Apple's $2.7B Motorola bond actually yearly estimate, could be worth $16B
Motorola could be forced to pay up to $16.2 billion in guaranteed compensation if the company ultimately loses its patent dispute with Apple in Germany, as the $2.7 billion figure the iPhone maker was quoted as seeking in November has been clarified as a yearly estimate.
In a hearing on Friday, Apple made clear that it estimates a bond of $2.7 billion per year will cover the losses suffered if Motorola prematurely enforces possible injunctions on iCloud that are later overturned, according to Florian Mueller of FOSS Patents. He goes on to say that a lawyer on Motorola's legal team mentioned the case may last until 2018, potentially making the $2.7 billion yearly bond worth $16.2 billion.
The suit is part of an ongoing worldwide dispute, with Motorola alleging that Apple's iCloud infringes on certain existing synchronization technology patents. Although previous reports say that Motorola is likely to win at least one of the German suits, Apple still has the ability to set a bond to recoup damages in the event of a win during the appeal process, which could take years.
A permanent injunction can be "preliminarily enforceable" in Germany, meaning that if Motorola wins an initial court hearing it can enforce the ruling prior to appeal, however the company would be liable if the injunction is found to have been improperly granted at the end of the process.
Mueller explains that "the end of the process means that the ruling (or a subsequent appellate decision) can no longer be appealed, or it is appealed but the next higher court isn't willing to hear the appeal, or a party doesn't exercise its right to appeal."
Insurance against an improperly handled injunction comes in the form of a bond, which Apple was thought to have set at $2.7 billion in November, but has gone on to clarify that the figure was an annual payment estimate that would be applied to the number of years it takes to resolve the suit.
Despite the risk of bond liability, some patent holders sometimes go through with preliminary enforcement, possibly to leverage a settlement in a worldwide dispute. In this case, the two companies are waging a worldwide patent war.
It is unclear whether the court will agree to Apple's annual bond, however if the company can prove that the products in question can generate $2.7 billion per year in Germany, the figure may be accepted.
A hearing is set for Feb. 3, 2012, when Mueller expects the court to reveal its decision as to how much Apple's bond is worth.
In a hearing on Friday, Apple made clear that it estimates a bond of $2.7 billion per year will cover the losses suffered if Motorola prematurely enforces possible injunctions on iCloud that are later overturned, according to Florian Mueller of FOSS Patents. He goes on to say that a lawyer on Motorola's legal team mentioned the case may last until 2018, potentially making the $2.7 billion yearly bond worth $16.2 billion.
The suit is part of an ongoing worldwide dispute, with Motorola alleging that Apple's iCloud infringes on certain existing synchronization technology patents. Although previous reports say that Motorola is likely to win at least one of the German suits, Apple still has the ability to set a bond to recoup damages in the event of a win during the appeal process, which could take years.
A permanent injunction can be "preliminarily enforceable" in Germany, meaning that if Motorola wins an initial court hearing it can enforce the ruling prior to appeal, however the company would be liable if the injunction is found to have been improperly granted at the end of the process.
Mueller explains that "the end of the process means that the ruling (or a subsequent appellate decision) can no longer be appealed, or it is appealed but the next higher court isn't willing to hear the appeal, or a party doesn't exercise its right to appeal."
Insurance against an improperly handled injunction comes in the form of a bond, which Apple was thought to have set at $2.7 billion in November, but has gone on to clarify that the figure was an annual payment estimate that would be applied to the number of years it takes to resolve the suit.
Despite the risk of bond liability, some patent holders sometimes go through with preliminary enforcement, possibly to leverage a settlement in a worldwide dispute. In this case, the two companies are waging a worldwide patent war.
It is unclear whether the court will agree to Apple's annual bond, however if the company can prove that the products in question can generate $2.7 billion per year in Germany, the figure may be accepted.
A hearing is set for Feb. 3, 2012, when Mueller expects the court to reveal its decision as to how much Apple's bond is worth.
