Google, FTC finalize settlement over Motorola patents

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Google (NASDAQ:GOOG) finalized its settlement with the U.S. Federal Trade Commission, under which Google has agreed to no longer seek sales bans on products that infringe on the standards-essential patents it owns. The FTC set up an arbitration process for patent complaint as part of the settlement.

The settlement between Google and the FTC, which was initially announced in January, was the result of a 20-month antitrust investigation by the FTC into Google's business practices. The settlement was finalized after the FTC received 25 comments from competitors and interest groups. The FTC concluded Google was not harming the Internet search market through its practices.

However, part of the investigation revolved around Google's $12.5 billion acquisition of Motorola Mobility, and Google's use of Motorola's patents. In essence, the FTC found Google guilty of abusing its patents for wireless standards, which are supposed to be licensed at reasonable royalty rates to others. As part of the settlement, Google agreed to license its standards patents on FRAND, or fair, reasonable, and non-discriminatory, terms.

The FTC settlement has established an arbitration program that makes it more difficult for Google to use the threat of injunctions in patent battles.  "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," the FTC said in a letter explaining the settlement. "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."

Google last year said it valued Motorola's "patents and developed technology" at $5.5 billion, according to a regulatory filing with the Securities and Exchange Commission. Google acquired a portfolio of more than 17,000 wireless patents when it bought Motorola, and had said it would use the patents to shield licensees of its Android software from patent litigation, but that strategy has so far had a mixed record in court.

The European Commission sent a preliminary antitrust complaint to Motorola, alleging that the company is abusing its dominant position by seeking an injunction against Apple (NASDAQ:AAPL) in Germany for infringing on its wireless standards patents.

Of late, Google has focused less on Motorola's patents and more on reviving the company's devices business. Motorola is expected to announce its new flagship smartphone, the Moto X, at an event on Aug. 1, part of a series of devices the unit will unveil in the coming months. The company has also embarked on a major new advertising campaign for the Moto X, which will be assembled in a plant in Ft. Worth, Texas.

For more:
- see this FTC order (PDF)
- see this GigaOM article
- see this The Hill article

Related articles:
Google's Motorola unfairly using patents as weapons against Apple, EU charges
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Google to stop using patents as weapons as part of FTC settlement
Google: Motorola's patents worth $5.5B