Google's Motorola hypocrisy: Corporate turf wars and collateral damage to innovation
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After months of talk, Google’s acquisition of Motorola Mobility may very well be approved by the US Department of Justice next week. The finalizing of the $12.5 billion purchase means Google will not only be obtaining Motorola’s cell phone assets, but also its 17,000 mobile patents, which Google needs now more than ever.
As companies such as Apple and Microsoft sue Google for patent infringement, it becomes more vital for Google to armor itself with patents, which can help it fight threatening lawsuits. Interestingly, before Google was on the path of acquiring so many patents, it had publicly stood against patent litigation between competing companies. Now, however, Google has no intentions of revising Motorola’s demands for patent royalties and harsh injunctions. For many people, this is a sign of hypocrisy and potential monopoly as Google has always claimed to follow and support FRAND, “fair, reasonable and non-discriminatory,” licensing, which is meant to promote competition within any industry.
Motorola demands 2.25 percent in royalties on every Apple and Microsoft product in return for licenses to wireless patents. One patent in particular seems to be very problematic for Apple, since Motorola was able to force Apple to remove certain products from their German online store temporarily. In order to continue selling those products, Apple will first have to pay Motorola $120 million. Thus, If a company does not pay the high royalty fees, then it will be faced with harsh injunctions that could remove products from sales.
Now, it is important to realize that no singular technology company owns all the patents it needs to create and sell an advanced tech product, like a cell phone. While Motorola might have a patent on one feature of the phone, Apple might have one on another feature. So if Apple, for example, wants to makes a new mobile device, it pays multiple companies royalty fees for a license on their patents. But what if each company asked for 2.5 or 3 or 5 percent in royalties? With the number of patent licenses Apple needs to make that device, it would be spending much more on litigation fees than the profit it would make. At some point, companies must draw the line between return on investment and futile money drains.
Nevertheless, just yesterday, Google sent a four page letter to President Gordon Day of the Institute of Electrical and Electronics Engineers (IEEE), explaining how it plans to carry on Motorola’s “reasonable terms and conditions” regarding essential patent claims and corporate control. The letter states, “This letter is intended to assure you and any potential licensees that, following Google’s acquisition of MMI, Google will honor MMI’s existing commitments to license the acquired MMI Essential Patent Claims on RAND terms, as required by IEEE rules and consistent with MMI’s longstanding practice.”
It seems competing companies will have no luck in seeing that percentage reduced and the IEEE has not yet released an official response. It will need to closely analyze the letter and weigh the outcomes for the respective companies, in order to make a fair judgment. Given the almost weekly squabbles between mobile and internet giants over patent infringement, consumers must wonder how much more profitable a company could be if they devoted that same time and money into research and development. While it is perfectly understandable and often necessary to protect inventions against copyright infringement, the complexity of some of today's technology makes such efforts a vainglorious waste of news headlines, company profit margins and investor stress.
Imagine the exponential gains if Apple, Google and other megaliths diverted the monetary capital they spend fighting corporate ego turf wars into the intellectual capital and high-tech materials of tomorrow's science-fiction made flesh. We would probably be enjoying our iPad 5s and performing Google searches with near field communication brain imaging scans by now. One can only hope that the fat cats do not so thoroughly cannibalize each other as to become complacent, raking in the harvest with their cash cow patent manure while technology is thrown into the compost fires.