essential Patents ("SEP") that Nortel and Motorola had previously committed to license as part of standard-setting organizations ("SSO"). An SSO is a technological standard, usually developed collectively by the software industry in order to make many different devices capable of operating together. SSOs include telecommunication standards 3G and 4G LTE, wireless internet protocols WiFi and WiMAX, and video compression algorithm H.264, among others. The SEP patents contain the rights to critical aspects of some SSOs. The commitment to license these patents in turn provides consumers with a wider variety of products and services than would exist if each corporation were forced to develop its own standards.1
According to the Antitrust Division Report, both the merger and patent transactions will not substantially lessen competition, despite the change in control of the SEPs from Motorolla, Nortel and Novell. In the case of Microsoft and RIM, the two firms lack the market share necessary to make anticompetitive activity profitable relative to simply licensing their patents. With regard to Apple, the acquisition of Novell patents through CPTN will not abrogate the existing requirement of those patents to offer a perpetual and royalty-free license in the Linux operating system. Finally, although Google might benefit from anticompetitive activity, the Antitrust Division did not believe that aggressive patent enforcement by Google would significantly alter the market conditions, given that Motorola had already taken an aggressive stance towards IP rights.
Both Wired and The Huffington Post note that regulatory agencies in the European Union also passed off on the acquisitions, albeit with reservations similar to those held by the US Antitrust Division about the use of SEPs. Foss Patents suggests that Google has an agenda against the H.264 video compression SSO in particular. Foss Patents also suggests that the careful wording of the European approval suggests that they may have approved the merger narrowly, using similar grounds to the Antitrust Division in that conditions were not growing any worse due to this merger.
How these patents, or, as the Huffington Post calls them, "a crucial weapon in an intellectual arms race," will affect the shape of the changing technology industry remains to be seen, as tech giants Google, Apple, and Microsoft continue to vie for control over the future of mobile technology.