Google's Motorola Acquisition May Spark New Apple Patent War

by dekokfo032 on 2012-02-16 14:27:42

Almunia's team has not ruled out an independent investigation into Google's behavior, in Europe, it is decided whether to install a full anti-monopoly investigation, advertising and search practices. A decision is expected in March. On the same day, Jieha spoke thoughtfully, saying that very publicly suing other brands of Android phones for infringing Motorola's patent portfolio, and proposed the possibility of cooperation with Microsoft instead of Google, and adopting new Windows Phone software and dropping Android. The EU also issued a similar warning, extending the review of the proposed merger between these two companies, waving their hands in August, the Education Bureau announced on Monday evening that it had decided that this deal would not affect the supply of Android software to other mobile phone manufacturers. However, the EU Competition Commissioner Almunia warned, "The Commission will continue to closely monitor all market players in this sector, especially the increasing use of patent strategy behavior." Microsoft has been forced to make almost all Android phones sign 50% of the patent ownership, claiming a royalty transaction for each phone from companies like Samsung and HTC. Such transactions cover 70% of Android phones sold in the U.S. - it claims, including China's Huawei and other Android phone manufacturers. Microsoft is also locked in a patent battle with MMI.

After Larry Page, Google's CEO, contacted Motorola Mobility last July and lost a series of patent bids at a bankruptcy auction of Canadian telecommunications company Nortel Networks, it abandoned bidding with Intel Corporation, as Google, Apple, Microsoft, and BlackBerry manufacturer RIM reached a bid of $4.5 billion - but its Motorola bid will far exceed that.

However, across Google's bow, the U.S. Department of Justice said that while accompanying its approval, Apple and Microsoft have made more explicit commitments regarding the use of "standard essential patents" (SEPs) in smartphones, Google's commitment statement was more ambiguous and did not provide the same direct confirmation of its SEP licensing policy. For this reason, the Department of Justice will continue to monitor the market and "will not hesitate to take appropriate enforcement action to prevent any anti-competitive use of SEP rights."

Apple is seeking to expand its case in Germany, where it is battling Motorola's attempt to impose a ban on the sale and use of its iPhone 4S and iCloud network storage and synchronization services.

Google stated that it is acquiring the human-machine interface to manufacture phones because its existing 17,000 and pending 7,500 patents cover a wide range of wireless and mobile fields, providing strength to the patent portfolio in other areas. This acquisition will enable Google to offer patent protection to device manufacturers using its Android mobile operating system, which are currently facing legal attacks over patents from companies like Apple and Microsoft.

Google's acquisition of MMI's 17,000 existing and 7,500 pending patents. Photography: Robert Galbraith/Reuters

The European Commission and the U.S. Department of Justice have approved Google's $12.5 billion (10.4bn) acquisition of Motorola Mobility (MMI), a U.S.-based mobile phone and set-top box manufacturer - a move that could open a new and potentially explosive chapter in the smartphone patent struggle.

Google has repeatedly stated that it will operate MMI's business at arm's length, which will be disadvantageous compared to other mobile phone manufacturers using Android software. Analysts suspect that it will increasingly seek its subsidiary to showcase new versions of Android phones as it attempts to enforce greater compliance with the rapidly growing use of the software.

According to the acquisition agreement filed by Motorola with the SEC, Google stated that it would be interested in purchasing the company - two weeks after July 20, when the famous "corporate sniper" Carl Icahn, who then held about 11% of the company, said Sanjay Jha, MMI's chief, that the company "should explore alternatives for the MMI patent portfolio." In other words, Icahn said: sell. (Icahn revealed this suggestion in a filing that day.)

In approving the acquisition, Almunia added that the decision "does not mean blessing all past or future actions of Motorola or all future actions of Google," and considered any action on "[the] issue, whether Motorola's or Google's behavior, to comply with EU antitrust laws" separately.

The approval settled a standoff between Google and Apple, with Motorola's subsidiary trying to squeeze the iPhone maker to pay an iPhone chip supplier, Qualcomm, which says it has been authorized patents.

A week later, Google said it was considering buying the company at a "price high $20 or low $30s."

On August 1, Google made its first formal bid at $30 per share - valuing MMI at $9.4 billion.

Apple sued in the U.S. last week, potentially causing an explosion, claiming MMI was abusing its ownership of basic patents used in phones after writing to Apple and chipmaker Qualcomm in January. In the letter, MMI revoked Apple's ability to use two patents embedded in Qualcomm chips used in the iPhone. This specific revocation generally does not allow for "essential" patent licensing terms: if Motorola is found to have violated "FRAND rules" surrounding its patent licensing (fair, reasonable, and non-discriminatory), it could face sanctions from standard-setting agencies and damages from Apple.

Its trick worked: by the end of the day, Google had offered its price at $40 per share - enough for Jieha and the MMI board. They squeezed Google into issuing shares worth $12.5 billion; Icahn's holdings rose in value from $750 million when Google first approached MMI to $1.34 billion when the deal was completed. Icahn owes Jieha a big favor - if, as some expect, the CEO pushes Arora aside when the merger is completed, Icahn may be in a position to repay him.

If Apple can show that MMI abused FRAND patents in the case, Joaquin Almunia, the EU's competition commissioner, who warned in a speech last Friday, drew attention to "owners of standard essential patents being given power in the market they cannot be allowed to abuse."

China must do the same before the merger can be completed.

Almunia can fine companies up to 10% of their global turnover for abuses - which, post-merger, would reach billions. Google's largest fine was $500 million levied by the U.S. government last August for its role in illegally selling internet drugs from Canadian sites to the U.S.

MMI was spun off from Motorola in January 2011 but has struggled financially ever since, recording net losses every quarter, losing funding and market share in its mobile phone business. Although quarterly revenue of around $3.4 billion will be small for Google, expected to bring $10 billion in the fourth quarter, it is expected to bring tax benefits, meaning it will have no net effect on profitability.

But Jieha held, by August 7, Google's chief negotiator Nikesh Arora - who is now passing messages from Jieha in the post-merger company - asked him to offer a bid of $37.