NetworkWorld - "Google, Microsoft and Apple Letters Aim to Keep Regulators at Bay"

In light of last year's patent auctions of historic proportions and Google's ongoing attempt to purchase Motorola Mobility, major players in the mobile industry are attempting to assuage anti-trust jitters at standards bodies such as the IEEE. Microsoft, Google and Apple have all used various means to make the case that they won't use the patents they acquire to create a monopoly.

GPC's Alexander Poltorak spoke about why standard essential patents are seen as a threat - and why their big tech owners aren't likely to request an injunction when asserting them. ("Google, Microsoft and Apple Letters Aim to Keep Regulators at Bay", February 9, 2012)

Article excerpt: All of the letters [sent by Apple, Google and Microsoft] specifically address licensing patents that are considered essential to standards. That's important because if a company were to use the courts to prevent competitors from selling products because of the infringement of a patent that is required in a standard, that company could essentially create a monopoly, said Alexander Poltorak, CEO and chairman of General Patent Corporation, a patent litigation firm.

The letters are aimed are reassuring regulators and standard setting bodies that the companies don't intend to go that far, he said.

"To attempt to assert a standard essential patent and ask for an injunction is to wave a red flag in front of a bull. It's to invite an antitrust inquiry, and nobody wants to do that," he said.

Each of the letters addresses the companies' policy around injunctions. Microsoft's is the most straightforward. It simply says it will not seek an injunction or exclusion order against any company based on an essential patent.

There's a good reason that Microsoft's statement is much clearer than the others. "It's really laughable," Poltorak said. "They can't possibly seek an injunction because they operate under the shadow of the Justice Department." Even though Microsoft is no longer subject to DOJ oversight following its antitrust investigation, the agency continues to closely watch the software giant. Microsoft agreed to DOJ oversight, which ended last year after 10 years, after the agency found the company violated antitrust laws.

A careful read of the Apple letter shows that it suggests a clever arrangement, he said. "They are making these statements on the surface that sound very good but if you start looking closely you see that they leave a lot of room for themselves to play this game the way it works for them," he said.

Apple said when it is negotiating with another party for essential patents, the royalty should be based on the industry average sales price for a basic communications device that does both voice and data. Should Apple's iPhone, one of the most expensive phones on the market, be used to set that average, this policy would require a company that makes very low end phones to pay a higher rate and would allow Apple to pay a lower rate should it license patents from a company that sells cheaper phones, Poltorak said. It's more common for a licensing deal to be based on the price of the device that uses the patent.

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