"The so-called smartphone patent wars should not occur at the expense of consumers," said Joaquin Almunia, the European Commission Vice-President for Competition.
Almunia was talking about the new guidelines for the Fair-Responsible-Non-Discriminatory (FRAND) terms, which require patent holders to license any technology involving Standard-Essential-Patents (SEPs) to other players in the industry. The standards in question are agreed to by standards-setting organizations such as ETSI (European Telecommunications Standards Institute) in which patent holders and manufacturers of standards-compliant products participate.
There are about 4,300 technology patents used in the mobile industry that are considered "essential" for any smartphone or tablet to work with GSM (2G) and UMTS (3G) networks. Those patents are the property of a handful of companies, among them Apple, Google, Samsung, Motorola, and Microsoft, and give their owners substantial power in the market. But, as Almunia pointed out, they "can be used abusively."
FRAND terms were established to stop patent holders from discriminating against competitors and provide a "safe-harbor" for companies to innovate while paying a fair price to the license holders.
But some companies are constantly using their patents as leverage to stop competing products from entering the market, and as a result create a climate of distrust. This is especially harmful to small players that wish to develop new products, need access to the technology protected by the SEPs, and don't have the resources to litigate.
Having seen the situation in US courts, the European Union wants to stop this kind of litigation because it limits innovation, hurts consumer choice, and creates an enormous burden on the courts and on European institutions.