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The most interesting latest news on the topic: DoJ |
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Apple CEO Tim Cook said he'd "rather settle a patent lawsuit" than fight legal battles to a bitter finish, but a kinder, gentler Apple won't show up in the courtroom. |
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Google and Facebook hit record levels of spending on lobbying efforts, as the Internet giants ramp up political influence in light of increasingly intense regulatory scrutiny. |
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 Tags: Apple, Editorials & Opinion, In Brief, Legal, Microsoft, Patents, RIM, Sony Ericsson, Android, DoJ, Nortel, Rockstar Bidco
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12 March 2012 |
The Justice Department approved the $4.5 billion purchase of over 4,000 Nortel patents to major Android rivals like Apple and RIM, guaranteeing no end in sight to the legal battles entangling the mobile industry. In Brief boils down complex events to give you the heart of the matter -- today and what it means for tomorrow -- clearly and simply. What's Happening: The DoJ's review of the record-setting patent purchase of 4,000 patents, previously owned by the now-bankrupt Nortel Networks, expired without comment by the regulator. Rockstar Consortium, a partnership between Apple, Microsoft, Sony, Ericsson and RIM that won the portfolio at auction, is now free to use its purchases. The Nortel intellectual properties -- covering technologies in wireless, wireless 4G, data networking, among other technologies -- went up for sale last year as a prized commodity in an industry increasingly embroiled in a web of patent litigation. The DoJ's official go-ahead clears the way for the Rockstar Consortium to use the patents freely. What's Really Happening: The Nortel patents were purchased by an unusual partnership between Apple, RIM, Microsoft and Sony. These partners are generally rivals in the marketplace, but most are all Android rivals, now armed with a warchest of intellectual property. What's Next: The DoJ's green light will likely lead the way to a new rash of lawsuits targeting Google's mobile OS, continuing a growing wave of patent litigation against Google and its Android phone maker rivals. The Nortel IP covers some key areas in technology, particularly in wireless 4G. With the DoJ approval, Apple et al. could begin implement many of the Nortel patents in new features and software, but will likely also begin filing more infringement suits against Android phone makers, to either force sales bans or open up negotiations for settlements and licensing. The rash of patent lawsuits against Android is poised to escalate, and the Android rivals could become even more aggressive in their legal strategy to hobble Google. However, Google has boosted its patent game, acquiring Motorola Mobility earlier this year and giving the search giant its own strong portfolio of patents. Google can likely draw on its own patents to create software and Android capabilities free of patent infringement, or begin to file its own suits against rivals. The Takeaway: In an industry where the competition between device makers is fought in courtrooms as well as the market, the DoJ's approval of Rockstar's purchase officially arms a group of Android rivals with a formidable weapon. Most of the patent battles have led to few definitive victories, but even one settlement can have lasting, concrete consequences -- Microsoft, for instance, collects a sizable portion of profits on HTC Android phones for its use of its patents. The Nortel patents, especially those covering key technologies like 4G, may lead to more of these licensing settlements in the future. At this juncture, the focus on patent suits is beginning to shift from outright infringement accusations to questions over fair use of industry standards software. By covering key pieces of technology crucial to the mobile industry, the Nortel patents may get caught up in this debate. However Apple and company chooses to wield their patents, one thing is clear: the importance of patents in the mobile industry will continue to grow, and those armed with the strongest portfolios will likely wield the most influence as the patent battles evolve. |
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Apple is fighting back against allegations of e-book price-fixing, as class action lawsuits and regulatory scrutiny gain momentum. In Brief boils down complex events to give you the heart of the matter -- today and what it means for tomorrow -- clearly and simply. What's Happening: A recent court filing, obtained by Paid Content, reveals insight into Apple's position on potential e-price fixing charges. Apple essentially argues it has no incentive for high e-book prices because it is a minor player in an industry dominated by Amazon, which holds 90 percent market share. The brief, filed last week in response to a class action suit against Apple, defends Apple against charges of conspiring with publishers to fix the price of e-books. The revelations come to light as the Department of Justice mulls antitrust action on the Cupertino, Calif.