updated 10:10 pm EDT, Fri June 29, 2012
Civil investigative demands issued to Google, Apple, Microsoft
The US Federal Trade Commission (FTC) is investigating if Google and Motorola Mobility are honoring fair, reasonable, and non-discriminatory (FRAND) commitments made to license standards-essential patents. A civil investigative demand, similar to a subpoena, has been issued to Google as it looks at overall practices in litigation and licensing. The US investigation follows the opening of European Commission investigations into Motorola Mobility and Samsung Electronics for FRAND violations as well.
The FTC is also questioning Microsoft and Apple as it seeks to prove whether Google intends to license standards-essential patents on 3G connectivity, Wi-Fi, and H.264 on FRAND terms. Google continues litigation initiated by Motorola, with Apple and Microsoft facing potential import bans on patents held by Motorola.
Microsoft spokesman Dominic Carr confirmed that the company received a FTC civil investigative demand, but refused to comment any further. Both Apple and the FTC refused specific comment as well. Apple and Microsoft have both written letters during the ITC's call for submissions about the giant's potential trade bans regarding FRAND abuse by Motorola.
When the Justice Department approved the Google acquisition of Motorola Mobility, and the Nortel Network patents by a group spearheaded by Apple and Microsoft, it said it would monitor for patent misuse by any of the companies. Apple and Microsoft pledged that they wouldn't prevent any FRAND licensing of standards-essential patents. Google promised the same, as long as good-faith negotiations for the patents were underway, but maintained the right to seek court relief if no agreement could be reached on licensing.
Motorola has historically asked for 2.25 percent of the cost of an entire device that uses one of their patents, and not just the price of the infringing software. For example, the current requested rate for Microsoft's Xbox 360 is $4.50 of the $200 retail price per unit sold.
Previous demands for Windows' use of the H.264 patent asked for 2.25 percent of each PC sold, and not just the retail value of Windows. Conservative estimates by Microsoft places the amount they would owe for the video playback patent in the billions of dollars, assuming the average PC was conservatively worth $500. The rate Motorola demands is several orders of magnitude larger than the capped license fee maximum of $6.5 million per year demanded for the patent by the MPEG LA group [via Bloomberg]