A German court has ruled in favor of Apple and dealt a crucial blow to Motorola Mobility in the ongoing patent battle between the two. The Karlsruhe Higher Regional Court decided today that Motorola Mobility can no longer enforce its standard-essential patent injunction against Apple in Germany during the ongoing appeal.
On the surface, that doesn’t sound like a very decisive blow. But, at the heart of the matter are patents essential to the standards used by all similar devices known as FRAND (Fair, Reasonable, and Non-Discriminatory). Apple has submitted a proposal to license the technology in question under FRAND terms, and the German court has essentially determined that for Motorola to reject the offer would amount to a violation of antitrust regulations.
Google and Motorola were betting heavily on enforcing these standards-essential patents against foes like Apple and Microsoft, and it was hoping that the legal framework in Germany would give it the best chance at establishing a precedent it could use as leverage in other legal arenas. It appears the gambit is doomed to fail.
Florian Mueller, a patent and intellectual property analyst, doesn’t hold back any punches in his assessment of this decision on his blog. “This is so huge that it even begs the question of whether Google's strategy for its $12.5 billion purchase of Motorola Mobility has failed before the deal is even formally closed (they're still waiting for some regulatory approvals).”
Mueller goes on to say that if Google was hoping that acquiring Motorola would give it some sort of legal advantage in the ongoing Android patent wars, it should seriously consider paying the $2.5 billion breakup fee and walking away from the deal. He also says that he doesn’t believe Google will do so regardless of the merits of such a strategy simply to save face and avoid embarrassment.
I asked Mueller if he thinks there will eventually be a “winner” in these battles, or if the rival companies will simply spend billions dancing with each other in court to reach some sort of legal stalemate. Mueller responded, “So far, no one has been able to deal a lasting knockout blow, but I believe Apple is likely to achieve some product differentiation in its favor through continued enforcement, and Microsoft will ultimately receive royalties on 100% of all Android devices sold in the United States and some other key markets.”
If that turns out to be true, it may have a lasting impact on the Android ecosystem. The cost of manufacturing smartphones and tablets built on the “free” Android operating system could get quite costly when weighed down with licensing fees and royalties. Vendors may eventually seek less encumbered mobile platforms to work with, or pass those costs on in the form of higher prices on Android devices.
The game is not over--not in Germany, and not globally by a long shot. There is still a lot of back and forth and small victories on both sides of the Android patent war. Only time will tell where the chips will eventually fall.