Ruling could weaken future patent position of a merged Google Motorola Mobility entity and ultimately push up prices for all Android devices.
A German court has ruled in favor of Apple and dealt a crucial blow to Motorola Mobility in the ongoing patent battle between the two. The Karlsruhe Higher Regional Court decided today that Motorola Mobility can no longer enforce its standard-essential patent injunction against Apple in Germany during the ongoing appeal.
On the surface, that doesn’t sound like a very decisive blow.But, at the heart of the matter are patents essential to the standardsused by all similar devices known as FRAND (Fair, Reasonable, andNon-Discriminatory). Apple has submitted a proposal to license thetechnology in question under FRAND terms, and the German court hasessentially determined that for Motorola to reject the offer wouldamount to a violation of antitrust regulations.
Google and Motorola were bettingheavily on enforcing thesestandards-essential patents against foes like Apple and Microsoft, andit was hoping that the legal framework in Germany would give it thebest chance at establishing a precedent it could use as leverage inother legal arenas. It appears the gambit is doomed to fail.
Florian Mueller, a patent and intellectual property analyst, doesn’thold back any punches in his assessmentof this decision on his blog. “This is so huge that it evenbegs the question of whether Google’s strategy for its $12.5 billionpurchase of Motorola Mobility has failed before the deal is evenformally closed (they’re still waiting for some regulatory approvals).”
Mueller goes on to say that if Google was hoping thatacquiring Motorola would give it some sort of legal advantage in theongoing Android patent wars, it should seriously consider paying the$2.5 billion breakup fee and walking away from the deal. He also saysthat he doesn’t believe Google will do so regardless of the merits ofsuch a strategy simply to save face and avoid embarrassment.
Impacton Android device prices
I asked Mueller if he thinks there will eventually be a“winner” in these battles, or if the rival companies will simply spendbillions dancing with each other in court to reach some sort of legalstalemate. Mueller responded, “So far, no one has been able to deal alasting knockout blow, but I believe Apple is likely to achieve someproduct differentiation in its favor through continued enforcement, andMicrosoft will ultimately receive royalties on 100% of all Androiddevices sold in the United States and some other key markets.”
If that turns out to be true, it may have a lasting impact on theAndroid ecosystem. The cost ofmanufacturing smartphones and tabletsbuilt on the “free” Android operating system could get quite costlywhen weighed down with licensing fees and royalties. Vendors mayeventually seek less encumbered mobile platforms to work with, or passthose costs on in the form of higher prices on Android devices.
The game is not over–not in Germany, and not globally by along shot. There is still a lot of back and forth and small victorieson both sides of the Android patent war. Only time willtell where thechips will eventually fall.