-based company and its iBooks partners over high e-book prices. What's Really Happening: Apple aims to protect its place in the burgeoning e-books market. It made substantial advances when it forged a partnership with major publishers over distributing e-books on the iPad, but the company is feeling the heat over the higher prices that resulted after the agreement. The brief is a delicate balancing act against antitrust scrutiny: By minimizing its threat against major rival Amazon, Apple essentially argues its practices are not anti-competitive. What's Next?: The class action lawsuit will continue through the courts, but potential antitrust action is more ominous for the company. Apple is expected to continue to publicly defend its position and minimize the damage wrought from revelations in Walter Isaacson's biography of Steve Jobs. In the book, the Apple founder asserted a plan to boost Apple into digital books and help publishers regain control of the market from Amazon. Amazon won't rest easy, however. Already willing to strong-arm publishers into lowering prices, the e-retailer will likely continue to assert itself more aggressively, especially knowing its Cupertino rival could face major legal roadblocks in the future. The Takeaway: The battle over e-book prices is one of the most contentious in digital publishing, especially as it begins to establish standards that define the very value of e-books. The issue will continue to escalate, and lawsuits and regulatory action could prove a seminal moment in the growing market. The DoJ's scrutiny is a significant development, and a lawsuit finding Apple and its partners guilty of price-fixing will derail its hopes in digital publishing, and could even damage its long-term reputation among consumers. Apple must tread carefully now. Apple's reputation as a market competitor is formidable, but the DoJ is no mere market rival. |
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The U.S. Justice Department may sue Apple and a handful of major book publishers, accusing them of collaborating to keep e-book prices high. Sources tell The Wall Street Journal the U.S. Justice Department is accusing Apple and 5 book publishers of essentially creating an agreement among themselves to price books at a level that profits retailer and publisher while barring publishers from offering lower prices at rival retailers. Whether the situation gets resolved through settlement or court case, the outcome is likely to change the price of e-books as the feds look to break up the potential antitrust ring, especially since European regulators are reportedly also looking into the case. Meanwhile, the growing e-book industry will level off, delivering affordable consumer prices that don't sacrifice value for the producers. The involved companies include Apple, Simon & Schuster, Hachette Book Group, Penguin, Macmillan and HarperCollins Publishers. The Justice Department has examined allegations of antitrust violations for some time, as publishers sought to partner with Apple as a way to take advantage of the exploding popularity of tablet reading. As described in the release of the third-generation iPad, reading on the device is one of its most popular uses, according to Apple's survey of its consumers. If a settlement or court case determines the current pricing model is found insufficient or violating antitrust laws, it could vastly change how Apple operates in a vital modern industry. According to the American Association of Publishers, e-book sales hit $970 million in 2010, a growing market that makes up for a steep decline in book sales, especially as retailers like Borders fade away. While there's no sign the antitrust suspicions will soon be resolved, either through a settlement or an expensive, lengthy court battle, the allegations against Apple and the publishers have the potential to drastically change how they determine prices, sending a ripple effect through the market. Self-publishing throws a curve, albeit a small one, into the future, a process Amazon is looking to jumpstart. But the model self-publishing presents threatens traditional publishing houses, and their pricing arrangements, as authors seek to publicize their work on popular platforms like the Kindle. E-book pricing and associated concerns culminated in 2010 when Apple released the original iPad. Book publishers, in conjunction with the powerful Cupertino, Calif. brand, set "agency" model pricing that allows publishers to set the price and gives Apple a 30 percent cut. The model competes with Amazon's system of offering $9.99 books, often selling best-selling books less than they paid for them, which publishers worried would not be enough to sustain the business and kept other retailers from joining in out of fear of being unable to compete. But the agency model allowed retailers and publishers to take profits, and publishers say the model helps increase competition by letting more electronic retailers take advantage of the opportunity. While there is no word on how long the Justice Department will take in addressing the e-book pricing concerns, if officials consider the agency model unfit it could lead to lower prices, and more opportunity for new electronic retailers to enter the market on other tablet platforms. Regardless of the resolve, Apple, and its publishing counterparts, are likely to change their arrangement if federal officials are wary of monopolistic behaviors. |
