Google to drop patent cases as part of FTC deal

Fueling FRAND debate

“By not addressing the ambiguity in the market about what constitutes a FRAND commitment, the Commission will leave patent owners to guess in most circumstances whether they can safely seek an injunction on a SEP,” wrote Commissioner Maureen Ohlhausen in her dissent.

Ohlhausen added that the FTC was in error in considering Apple a willing licensee of the Motorola patents. She cited court cases where Apple representatives said they wanted a ceiling on royalties for the patents.

The commissioners voting for the deal said it will protect the standards process. “The procedures outlined in the proposed settlement will provide useful guidance to market participants, including [standards-setting organizations], in developing a predictable approach to resolve licensing disputes involving standard-essential patents,” it wrote.

FTC Chairman Jon Leibowitz called the Motorola cases a “patent hold-up.” In a press conference he showed an Apple iPad, Microsoft Xbox and a government-issued Research in Motion smartphone as examples of products affected by the cases. “Companies cannot make these [FRAND] commitments when it suits them to have a patent included in a standard people…[and later have competitors] vulnerable to extortion,” he said.

Google faces a relatively modest penalty of a $16,000 fee for any violation of the agreement. But “violations can be defined in a way that multiplies that very, very quickly,” he said.

Separately, Google agreed to stop two practices related to search advertising. It will no longer scrape content from third-party sites and treat it as Google content. In addition, it will end restrictions around its search ad API.

The FTC collected 9 million pages of Google documents and interviewed “numerous industry participants and took sworn testimony” from several senior Google executives as part of the investigation Leibowitz called “exhaustive.”

Commissioners unanimously agreed to end the investigation, finding Google was not engaged in monopolistic practices. The agreement will now undergo a 30-day public comment period.