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Smartphone patent warriors beware - the European competition authority scents blood

Patent owners in the technology sectors, and perhaps the mobile devices sector most of all, should read this section of a speech delivered by Joaquín Almunia, the head of the European Commission’s completion watchdog, and take them very seriously indeed:

Contestable markets, instead, allow new players to experiment, and new ideas to succeed. It is a major task of competition control to ensure that new generations of businesses are given a fair chance.

I am notably thinking of the surge in the strategic use of patents that confer market power to their holders.

The potential abuses around standard-essential patents are a specific illustration of this concern.

Standards are the best tool to promote interoperability of devices or to define safety or quality benchmarks. In the communications technologies, standards are key for a universal interconnection and seamless communication.

Once a standard is adopted, it becomes the norm and the underlying patents are indispensable.

Owners of such standard essential patents are conferred a power on the market that they cannot be allowed to misuse.

Standardisation processes must be fair and transparent, so that they are not in the hands of established firms willing to impose their technologies. But it is not enough. We must also ensure that, once they hold standard essential patents, companies give effective access on fair, reasonable and non discriminatory terms.

This is crucial if we want industries and businesses relying on such patents to develop freely to their utmost potential.

I am determined to use antitrust enforcement to prevent the misuse of patent rights to the detriment of a vigorous and accessible market. I have initiated investigations on this issue in several sectors and we will see the results in due time.

We already know that Samsung is being investigated by the Commission for potential FRAND abuses. And from what Almunia is saying there is significant potential for more of the same. The problem is that over time the Competition DG has shown itself to be extremely suspicious of patent rights and their owners; put simply, it does not seem to like either of them very much. As an article we published in issue 52 of IAM makes clear, the Competition DG has wide-ranging powers that are far greater than anything competition authorities have ever enjoyed on a national level in EU member states. What’s more, they are frequently invoked. This can include fining a company up to 10% of its global turnover for behaviour that is deemed unacceptable.

Off the top of my head I can’t tell you what the likes of Apple, Google and Microsoft generate each year, but it will run into the many billions; losing a chunk of that as a result of a Commission decision will have implications that will resonate well beyond Europe. It’s something that makes the Competition DG extremely powerful – if it gets its teeth into something, and patents are always a favourite target, it effectively becomes a global issue. No wonder we have seen some of the big mobile devices players making conciliatory statements about FRAND and licensing over recent days. Microsoft is one company that already knows that the Commission’s bite can be as bad as its bark when it comes to patents, and will want to do all it can to avoid falling a victim


Joff Wild
IAM Magazine
10 February 2012

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Competition/antitrust, Licensing, IP politics, Patents, IP business

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RE: Smartphone patent warriors beware - the European competition authority scents blood

The DG may find that FRAND commitments are so weak, that it is not the tool he needs to keep these patentees in line.

David Newman, Arnstein & Lehr on 16 Feb 2012 @ 14:23

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