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Google's Motorola purchase received U.S. approval, but government regulators will watch closely to prevent patent abuses, curtailing Google's new-found power. The U.S. Department of Justice sanctioned Google's buyout of Motorola Mobility, after the European Commission's decision to do the same. Both regulatory bodies granted the acquisition with the same condition that they intend to watch Google and Motorola for patent abuse, and will not abide an onslaught of litigation as a result of the deal, which grants Google access to Motorola's hefty patent portfolio. The Department of Justice requires Google license its Motorola patents under fair and reasonable use standards, or FRAND. Google previously assured the European Commission it intends to honor FRAND, which helped the company gain needed approval. Regulators are making it clear with its warning that it will hold Google to its promise. Compared to its rivals, Google lacked a strong patent collection before this deal. Google assisted HTC, Samsung and another Android partners in proxy battles against Apple, since the search giant lacked enough ammunition to enter into direct conflict with its biggest adversary. The Motorola buyout, however, equips Google with valuable standards essential patents, or SEP, potent enough to directly fight Apple. Some analysts believed the Motorola patents would help Google launch an attack of its own against rivals, but the regulator provisions dampen the chances that Google engages in any overt or aggressive legal moves against its business opponent. "The division continues to monitor the use of SEPs in the wireless device industry, particularly in the smartphone and computer tablet markets," said the Department of Justice, outlining its conditions after approving the deal. "The division will not hesitate to take appropriate enforcement action to stop any anticompetitive use of SEP rights." The Department of Justice also said it will focus on enforcing antitrust laws to prevent larger companies from dominating the market, therefore hurting consumer choice. This regulatory vigilance comes at a time when the big companies are, indeed, looking to consolidate power and patents as market battles find their way into the courtrooms. Android phone makers and Apple often clash in court as the Android OS comes under attack for patent infringement, but the smartphone giants also join forces to squash the competition, using their hefty patent arsenals. Google's deal with Motorola gives the company extra ammunition in court cases like this, which damages chances for smaller companies and start-ups to overcome patent charges. Even under the watchful eyes of regulators, Google's new patent power has the potential to stifle competitors, especially if it uses them to come to the aid of its Android phone makers in court. Google purchased Motorola to stay competitive as the smartphone industry continues its intellectual property skirmishes. Google could use its newly acquired patents to its advantage, despite regulatory scrutiny. The company will have to tread lightly as it attempts to make the most of the patents it purchased, or government inquiries are likely to continue. |
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U.S. regulators are close to approving Google's $12.5 billion purchase of Motorola, putting the Android maker one step closer to forming a partnership that may change alliances in the industry. The Justice Department may approve the deal as early as Monday next week, according to the Wall Street Journal. The deal, which is also pending approval from the European Commission, would give Google's Android umbrella ownership of Motorola's massive patent portfolio and hardware manufacturing capabilities. The Motorola deal has the potential to upset the current balance of handset makers of other Android devices, though they've previously came out in support of the idea. The idea of Google rolling out Android while making its own phones could affect other device manufacturers using the OS. The deal will give Google hardware capabilities, enabling it to create a device that seamlessly runs Android, perhaps better than other manufacturers and without integration issues. Wary of a software partner becoming a hardware rival, Android makers like Samsung, LG and HTC could choose to pull away from the Google flock, decreasing its overall revenue from Android. They may turn to Windows Phone as it becomes a larger player, helped in part by LTE devices released on AT&T. If Google intends on sustaining Android's growth, it will need to assure Android makers it will support their systems equally. Google will gain 17,000 patents owned by Motorola through the deal, offering Google plenty of access to technologies it can harness to help rebuff a string of existing lawsuits. Still, Google reassured other manufacturers the potential for integrated hardware won't result in favoritism of Motorola. Already Google demonstrated its commitment to helping out other Apple rivals, for instance allowing HTC to sue using its patents. Another outcome of the merger is how it will affect competition between Android-powered phones and Apple if the deal comes through. Once it's released, the hypothetical Google-Motorola phone would directly compete with iPhone from Apple, the only other maker of both a device and operating system besides BlackBerry maker Research In Motion. An integrated device could speak for itself on the shelves of stores. Depending on how integrated the device is, how well it runs, and its design, it could dominate smartphone users on lower-tier carriers, or eat into iPhone sales away on Verizon and AT&T. Once the DoJ signs off the deal, and if it passes through European Commission antitrust measures, a slew of power dynamics could shift indefinitely for mobile manufacturers and the platforms that support them. But Google, already possessing a strong foothold in the operating system marketplace, could be setting the stage to disrupt the makers who helped it get to where it is today. |
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Federal investigators say Google co-founder Larry Page knew ads for unlicensed online pharmacies were illegal but allowed them anyway, suggesting the government may continue to carefully monitor Google's advertisements. Google late last week agreed on a $500 million settlement in a U.S. Justice Department criminal probe about Canadian pharmacies' advertising through Google-owned AdSense. A federal prosecutor today said government investigators sorted through more than four million documents and found numerous emails that they say show Page was aware of the ad sales but didn't stop them. Officials won't release the documents because Google settled the case and a trial was not held. "We simply know it from the documents we reviewed, witnesses that we interviewed, that Larry Page knew what was going on," said U.S. Attorney Peter Neronha, who led the investigation, to The Wall Street Journal. The Canadian pharmacies, which advertised on AdSense for years, had been selling prescription drugs without a doctor's order to customers in the U.S., which violates federal law. It is also against the law for websites to knowingly accept ads for companies or services that are illegal. The Justice Department says Google knew it was potentially violating U.S. law since at least 2003, but didn't take action until federal investigations began in 2009. Although Google told Congress it tried to stop illegal advertisements, Neronha said those efforts amounted to "window dressing." "Suffice it to say that this is not two or three rogue employees at the customer service level doing this on their own," Neronha told the Wall Street Journal. "This was a corporate decision to engage in this conduct." Google over the weekend declined to comment on Page's alleged knowledge about the ad sales. "This issue is not related to current advertising practices," a company spokesman said. "We have settled and we are moving on...it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place." Even though Google admitted wrongdoing in the case, the settlement didn't single out Page or any other executives. Neronha said he doesn't have plans to prosecute Page, but also said the Google CEO, or other executives, are not off limits where prosecutions are concerned. Google has a lot more to lose if the government finds any more problems with its advertising sales. Google's AdSense program dominates mobile advertising, with Millenial Media reporting Google accounts for nearly half of all mobile advertising, a number that will likely continue to grow as more people use smartphones and tablets. But last week's settlement may just be the beginning of Google's legal woes over its advertising practices, as Google is still involved in another, wider federal probe concerning antitrust practices, initiated by the Justice Department after rivals complained Google allegedly skewed search results to favor its advertisers. Because the search giant and the government haven't settled that investigation, Google may face millions more in settlement costs if the Justice Department finds it guilty of antitrust violations. While Google agreed to settle the government investigation over the drug advertisements, Neronha's statements about Page's knowledge of improprieties concerning the sales may indicate the government probe into Google may not end for some time. |
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Federal investigators say Google co-founder Larry Page knew ads for unlicensed online pharmacies were illegal but allowed them anyway, suggesting the government may continue to carefully monitor Google's advertisements. Google late last week agreed on a $500 million settlement in a U.S. Justice Department criminal probe about Canadian pharmacies' advertising through Google-owned AdSense. A federal prosecutor today said government investigators sorted through more than four million documents and found numerous emails that they say show Page was aware of the ad sales but didn't stop them. Officials won't release the documents because Google settled the case and a trial was not held. "We simply know it from the documents we reviewed, witnesses that we interviewed, that Larry Page knew what was going on," said U.S. Attorney Peter Neronha, who led the investigation, to The Wall Street Journal. The Canadian pharmacies, which advertised on AdSense for years, had been selling prescription drugs without a doctor's order to customers in the U.S., which violates federal law. It is also against the law for websites to knowingly accept ads for companies or services that are illegal. The Justice Department says Google knew it was potentially violating U.S. law since at least 2003, but didn't take action until federal investigations began in 2009. Although Google told Congress it tried to stop illegal advertisements, Neronha said those efforts amounted to "window dressing." "Suffice it to say that this is not two or three rogue employees at the