Comments
There is a law suit being filed in the country of the antarctic. The penguin court is set to convene over the patent dispute of thermal dynamics of Mac's and how they stay cool. The cooling effect is an antarctic patent, being that its colder there than any other place on earth. The penguins are very upset and feel that Apple needs to have some respect for the continent and their inhabitants. As of now all Penguins are using Galaxy Tabs and seem to have some sort of bias against Apple and its products.
This doesn't make sense. For starters, the iPad specs say functionality isn't supported below 32° F (0° C) and the penguins already got a ban on the device for coming in black and white.
Motorola doesn't have much of a case, and from my understanding, the patents that Motorola is trying to use against Apple are part of FRAND, much like Samsung is trying to do. That is not going to fly. Apple will crush them all.
Apple should use it's massive cash balance to weaken it's enemies and hurt them financially. The competition and the copytition should quit whining and begin innovating if they wish to remain relevant.
Secondly this would be an yearly amount , say for one year the Motorola will need to furnish bond for 1.5 billion dollar, if case stretches beyond that then it will be 3 billion dollar for next year and so on.
So what is the amount that Motorola needs to pay to make a bond of 1.5 billion dollars as of now. Around 1% of the value, since it would be in the form of bank guarantee.
1.5% of a billion dollar is 15 million dollar.
Not a big deal.
There is a law suit being filed in the country of the antarctic. The penguin court is set to convene over the patent dispute of thermal dynamics of Mac's and how they stay cool. The cooling effect is an antarctic patent, being that its colder there than any other place on earth. The penguins are very upset and feel that Apple needs to have some respect for the continent and their inhabitants. As of now all Penguins are using Galaxy Tabs and seem to have some sort of bias against Apple and its products. When asking one of the leaders, how they felt about this matter all that could be said was a sort of trumpeting sound and constant pecking at the interviewer. The interviewer barely made it out alive. When asked how he felt about the interview he said My God man they are out for blood.
* Happy Feet Likes this.
First Judge definitely will not take Apple's claims on face value and will reduce the amount , say to a 1.5 billion dollar per year ( from 2.7 claimed)
Secondly this would be an yearly amount , say for one year the Motorola will need to furnish bond for 1.5 billion dollar, if case stretches beyond that then it will be 3 billion dollar for next year and so on.
So what is the amount that Motorola needs to pay to make a bond of 1.5 billion dollars as of now. Around 1% of the value, since it would be in the form of bank guarantee.
1.5% of a billion dollar is 15 million dollar.
Not a big deal.
ROTFLMAO.
Let's assume that you're right and it gets reduced to $1.5 B (actually, I'd expect it to be reduced even more). Let's also assume that the judge will allow the bond to be paid one year at a time. A $1.5 B bond is not a big deal? That's blatantly absurd. Even to a company the size of Motorola, it's a huge deal. There's a lot more involved than out of pocket cost (even if your 1% estimate is accurate):
- It ties up $1.5 B in borrowing resources - which drives up their borrowing cost for everything else
- It becomes a $1.5 B liability on their balance sheet - which can greatly affect stock price
- It could effect the Google acquisition significantly
And keep in mind that this is only one country. If Motorola takes a $1.5 B hit to the balance sheet over one country, investors are going to be taking a serious look at the risks involved.
It's not Apple's fault that they are 'too big to sue'.
No one is too big to sue. In fact, the bigger you are, the more frivolous lawsuits you seem to attract.
ROTFLMAO.
Let's assume that you're right and it gets reduced to $1.5 B (actually, I'd expect it to be reduced even more). Let's also assume that the judge will allow the bond to be paid one year at a time. A $1.5 B bond is not a big deal? That's blatantly absurd. Even to a company the size of Motorola, it's a huge deal. There's a lot more involved than out of pocket cost (even if your 1% estimate is accurate):
- It ties up $1.5 B in borrowing resources - which drives up their borrowing cost for everything else
- It becomes a $1.5 B liability on their balance sheet - which can greatly affect stock price
- It could effect the Google acquisition significantly
And keep in mind that this is only one country. If Motorola takes a $1.5 B hit to the balance sheet over one country, investors are going to be taking a serious look at the risks involved.
