Google just sent letters out to various standards organizations, including the IEEE, promising to license Motorola's patents related to standards like 3G and H.264 after it completes its planned acquisition of the company. The move doesn't signal any change in policy, but is rather a bit of well-timed showmanship by Google: Motorola already has obligations to license "essential" patents to various standards under fair, reasonable, and non-discriminatory (FRAND) terms, but the deal is being closely scrutinized by European regulators as Motorola fights various FRAND-related lawsuits in courts around the world. A particular issue is whether Motorola has been too aggressive in seeking injunctions against products that infringe its FRAND patents instead of negotiating appropriate royalties as required; Apple recently had to pull the iPhone and iPad 3G from its online store in Germany for a short while due to Motorola's enforcement of a patent essential to GPRS data transmission. Similar issues have prompted an EU investigation of Samsung's licensing practices — exactly the sort of heat Google is trying to avoid.
In its letter to the IEEE, Google expressly states that it understands "MMI is prepared to grant licenses for Essential Patent Claims with a maximum per-unit royalty of 2.25%" and that Google "will continue to honor MMI's past practice with regard to MMI's maximum go-forward per-unit royalty rate." On the controversial issue of using these standards patents to seek injunctions against competitors, Google's position is that it will not first resort to an injunction, but it reserves the right to do so if its licensing offer is not accepted:
Google will make a final offer of its RAND license terms for products covered by the acquired MMI Essential Patent Claims, without prejudice to any right to recover damages for past unlicensed use. Google will make this offer before seeking injunctive relief for infringement of the acquired MMI Essential Patent Claims (i) that is the subject of litigation commenced after the date of this letter or (ii) introduced into existing litigation after the date of this letter. As described above, the offer may include a reciprocal grant back license for Google's products to the licensee's Essential Patent Claims for the same standards, also on RAND terms. The offer shall be open for at least 30 days, provided that the counterparty agrees not to seek injunctive relief against Google's products based on the counterparty's own standard essential patents reading on the same standards during that period. If the counterparty accepts Google's RAND offer, Google will not apply for injunctive relief based on the acquired MMI Essential Patent Claims.
We probably shouldn't expect this development to end the current patent disputes between companies like Apple and Motorola anytime soon. Motorola has apparently already offered Apple this license rate of 2.25% and Apple has rejected it as fundamentally unfair and contrary to the principles of FRAND licensing commitments. Considering that MMI's 2.25% licensing demand is tied to the overall price of the iPhone, and not just the relevant chip within the phone, it's hard to fault Apple's objections.
There's also some question of whether it's fair to demand potential licensees of its FRAND patents to pay for what's called a "portfolio license" that includes other non-standards-essential patents. Portfolio licensing is common in the industry — it's how Microsoft licenses its patents to Android OEMs — but mixing FRAND and non-FRAND patents together appears to have caught the eyes of EU regulators as a potentially dangerous antitrust issue. A source close to Google told us that the company "will not require prospective licensees of Motorola's FRAND patents to license non-FRAND patents" after the deal closes. Consistent with this, Google's letter indicates that all FRAND licensing options "will be independent of any broader cross-license that Google and the prospective licensee may voluntarily choose to discuss."
Matt Macari contributed to this report.