EUROPEAN COMMISSION CASE AT.39985 - MOTOROLA - ENFORCEMENT OF GPRS STANDARD ESSENTIAL PATENTS (Only the English text is authentic) ANTITRUST PROCEDURE Council Regulation (EC) 1/2003 Article 7 Regulation (EC) 1/2003 Date: 29/04/2014 This text is made available for information purposes only. A summary of this decision will be published in all EU languages in the Official Journal of the European Union. Parts of this text have been edited to ensure that confidential information is not disclosed. Those parts are replaced by a non-confidential summary in square brackets or are shown as […]. EN EN EUROPEAN COMMISSION Brussels, 29.04.2014 C(2014) 2892 final PUBLIC VERSION COMMISSION DECISION of 29.04.2014 addressed to Motorola Mobility LLC relating to proceedings under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement Case AT.39985 - Motorola - Enforcement of GPRS standard essential patents (Only the English text is authentic) EN EN TABLE OF CONTENTS 1. Introduction .................................................................................................................. 2 2. The undertakings concerned ........................................................................................ 3 2.1. Motorola ....................................................................................................................... 3 2.2. Apple ............................................................................................................................ 4 2.3. Other undertakings ....................................................................................................... 5 2.3.1. Google .......................................................................................................................... 5 2.3.2. Samsung ....................................................................................................................... 5 3. Procedure ...................................................................................................................... 5 4. Background .................................................................................................................. 6 4.1. Patent rights and their enforcement within the EEA .................................................... 6 4.1.1. Means of redress for infringements of IP rights under the Enforcement Directive ..... 8 4.1.2. Permanent injunctions .................................................................................................. 8 4.1.3. Damages ....................................................................................................................... 8 4.1.4. The loser pays principle ............................................................................................... 9 4.1.5. Proportionality of remedies and safeguards against abuses ......................................... 9 4.2. Standards, standard-setting organisations and standard essential patents .................... 9 4.2.1. Standards ...................................................................................................................... 9 4.2.2. Standard-setting organisations ..................................................................................... 9 4.2.3. Standard essential patents .......................................................................................... 10 4.3. The European Telecommunication Standards Institute (ETSI) ................................. 10 4.3.1. The ETSI IPR Policy .................................................................................................. 11 4.3.2. ETSI and standard essential patents ........................................................................... 11 4.3.3. Commitment to license on FRAND terms and conditions under ETSI rules ............ 12 4.4. Standardisation and Union competition law .............................................................. 14 4.5. The "Orange Book" judgment of the Bundesgerichtshof and its application in the SEP context by the lower German courts .................................................................. 15 5. Facts ........................................................................................................................... 16 5.1. The evolution of 2G technologies .............................................................................. 16 5.2. Motorola's participation in the standardisation of GPRS ........................................... 17 5.3. Motorola’s Cudak GPRS patent ................................................................................. 18 5.4. Motorola's licensing practices in relation to its telecommunication SEPs ................. 19 5.5. Motorola's licensing agreements with chipset manufacturers relating to its telecommunication SEPs ............................................................................................ 20 5.5.1. The licensing agreement between Motorola and Chi Mei ......................................... 20 5.5.2. The licensing agreement between Motorola and Qualcomm ..................................... 20 EN EN 5.6. The patent litigation between Motorola and Apple in Germany ................................ 21 5.6.1. October 2010 – March 2011 ...................................................................................... 21 5.6.2. April 2011 – August 2011 .......................................................................................... 22 5.6.3. The German injunction proceedings and Apple’s six Orange Book offers ............... 22 5.6.3.1. First Orange Book Offer of 20 July 2011 .................................................................. 23 5.6.3.2. Second Orange Book Offer of 4 October 2011 .......................................................... 24 5.6.3.3. Third Orange Book Offer of 10 November 2011 ....................................................... 25 5.6.3.4. The Mannheim District Court judgment of 9 December 2011 and the first application to stay the enforcement of the injunction ................................................ 26 5.6.3.5. Fourth Orange Book Offer of 14 December 2011, Fifth Orange Book Offer of 5 January 2012, and Apple's first application to stay the enforcement of the injunction.................................................................................................................... 26 5.6.3.6. Sixth Orange Book Offer of 30 January 2012 ........................................................... 28 5.6.3.7. The second application to stay the enforcement of the injunction ............................. 29 5.6.3.8. The alleged infringement of the Cudak GPRS SEP by the iPhone 4S....................... 30 5.6.4. The Settlement Agreement ......................................................................................... 32 5.7. The rate-setting proceedings and Motorola's further damages action before the Mannheim District Court ........................................................................................... 33 5.8. The US Federal Trade Commission (FTC) Consent Order of 24 July 2013 ............. 35 6. Relevant market ......................................................................................................... 35 6.1. Principles .................................................................................................................... 35 6.2. Product market ........................................................................................................... 36 6.2.1. Principles .................................................................................................................... 36 6.2.2. The relevant input and output markets ....................................................................... 36 6.2.3. The relevant SEP ........................................................................................................ 37 6.2.4. The relevant technology market ................................................................................. 37 6.2.5. Demand-side substitutability ...................................................................................... 37 6.2.5.1. No substitutability by 3G or 4G standards ................................................................. 38 6.2.5.2. No substitutability by any other 2G standard ............................................................. 39 6.2.5.3. The GPRS standard cannot be lawfully implemented in the EEA in devices without access to Motorola's Cudak GPRS SEP ........................................................ 41 6.2.6. Supply-side substitutability ........................................................................................ 41 6.2.7. Conclusion on the relevant product market definition ............................................... 41 6.3. Geographic market ..................................................................................................... 42 7. Dominance ................................................................................................................. 43 7.1. Principles .................................................................................................................... 43 7.2. Motorola's market share ............................................................................................. 43 EN EN 7.3. It is indispensable for manufacturers of mobile devices to comply with the GPRS standard ...................................................................................................................... 43 7.4.