At the end assume Moto wins. They now get their bonds released back to them, plus have Apple's own valuation of the "stolen IP" to submit to the court as a requested award on Motorola's behalf. Is that correct? If so there's dangers to both sides.
At the end assume Moto wins. They now get their bonds released back to them, plus have Apple's own valuation of the "stolen IP" to submit to the court as a requested award on Motorola's behalf. Is that correct? If so there's dangers to both sides.
No. If Motorola wins, then they haven't infringed and Apple doesn't have to pay anything. Motorola doesn't get an award if they win. They simply avoid having to pay.
As a separate issue, Motorola could ask for the judge to order Apple to pay some or all of its legal expenses, but that's not easy to get - and would be a tiny fraction of the billions of dollars in potential damages.
Seriously, if your understanding of legal matters is that weak, you shouldn't be commenting. AT ALL.
ROTFLMAO.
A $1.5 B bond is not a big deal? That's blatantly absurd. Even to a company the size of Motorola, it's a huge deal. There's a lot more involved than out of pocket cost (even if your 1% estimate is accurate):
- It ties up $1.5 B in borrowing resources - which drives up their borrowing cost for everything else
- It becomes a $1.5 B liability on their balance sheet - which can greatly affect stock price
- It could effect the Google acquisition significantly
And keep in mind that this is only one country. If Motorola takes a $1.5 B hit to the balance sheet over one country, investors are going to be taking a serious look at the risks involved.
You are making erroneous assumptions.
Well how does it affect Google's acquisition significantly? This liability is actually pea nuts for Google.
I understand there are other repercussions for a bank guarantee creation, but it is wrong to assume that it will have investors have serious look at risk or anything like that.
A strategic advantage at a serious competitor who is hell bent on suing you to oblivion will always be looked positively by Investors or most surely will have positive impact on price.
It is not a question of one country or more, it is a question of Strategic advantage for Motorola and also for Google..
ROTFLMAO.
Let's assume that you're right and it gets reduced to $1.5 B (actually, I'd expect it to be reduced even more). Let's also assume that the judge will allow the bond to be paid one year at a time. A $1.5 B bond is not a big deal? That's blatantly absurd. Even to a company the size of Motorola, it's a huge deal. There's a lot more involved than out of pocket cost (even if your 1% estimate is accurate):
- It ties up $1.5 B in borrowing resources - which drives up their borrowing cost for everything else
- It becomes a $1.5 B liability on their balance sheet - which can greatly affect stock price
- It could effect the Google acquisition significantly
And keep in mind that this is only one country. If Motorola takes a $1.5 B hit to the balance sheet over one country, investors are going to be taking a serious look at the risks involved.
Thanks for the explanation. In your obviously knowledgeable opinion in this matter, does it seem like Apple are doing this from a position of strength or as just a tactical maneuver? In other words can you read any significance into this? I don't recall reading Apple doing this in other cases ... maybe in just missed them, but if not why not?
Update... Just read Gatorguy comment ... This is a defense strategy then... Wow I'd love to understand legal stuff!
No. If Motorola wins, then they haven't infringed and Apple doesn't have to pay anything. Motorola doesn't get an award if they win. They simply avoid having to pay.
As a separate issue, Motorola could ask for the judge to order Apple to pay some or all of its legal expenses, but that's not easy to get - and would be a tiny fraction of the billions of dollars in potential damages.
Seriously, if your understanding of legal matters is that weak, you shouldn't be commenting. AT ALL.
I think you've confused IP cases. In this one it's Motorola suing Apple for infringement.
No. If Motorola wins, then they haven't infringed and Apple doesn't have to pay anything. Motorola doesn't get an award if they win. They simply avoid having to pay.
As a separate issue, Motorola could ask for the judge to order Apple to pay some or all of its legal expenses, but that's not easy to get - and would be a tiny fraction of the billions of dollars in potential damages.
