The Federal Trade Commission announced on Wednesday that the agency and Google have agreed to a final settlement over the company’s alleged abuse of patents it obtained from Motorola.
The deal came about after competitors accused Google of refusing to license standards-essential patents known as “FRAND” patents. These are considered essential to an industry — in this case for smartphones and tablets — and those who hold FRAND patents must license them on Fair, Reasonable And Non-Discriminatory (FRAND) terms.
Competitors claimed that Google did not engage in good faith negotiations but instead used the FRAND patents to try to obtain injunctions to ban them from the market. Google has claimed the competitors refused to pay reasonable terms.
The terms of the settlement, under which Google doesn’t have to admit fault, create an arbitration scheme that makes it harder for Google to use the threat of injunctions. Here’s a key passage from a letter explaining the ruling:
The order strikes a balance. It enables Google and implementers to negotiate a FRAND rate while protecting both parties from opportunistic behavior that is inconsistent with the FRAND agreement. An implementer can negotiate licensing terms without facing the threat of an injunction, but Google is not barred from responding to an implementer that misuses the protections in the order to delay rather than facilitate entering into a FRAND license.
The FTC letter came after 25 public comments from competitor companies and interest groups.
The patents have been something of a headache for Google after it acquired them by buying Motorola in late 2011 for $12.5 billion. The acquisition — and the patents — were supposed to give Google ammunition to counter-attack a spate of intellectual properties launched by Microsoft and other rivals; instead, they have often landed Google in regulatory trouble instead.
In the bigger picture, the FTC settlement is just one ripple in the global fight over smartphone patents, which is driven in large part by a US patent system run amok.
Here’s the entire FTC letter describing the settlement: