Motorola Mobility’s patent lawsuits investigated by EU

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Motorola Mobility’s patent lawsuits have become the subject of two investigations by the European Commission.

It follows complaints by Apple and Microsoft after Motorola tried to block sales of their products.
They said that Motorola – which is in the process of being taken over by Google – had failed to license “essential” technologies on fair and reasonable terms.

Motorola denies any wrongdoing.
“The commission will examine whether Motorola’s behaviour amounts to an abuse of a dominant market position,” a statement from the commission said.
The dispute centres on Motorola’s use of Frand-type patents.
These involve technologies that are deemed to be part of an industry standard and therefore must be offered for a reasonable fee to anyone willing to pay.

“Motorola Mobility is confident that a thorough investigation will demonstrate that it has honoured its Frand obligations and complied with anti-trust laws,” a statement from the firm said.
“[We] will continue to work closely with the European Commission to resolve this matter as soon as practicable.”
Injunctions Apple has clashed with Motorola over the amount it should pay for its use of a patent for a “method for performing a countdown function during a mobile-originated transfer for a packet 2 Way Radio system”.

The dispute led a German court to order a ban of certain iPad and iPhone models in Germany last year – a ruling which was later suspended.
Apple has also been forced to suspend its push email service to German customers as a result of another clash.
Microsoft faces a separate complaint in Germany in a fortnight’s time over its use of H.264 video-compression technology patents claimed by Motorola.

Microsoft announced on Monday that it was moving its European software distribution centre from Germany to the Netherlands in order to prevent a potential ban of shipments of its Windows 7 system software and Xbox 360 gaming consoles.
“We would have preferred to keep our European distribution centre in Germany, where it has been for many years,” a statement from Microsoft said.

“Unfortunately the risk from disruption’s from Motorola’s patent litigation is simply too high.”
Patent consultant Florian Mueller blogged that the commission’s intervention might influence the outcome of the case.
“Germany is the only EU member state in which Motorola is suing Apple and Microsoft over standard-essential patents,” he wrote.

“The commission’s decision to launch these formal investigations should serve as food for thought for certain judges in the largest EU member state who have shown a worrying tendency in recent years to put patent law far above anti-trust law.”
Enforcement The European Commission’s action follows earlier warnings that it had concerns about Motorola’s enforcement tactics, which it expressed after approving Google’s takeover of the firm.

“The holders of standard-essential patents have considerable market power,” said competition commissioner Joaquin Almunia.
“This market power can be used to harm competition… I don’t need to tell you that this is unacceptable, and I am determined to use anti-trust enforcement to prevent such hold-up by patent holders.”
The Commission launched a related probe into Samsung in January after it sought sales injunctions against Apple linked to its Frand-related 3G patents.

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New radio system OK’d for Leicester police

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A new Police Department motorola DP3400 two way radio [http://visualtargeting.org/review-of-the-dp-3400] system will cover Leicester from “soup to nuts,” and meet or exceed all public safety needs, according to Police Chief James Hurley. 

Selectmen on Monday night approved a purchase order of $190,348 to get the Motorola Solutions equipment, which includes 11 mobile units and 25 handsets. They authorized borrowing $138,400 through People’s United Bank with an interest rate of 0.6 percent. 

Town Administrator Kevin Mizikar explained that the overall project, approved by town meeting a few years ago, totaled $238,000, which includes proposed upgrades to the Highway and Fire Departments. 

As to the police portion, Chief Hurley emphasized that improvements are needed to carry the department “into the future” and to solve the “enormous” current problem of inadequate communications in certain parts of Leicester. 

“Everything the officers need has to be on the tip of their fingers and I think this will work well,” the police chief said. 

Although the vendors noted that the life span of the mobiles was about seven years, the chief said the upgrade process needed to be continuous. Board members were also assured that their investment would be protected because the 2 way Radios contained embedded software that could be kept up to speed with changing technology. 

Selectmen also approved a lateral transfer of police Officer Ronald Tarentino Jr. to Auburn. Chief Hurley said the officer had stayed in town until three of his colleagues who were on sick leave returned to their jobs. He said it was a positive career move for the officer and the town would continue to lose its personnel until a strategic plan was put together to adequately fund the department. 

Neighboring communities have opportunities for details, motorcycle units and other programs that Leicester gave up years ago and it is difficult to attract and keep candidates, the chief said. 

The department has had to operate with as few as 13 people. “Six or seven years ago, Leicester was the place to come and we got a lot of résumés. Now, our officers are going to Paxton, Oxford, etc. where they have stuff we don’t. That can’t be fixed without money,” the chief added. 

