Google files EU antitrust complaint against Nokia and Microsoft

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The Wall Street Journal reports that Google has filed an antitrust complaint against Microsoft and Nokia with the European Commission, arguing that the two companies are colluding to drive up patent costs for mobile devices through licensing management agreements made with non-practising entities (third parties); companies that Google describe as "patent trolls".

Google has not published the full details of its complaint, but did issue a statement:

"Nokia and Microsoft are colluding to raise the costs of mobile devices for consumers, creating patent trolls that sidestep promises both companies have made. They should be held accountable, and we hope our complaint spurs others to look into these practices."

The complaint appears to be based on Microsoft and Nokia's increased activity around their respective mobile patent portfolios, following their partnership agreement last year. At the time, both companies cited the strong respective patent portfolios and potential for cross licensing as one of the strongest assets of the alliance.

In particular Google is objecting to the transferring, or selling, of patents to companies who specialise in patent management and licensing. Google believes that Microsoft and Nokia are using these proxies to go back on previous agreements and increase the patent licensing costs associated with creating an Android product. 

The WSJ gives the example of MOSAID, a company to which both Nokia and Nokia transferred a total of around 2,000 patents last year, but other recent examples of Nokia divesting itself of patents include agreements with Sisvel, which acquired 450 patents from Nokia earlier this year, Synchronica, which acquired part of Nokia's software messaging business, and Renesas, which acquired Nokia's wireless modem business in 2010.

Sisvel and MOSAID are the most relevant here are they are non-practising entities (NPE), that it to say companies that do not actively use the patent themselves, but rather seek revenue by licensing the patent). It is becoming increasingly common for large companies to sign partnership agreements (outright transfer, or acquisition, of patents; simple representation; or a mix of the two) with NPEs to handle the licensing of a patent portfolio, with any revenue shared between the two companies. There's nothing wrong with this process, after all the whole patent system is based on the inventor being rewarded for their efforts. Issues only arise, as with any other patents, if questions arise around the legitimacy or enforceability of the patents in question.

Florian Mueller, a well known mobile patent analyst, writing on FOSS patents, covers this latest round of the mobile patent battle in two separate posts. In the first he notes that the compaint being made by Google has already been rejected by the US's ITC:

It's not just "old wine" but actually a concoction that failed to pass even the low hurdle of a basic plausibility test by the United States International Trade Commission. It failed that test at the ITC no less than three times: the Office of Unfair Import Investigations (which defends the public interest in ITC investigations), Judge Theodore Essex (in asummary determination) and the six-member decision-making body at the top of the ITC all agreed that there was no antitrust-related or other kind of patent misuse claim against Microsoft and Nokia. An entire set of "patent misuse" theories including the Mosaid story was considered so frivolous that the ITC didn't even want to waste time on this at a trial at which an all-star team of antitrust lawyers wanted to square off with Microsoft.

In the second post, which includes a breakdown of Nokia's response (quoted below), he summarises by saying:

Thus far, Google's allegations are far too vague to give the impression that this is a good use of regulatory resources. There are indications that Google is playing a political game here, hoping that the Commission will have to look into the Mosaid conspiracy theory only in order to avoid the impression of being biased against Google.

Response from Microsoft and Nokia

Microsoft responded to Google's intial statement by saying:

"Google is complaining about patents when it won't respond to growing concerns by regulators, elected officials and judges about its abuse of standard-essential patents, and it is complaining about antitrust in the smartphone industry when it controls more than 95% of mobile search and advertising. This seems like a desperate tactic on their part."

In this statement Microsoft is highlighting Google's own lack or response to anti-trust issues around its own standards-essential (FRAND) patents, suggesting the latest tactic is an attempt to muddy the waters.

Nokia also responded with a statement:

"Though we have not yet seen the complaint, Google's suggestion that Nokia and Microsoft are colluding on IPR is wrong. Both companies have their own IPR portfolios and strategies and operate independently. 

Nokia has made regular patent divestments over the last five years. In each case, any commitments made for standards essential patents transfer to the acquirer and existing licenses for the patents continue. Had Google asked us, we would have been happy to confirm this, which could then have avoided them wasting the commission's time and resources on such a frivolous complaint.

We agree with Google that Android devices have significant IP infringement issues, and would welcome constructive efforts to stop unauthorised use of Nokia intellectual property.

Nokia has an active licensing program with more than 40 licensees. Companies who are not yet licensed under our standard essential patents should simply approach us and sign up for a license."

Nokia's statement notes that Microsoft and Nokia operate their IPR strategy independently (i.e. no collusion) and reaffirms its position that when transferring (divesting patents) any commitments for "standards essential patents" (FRAND) remain in place. That directly answers Google's accusation that the motivation of such transfers is to sidestep earlier promises.

It also notes that by making the complaint Google is admitting that Android devices have significant infringement issues, the implication being there would be no need for Google to complain if there were no infringement.



Source / Credit: Wall Street Journal