The Federal Trade Commission is investigating whether Google's Motorola Mobility unit is improperly blocking access to industry-standard technology that should be licensed to competitors according to traditional industry and legal practice.
A source says Google has been served by the FTC with a civil investigative demand -- similar to a subpoena. The news was reported earlier by Bloomberg, which said the government is also seeking information from Apple and Microsoft.
The issue involves so-called frand patents -- "fair, reasonable, and nondiscriminatory" -- that cover technology essential to the smooth operation of an industry. As CNET's Roger Cheng has explained, the idea "is based on the principle that fair licensing of intellectual property is often needed because sometimes certain ideas and patents just need to be shared for everything to work together properly" -- i.e., for things like smartphones from rival companies to work with each other. In a kind of quid pro quo arrangement, companies that produce technology that's adopted by the industry as a standard agree to license that technology at a fair rate.
Lately however, Google rivals, such as Microsoft and Apple, have been crying foul over Google's and Motorola Mobility's willingness to play by these rules.
Last month, a judge for the U.S. International Trade Commission, a federal agency with the power to enforce bans on products shipping to the U.S., said Microsoft's Xbox console should not be allowed into the states because it infringed on Motorola patents -- a determination the judge had made in an earlier ruling. In response to that earlier ruling, Microsoft told CNET that it "remain[ed] confident the commission will ultimately rule in Microsoft's favor in this case and that Motorola will be held to its promise to make its standard-essential patents available on fair and reasonable terms."
Not long after the recommendation for an Xbox ban, the Federal Trade Commission sent a letter to the ITC saying efforts to block imports of the Xbox and of Apple's iPhone could cause "substantial harm" to consumers, competition, and innovation, and suggested that companies should be limited in their ability to block competitors' imports based on frand patents.
And not long after the FTC sent its letter, a federal judge presiding over a different case questioned an Apple bid for a ban against Motorola, but at the same time chastised Motorola's legal team for its own injunction strategy, saying, "I don't see how you can have injunction against the use of a standard-essential patent." In later throwing out the case -- in what was ultimately a win for Motorola -- the judge nevertheless made a point of calling attention to the frand issue, saying, "I don't see how, given FRAND, I would be justified in enjoining Apple from infringing the '898 [patent] unless Apple refuses to pay a royalty that meets the FRAND requirement."
In its report today, Bloomberg said the FTC investigation is also looking at Google's decision to continue Motorola lawsuits that involve frand patents. When Google closed its acquisition of Motorola back in February, it promised to fairly license Motorola patents.
Back in April, the European Commission opened an investigation based largely on complaints from Apple and Microsoft on whether Motorola had breached its promise to offer fair licensing of frand patents.
Bloomberg said today that Microsoft confirmed that it had received the FTC's civil investigative demand but declined to comment further. The news agency also said the FTC had declined to comment on the investigation.
Google sent CNET the following statement: "We take our commitments to license on fair, reasonable, and nondiscriminatory terms very seriously and are happy to answer any questions" from the FTC. Apple declined to comment. We haven't heard back from the FTC or Microsoft, but we'll update this post if we do.
Bloomberg's report today said Kirk Dailey, vice president of intellectual property for Motorola Mobility, said on June 20 that Microsoft and Apple "seemingly won't accept any price" for licensing frand patents held by Motorola.
Update, June 30, 8:31 a.m. PT: Recasts top of story based on confirmation, from a source, of FTC contact with Google. Adds "no comment" from Apple. Adds Google statement.