Seriously, if your understanding of legal matters is that weak, you shouldn't be commenting. AT ALL.
Again you have proved you do not understand facts. It is about following patents which Motorola is asserting against Apple
EP (European Patent) 1010336 (B1)
EP (European Patent) 0847654 (B1)
If Apple is found to be infringed, they have to pay.
It is your understanding that is questionable, if you somehow related the Apple suing Motorola with Motorola submitting bond (regardless of whether you know fact or not)
You are making erroneous assumptions.
Well how does it affect Google's acquisition significantly? This liability is actually pea nuts for Google.
Google is paying $12.5 B for this division of Motorola. Motorola's attorneys say the the case will go on until 2018 - so we're talking about 7 years. Even if we accept your figure ($1.5 B bond), that means a total potential liability of $10.5 B. You don't think a $10.5 B potential liability has any impact on a $12.5 B deal? If you really believe that, I'd strongly encourage you never to invest money in anything.
And that's just one country. Expand that potential liability around the globe and it looks even worse.
I understand there are other repercussions for a bank guarantee creation, but it is wrong to assume that it will have investors have serious look at risk or anything like that.
You really think that investors don't look at risk? They aren't going to care about $1.5 B (potentially $10.5
Once again, put your money under your matters. You have no business investing anything.
A strategic advantage at a serious competitor who is hell bent on suing you to oblivion will always be looked positively by Investors or most surely will have positive impact on price.
So investors are going to see it as a positive that Motorola is being sued for billions of dollars? Are you REALLY that clueless?
It is not a question of one country or more, it is a question of Strategic advantage for Motorola and also for Google..
It's also a matter of the number of countries. If Motorola is facing a potential liability of $10.5 B in just one country, the worldwide total is much, much higher. How does a potential liability of tens of billions of dollars give you a strategic advantage?
I think you've confused IP cases. In this one it's Motorola suing Apple for infringement.
Again you have proved you do not understand facts. It is about following patents which Motorola is asserting against Apple
EP (European Patent) 1010336 (B1)
EP (European Patent) 0847654 (B1)
If Apple is found to be infringed, they have to pay.
It is your understanding that is questionable, if you somehow related the Apple suing Motorola with Motorola submitting bond (regardless of whether you know fact or not)
Read the article:
Motorola could be forced to pay up to $16.2 billion in guaranteed compensation if the company ultimately loses its patent dispute with Apple in Germany, as the $2.7 billion figure the iPhone maker was quoted as seeking in November has been clarified as a yearly estimate.
Apple sued Motorola and Apple is asking the court to make Motorola put up a bond for the potential losses. The above issue - and, particularly, the bond that is being discussed is part of Apple's suit against Motorola.
The cases you are citing are Motorola's countersuit (which involves FRAND technologies and is therefore likely to be settled with Apple simply paying the same license fees as everyone else, anyway).
Google is paying $12.5 B for this division of Motorola. Motorola's attorneys say the the case will go on until 2018 - so we're talking about 7 years. Even if we accept your figure ($1.5 B bond), that means a total potential liability of $10.5 B. You don't think a $10.5 B potential liability has any impact on a $12.5 B deal? If you really believe that, I'd strongly encourage you never to invest money in anything.
And that's just one country. Expand that potential liability around the globe and it looks even worse.
You really think that investors don't look at risk? They aren't going to care about $1.5 B (potentially $10.5
Once again, put your money under your matters. You have no business investing anything.
So investors are going to see it as a positive that Motorola is being sued for billions of dollars? Are you REALLY that clueless?
It's also a matter of the number of countries. If Motorola is facing a potential liability of $10.5 B in just one country, the worldwide total is much, much higher. How does a potential liability of tens of billions of dollars give you a strategic advantage?
Read the article:
Apple sued Motorola and Apple is asking the court to make Motorola put up a bond for the potential losses. The above issue - and, particularly, the bond that is being discussed is part of Apple's suit against Motorola.
The cases you are citing are Motorola's countersuit (which involves FRAND technologies and is therefore likely to be settled with Apple simply paying the same license fees as everyone else, anyway).
You are beyond reasoning now. The patent in question for this lawsuit is Second patent that I mentioned and it is not a Frand Patent
Please follow below link to understand the facts
http://fosspatents.blogspot.com/2011...in-german.html
Secondly , adding figures for 7 years time and making it a reference point for today is totally unreasonable. Court will not ask Motorola to give a bond for 7 years as of today. It will be for a single year at at time. And Extrapolating an action in one country to all world is again stupidity. Owing to very strict German Patent Laws, any company is much more likely to get such injunctions there. For example I cannot see Motorola getting injunction based on this in US ( because of clause of irreparable harm and less strict laws). So German Injunction will most likely be one off case and a strategic weapon for Google and Motorola.
Anyways I invest a lot and make a good amount of money on that.
You are beyond reasoning now. The patent in question for this lawsuit is Second patent that I mentioned and it is not a Frand Patent
Once again, that is not the issue that is involved with the bond. That is an entirely unrelated case (other than the parties being the same). Read the original article again. Apple sued Motorola and is asking the court to order a bond.
Please follow below link to understand the facts
http://fosspatents.blogspot.com/2011...in-german.html
Once again, a different case. Search that link for the word 'bond' to see if it's involved.
Secondly , adding figures for 7 years time and making it a reference point for today is totally unreasonable. Court will not ask Motorola to give a bond for 7 years as of today. It will be for a single year at at time. And Extrapolating an action in one country to all world is again stupidity. Owing to very strict German Patent Laws, any company is much more likely to get such injunctions there. For example I cannot see Motorola getting injunction based on this in US ( because of clause of irreparable harm and less strict laws). So German Injunction will most likely be one off case and a strategic weapon for Google and Motorola.
None of that matters. Motorola estimated that the case would go for 7 years. If they are ordered to post $1.5 B (or $2.7 B or any other number) bond annually, the potential liability is 7 times the annual number. Whether they have to post it all today is not a big issue. The total potential liability most certainly is.
And whether they could get a bond in other countries is not really all that relevant. If the court accepts that Motorola needs to put up $1.5 B for the next 7 years in Germany, that says that the potential liability is $10.5 B IN GERMANY ALONE. If Motorola loses in Germany and faces $10.5 B in damages, that creates a risk that they will lose somewhere else, too, creating many more billions of dollars in damages.
It's not about the bond at all. It's about the fact that if the court orders the bond, the court is saying that there's a possibility that Motorola could have to pay many billions of dollars in damages in Germany in this case. That is an immense risk.
Anyways I invest a lot and make a good amount of money on that.
Then it's dumb luck if you think a $10 B liability won't affect a $12 B deal.
Again you have proved you do not understand facts. It is about following patents which Motorola is asserting against Apple
EP (European Patent) 1010336 (B1)
EP (European Patent) 0847654 (B1)
If Apple is found to be infringed, they have to pay.
It is your understanding that is questionable, if you somehow related the Apple suing Motorola with Motorola submitting bond (regardless of whether you know fact or not)
Facts are in the mind of the beholder to some posters here. They are malleable, like the meanings of common words.
Once again, that is not the issue that is involved with the bond. That is an entirely unrelated case (other than the parties being the same). Read the original article again. Apple sued Motorola and is asking the court to order a bond.
.
Where in the article it is written that. Artcile says "In a hearing on Friday, Apple made clear that it estimates a bond of $2.7 billion per year will cover the losses suffered if Motorola prematurely enforces possible injunctions on iCloud, "
So who is enforcing injunction , Apple or Motorola?
Actually your post is all based on the belief that Apple is suing thereby enforcing injunction and asking Motorola for bond. By this logic definitely Motorola is in big trouble.
And for your financial analysis of making future financial liabilities all applicable to current scenario when one cannot be sure how much years case will prolong ( one, two or ninetty nine), really Kudos!