FRAND. The acronym stands for Fair, Reasonable and Nondiscriminatory terms, and often applies to technology licensing obligations embraced by an industry group. A commitment by Google (NASDAQ:GOOG) to FRAND is in fact key to its proposed acquisition of Motorola Mobility (NYSE:MMI), whose regulatory approval in Europe and the U.S. is fast approaching.
According to Bloomberg, the U.S. Justice Department appears likely to give antitrust approval on the deal, with a ruling expected next week. European approval is less certain, with regulators raising concerns about whether Google would adopt FRAND licensing terms for Motorola’s 17,000-plus patents, or might instead leverage the patents to launch courtroom battles against Apple (NASDAQ:AAPL) and other mobile competitors.
In response to those concerns, Google reportedly sent letters to the European Telecommunications Standards Institute (ETSI) and other governing bodies, including IEEE (Institute of Electrical and Electronics Engineers), seeking to reassure them that the company will not show bias in favor of Android handset manufacturers.
In the letter, which was excerpted by CNET, Allen Lo, Google’s deputy general counsel, wrote: “Therefore, 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.” Lo also pledged that Google’s purchase of Motorola would not “otherwise adversely affect manufacturers or consumers.”
No litigation? Not necessarily
In other words, Google is seeking to reassure regulators that it does not intend to show bias against competitors or to use Motorola’s patents in an aggressive manner by seeking to mount legal attacks against competing hardware and mobile operating systems. On the other hand, Businessweek notes that Google has also said that it would “still consider seeking court injunctions to block companies from using its technology if it couldn’t resolve “standard compliant” patent disputes.” So the company isn’t going to let competitors roll over it, either.
The European Commission will rule by Feb. 13 whether to allow the $12.5 billion purchase; it also has the option of opening a 90-day, in-depth probe of the proposed deal. Google shares were trading at $610 on Thursday (compared to $575 a few weeks ago) as the key decision dates approach, perhaps signaling investor confidence that approval will be granted.
While Google’s purchase of Motorola may still be all about MMI’s patent portfolio, it may come down to being a defensive move—acquiring Motorola’s patents is a way for Google to defend itself against a mobile war that seems to be fought in the courtrooms as much as on retailers’ shelves. Google’s corporate motto used to be “Do No Evil,” but the company’s strategy in seeking approval for its Motorola acquisition seems more along the lines of “Be Neutral.”
As of this writing Brad Moon did not own a position in any of the stocks named here.