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Late last Thursday, Google filed a complaint with the European Commission's Competition Directorate General relating to what it claims is collusion between Nokia and Microsoft to artificially raise the price of mobile handsets. This, says Google, is the consequence of a deal done with MOSAID last year in which 2,000 patents, previously owned by a Nokia holding company, were transferred to the Canadian NPE in what its CEO John Lindgren called “a transformative event” which, he stated, “will create exciting new opportunities for MOSAID as one of the world's premier licensing organisations”. Lindgren concluded: “This is one of the strongest standards-essential wireless portfolios available on the market, and we are thrilled that we have acquired this outstanding portfolio and have the opportunity to monetise it."
Both Microsoft and Nokia get a share of the revenue that MOSAID (which since the deal was done has been acquired by private equity firm Sterling Partners) generates from any licensing deals it does. In theory, at least, they are also shielded from the downsides of a monetisation programme based on the patents, such as: having to invest time and money in putting one together, counter-assertions, and anti-trust suits based on commitments that the companies may have given in the past. In other words, the relationship the two have with MOSAID looks very much like the privateer model that has become increasingly popular among operating companies over recent years.
Although the content of Google’s complaint has not been made public, the company did issue a brief statement: “Nokia and Microsoft are colluding to raise the costs of mobile devices for consumers, creating patent trolls that side-step promises both companies have made. They should be held accountable, and we hope our complaint spurs others to look into these practices." Apparently, Google is also said to have alerted US regulators to its concerns as well.
Over on the FOSS patents blog Florian Mueller, who has quite a close relationship with Microsoft these days, lists a few of the reasons why Google may be frustrated in its attempts to get a hearing, but I am not so sure. First of all, it is no great secret that the European Competition DG is very suspicious of patents and the powers that they can give to their owners. Although I am no expert, it would not surprise me at all if they decided to have a look at this if they can find a justification to do so: the temptation to have another go at rights holders and how they use their IP assets would surely be too strong. Furthermore, I would not base that much on the fact that in the US the ITC has looked at this in the past and dismissed it. Instead, I would base a lot more emphasis on the words uttered earlier this year by the DoJ’s former anti-trust chief when she spoke of how the DoJ and the Europeans had been developing much closer links and stated: “Intellectual property and the aggregation of patented technology will be among the biggest issues to emerge in the next few years, both in terms of reviews of transactions and industry conduct … We’re only in the early stages of understanding how the acquisition of patents might deter innovation.”
All in all, this looks like a smart move from Google with very little downside. It’s worth remembering that MOSAID is not the only privateer that the company and its Android platform are up against. Rockstar Consortium Inc is now in business and already talking to 100 potential licensees. Its portfolio amounts to 4,000 of the 6,000 patents acquired by the six companies, including Microsoft and Apple, that paid $4.5 billion to stop the Nortel portfolio from falling into Google’s hands last June. It does not take a great leap of imagination to imagine who CEO John Veschi and his team may consider potential targets for licensing deals.
In January this year, meanwhile, Nokia sold a bundle of 450 patents and applications to Italian NPE Sisvel; the majority of these have previously been declared essential “to second, third and fourth-generation communications standards, including GSM (Global Systems for Mobile communications), UMTS/WCDMA (Universal Mobile Telecommunications Service / Wide-Band Code Division Multiple Access) and LTE (Long Term Evolution)”.
If Google can get competition and anti-trust authorities in the US and Europe to start looking into these kinds of arrangements more closely, it could well end up seeing the dangers they pose to the company and its partners significantly reduced. But even if this time they are not successful, Google has put the issue into the public domain in great big letters. This will concentrate minds not only within the regulatory authorities, but also among Google’s rivals too. That’s called being pro-active and setting the agenda. All too often over recent years Google has been playing catch-up. This time it seems to be moving ahead of the curve. And that is always a good place to be.
Competition/antitrust, IP management, Licensing, Patents, IP business