Selectman Tom Buckley acknowledged that he wasn’t surprised employees are going elsewhere because of the town’s budget constraints. “I feel like Leicester is the training ground for other communities,” he said. Buckley praised the department for doing a “remarkable” job despite being shorthanded. 

The board members also reminded the public that town meeting convenes at 7 p.m. Tuesday at Town Hall, where voters will consider a proposed $25.7 million budget. 

Motorola Posts Disappointing Q1 On Government Slowdown, Narrowbanding Impact

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zigbee communication deviceMotorola Solutions (NYSE:MSI) recently announced a weak set of Q1 2014 results, as government revenues fell 11% and operating profits by 21% over the same period last year due to a higher-than-expected overhanging impact of narrowbanding in North America. A sustained decline in the federal business also had an impact on government revenues, and the company expects only a modest improvement this year from the government shutdown-related lows of last year. The company’s enterprise revenues, excluding iDEN, declined just 1% over the same period last year – recovering gradually from recent macroeconomic uncertainties and offsetting some of the impact of the under-performing government division. Motorola expects the demand environment, especially in the government business, to remain challenging in the near term, with government sales expected to decline by 8-11% in the second quarter.
In order to focus singularly on its government business, which accounts for almost 70% of its total revenues, Motorola has decided to sell off its enterprise division to Zebra Technologies for $3.45 billion in cash. The company expects the deal to close by the end of the year, following which the excess capital will be returned to shareholders “in a timely manner”. The enterprise sale provides Motorola with an opportunity to restructure and reduce costs in keeping with the current business environment. Motorola expects to cut around $200 million in operating costs over the next 18-24 months. We have a slightly revised $65 price estimate for Motorola, which is about in line with the current market price.
Narrowbanding And Federal Impact
One of the biggest reasons that Motorola mentioned for its top-line under-performance last quarter was its lower-aged government backlog in North America. The company acknowledged that it underestimated the impact of narrowbanding in previous years, which had led to record years in 2012 and 2011. Motorola’s government revenues in those years were boosted by the narrowbanding mandate issued by the Federal Communications Commission (FCC), which necessitated a switch to a more efficient spectrum band for public safety operations. With most of the narrowbanding-related equipment upgrades now complete and government agencies going slow on their capital spending, Motorola’s government business faces near-term growth concerns.
The tough year-over-year comparison was accentuated by a challenging federal environment in the aftermath of the recent government shutdown in September. In the fourth quarter, Motorola had suffered a revenue hit of about $150 million in its federal business. Since most of this shortfall wasn’t deferred, Motorola was unable to recoup the losses in Q1. The federal slump should continue in the near term, with government sales expected to decline by about 9.5% at the mid-point of guidance. However, for the full-year, the company expects a solid back-half recovery to help stem the slide to the low-to-mid single digits. The downside is limited by the fact that public safety is usually down the priority list of areas in which governments will look to cut their spending. As a result, we see any further impact to government revenues from sequestration, or the spending cuts that the federal government started implementing, being fairly muted.
LTE Transition And Margins Key To Long-term Fundamentals
Going forward, we see the adoption of LTE for public-safety use, along with the broader trend of analog-to-digital shift in the U.S. and internationally, as the key drivers of Motorola’s value. U.S. public safety spending in the coming years will be bolstered by the job creation bill passed in 2012 that reallocated the D Block spectrum for public safety use and provided a funding of $7 billion to build out a nationwide network over eight years. We expect Motorola to benefit from the stickiness of its government customers as well as its strong market position and large installed base of security devices to grab a big chunk of that market going forward. The company’s recent launch of APX 7000L, its first Motorola 2 way radio that works both on legacy LMR (Land Mobile Radio) and next-generation 4G LTE networks, bolsters our view that Motorola has positioned itself strongly to benefit from the LTE transition in the years to come (see Motorola Solutions Sharpens LTE Focus With First 4G-Capable Radio For Public Safety).
It is also a good sign for the future that the company has been successful in driving efficiency through its operations over the last couple of years, and expects to accelerate those efforts in the coming quarters. Despite the top-line concerns and significant operating leverage in the business, Motorola expects operating margins to improve by almost a percentage point to 18.5% in 2014, benefiting mostly from the the cost controls in place as well as the $200 million in cost cuts expected over the next two years. Going forward, we expect the operational efficiencies to more than offset the gross-margin decline that could result from rising competition in the coming years as rivals increasingly address the ongoing transition of public safety networks from analog to digital.