Legal Business Blogs

Smartphone wars: Slaughters, Cleary and Freshfields lead for Motorola and Apple in EU’s verdict to level playing field

The latest instalment of the smartphone wars has seen Slaughter and May and Cleary Gottlieb Steen & Hamilton face Freshfields Bruckhaus Deringer as the European Union takes steps to reduce the seemingly never-ending and costly trail of patent disputes, saying that Motorola Mobility broke EU law by trying to use its patents to block sales of Apple products in Germany.

The decision by EU competition commissioner Joaquin Almunia this week found that smartphone manufacturer Motorola misused the standard essential patent and breached EU antitrust rules by using an injunction obtained against Apple in Germany in an attempt to create hold ups in the German court, thereby deliberately impeding competition.

The Commission said that the move constituted an abuse of dominant position. Motorola must now reach a fair licensing agreement with Apple within 12 months.

Motorola was represented by Slaughter & May Brussels competition partner Claire Jeffs. Cleary Gottlieb advised Motorola as co-counsel, with London-based competition partner Maurits Dolmans leading alongside associate Ricardo Zimbron.

Freshfields Bruckhaus Deringer Brussels-based competition and antitrust partner Frank Montag advised Apple alongside London-based antitrust partner James Aitken.

Dolmans said: ‘The Commission decision established a precedent that owners of essential patents, who have promised to license these on fair, reasonable and non-discriminatory terms, cannot obtain injunctions against users who are willing to take a license on those terms. This is now the law for everyone, in jurisdictions as diverse as the US, the EU and China.

‘The next and increasingly important concern, is producers who transfer patents to non-practicing entities (sometimes called “trolls”), giving them incentives to go after their competitors. This is an unfortunate trend of patent misuse. If nothing is done about it, it could become a serious barrier to innovation.’

The Commission’s head of competition Joaquín Almunia added: ‘The so-called smartphone patent wars should not occur at the expense of consumers. This is why all industry players must comply with the competition rules. Our decision on Motorola, provides legal clarity on the circumstances in which injunctions to enforce standard essential patents can be anti-competitive.’

In January, Google agreed to sell Motorola Mobility to Lenovo for $2.9bn, having acquired it in 2011 for $12.5bn, which marked a significant high point in the smartphone patent bubble.