customer service level doing this on their own," Neronha told the Wall Street Journal. "This was a corporate decision to engage in this conduct." Google over the weekend declined to comment on Page's alleged knowledge about the ad sales. "This issue is not related to current advertising practices," a company spokesman said. "We have settled and we are moving on...it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place." Even though Google admitted wrongdoing in the case, the settlement didn't single out Page or any other executives. Neronha said he doesn't have plans to prosecute Page, but also said the Google CEO, or other executives, are not off limits where prosecutions are concerned. Google has a lot more to lose if the government finds any more problems with its advertising sales. Google's AdSense program dominates mobile advertising, with Millenial Media reporting Google accounts for nearly half of all mobile advertising, a number that will likely continue to grow as more people use smartphones and tablets. But last week's settlement may just be the beginning of Google's legal woes over its advertising practices, as Google is still involved in another, wider federal probe concerning antitrust practices, initiated by the Justice Department after rivals complained Google allegedly skewed search results to favor its advertisers. Because the search giant and the government haven't settled that investigation, Google may face millions more in settlement costs if the Justice Department finds it guilty of antitrust violations. While Google agreed to settle the government investigation over the drug advertisements, Neronha's statements about Page's knowledge of improprieties concerning the sales may indicate the government probe into Google may not end for some time. |
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Google will pay $500 million to settle a federal investigation into the ads it accepted for online Canadian pharmacies, in a landmark case that may signal the beginning of Google's woes concerning its advertising practices. The U.S. Justice Department said Google sold online advertising to Canadian pharmaceutical companies that were illegally selling prescription drugs, without doctors' orders, to customers in the U.S. Federal law says websites are liable for the content of advertising they sell, and ordered an investigation into Google's role in the ads. According to investigators, some Canadian pharmacies accept an "online consultation" to dispense drugs, rather than requiring a prescription. This resulted in drugs like the painkiller Oxycontin and the stimulant Ritalin, both of which are considered as controlled substances in the U.S., being sold illegally. The Justice Department said the drugs from Canada's pharmaceutical companies were illegal not only because users were able to obtain them without a prescription, but also because they may have been dangerous if they didn't meet U.S. standards. "While Canada has its own regulatory rules for prescription drugs, Canadian pharmacies that ship prescription drugs to U.S. residents are not subject to Canadian regulatory authority, and many sell drugs obtained from countries other than Canada which lack adequate pharmacy regulations," federal officials said. According to federal law, websites are liable for the advertising they carry. And, in Google's case, websites may have to forfeit profits from the ads if investigators determine they promote illegal activities, such as selling drugs without a prescription. "Google was on notice that many pharmacies accepting an online consultation rather than a prescription charged a premium for doing so because individuals seeking to obtain prescription drugs without a valid prescription were willing to pay higher prices for the drugs," federal investigators said. Google has been working toward taking illegal drug advertising off its site for years and in February 2010 said it would no longer accept advertising from Canadian pharmaceutical sites. However, that decision came too late for the company to avoid Wednesday's multi-million settlement, which may prove to be a chilling reminder for website owners. Google's settlement in the drug advertising probe shows websites may have to forfeit their profit from advertising sales that violates federal standards. The Mountain View, Calif.-based company's $500 million settlement is based primarily on revenues from Canadian pharmacy advertisements placed through its AdWords program, according to federal authorities. Wednesday's settlement came as Google is still involved in another, wider federal probe concerning antitrust practices. The Justice Department began to investigate the company after rivals complained Google allegedly skewed search results to favor its advertisers, placing them higher in search results. Because Google and the government haven't settled that investigation, Google may potentially face millions more in settlement costs if the Justice Department finds it is guilty of antitrust violations. In May, the search giant said it set aside $500 million to settle a possible federal probe. The settlement shows that while advertising is necessary to drive revenues, companies that rely on advertising that may promote illegal activity are responsible for the ads' content as well -- and the U.S. government can seize the profits from the ads as punishment. |
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