Apple asks ETSI standards body to set rules for standards essential patents
Apple addressed the European Telecommunications Standards Institute in November, asking the organization to set clear polices governing how its member companies license their patents.
According to a report by the Wall Street Journal, Apple complained in a letter that the telecommunications industry lacks consistent policy outlining how manufacturers can license the series of patents required to build devices capable on working on mobile networks.
Apple recommended that the ETSI develop rules for setting appropriate royalty rates related to the portfolio of patents used in implementing its standards. ETSI is involved in the 3GPP standards process related to GSM, UMTS 3G and LTE 4G mobile technologies.
The company asked for transparency in telecom industry patent royalty rates, which are currently being arbitrarily negotiated in secret, making it difficult to determine if so-called FRAND licensing terms are actually "fair, reasonable and nondiscriminatory."
Apple's FRAND
Apple contributes a variety of patents to various international standards bodies, including the ISO's MPEG H.264 as well as HTML5, which Apple has contributed, among other things, royalty free use of patents related to Canvas.
In its letter to ETSI, Apple also noted that it "owns a portfolio of cellular standards essential patents relevant to certain cellular standards of ETSI and other standards setting organizations," noting that since 2007, Apple has committed to license these patents to other companies under FRAND terms.
"It is apparent that our industry suffers from a lack of consistent adherence to FRAND principles in the cellular standards arena," Apple's intellectual property head Bruce Watrous wrote in the letter, embedded below.
11-11-11 Apple Letter to ETSI on FRAND
Apple also asked that patents that are "standards essential" not be allowed to be used to seek injunctions on sales, as this allows the patent holder undue leverage in negotiating a patent royalty rate.
Unlike non-standards essential patents (such as the user interface, operating system or design patents Apple has argued), in order to be compatible with mobile standards all products would out of necessity be "infringing" in a way that is impossible to avoid or work around.
Apple began publicly calling out Samsung and Motorola for their efforts to effectively monopolize the standards process by leveraging patents the companies had already committed to FRAND licensing in last August.
The purpose of industry standards is to foster interoperability and prevent proprietary boundaries from slowing the progress of technology.
By subverting the standards process to instead be a way to block competitors from selling standards-compatible products, Motorola and Samsung have also invited antitrust investigations by the European Commission.
[ View article on AppleInsider ]
Comments
I hope something happen with these FRAND patents, it's really out of control what google and Motorola is doing lately.
At this point Google hasn't done anything with Moto's FRAND patents, nor does it control them. This process with Apple started looong before Google had any pending purchase agreement with Motorola.
Apple also asked that patents that are "standards essential" not be allowed to be used to seek injunctions on sales, as this allows the patent holder undue leverage in negotiating a patent royalty rate.
I don't think that just eliminating the main remedy for patent holders will be sufficient.
That would leave the door wide open to companies, like Apple, who use patented tech and don't pay for it. If an injunction will no longer be available, then what sort of incentive will Apple offer as a substitute? What can be done about companies who refuse to license FRAND patents, but use them in products nevertheless? A huge fine? Rescission of all other licenses granted to the scofflaws?
IMO, an injunction is an extraordinary remedy, to be used in appropriate cases, that is, used rarely, but eliminating the biggest stick just makes it easier for companies who steal patented tech.
Maybe binding arbitration is the answer. But companies who would rather pay zero can drag out that process too, and it is not very different from going to court. And if a company still refuses to license the tech after the arbitrator orders them to do so, then what? It still goes to court.
ISTM that eliminating the most effective remedy for patent holders is not the answer. Maybe triple damages for the period of time that the scofflaw refuses to license?
The remedy needs to eliminate all incentive for scofflaws to game the system. Unless it does that, the system will be abused, like what is happening now.
I can hear the iWhaaaaaambulance.
See a shrink, because it's entirely in your head.
I can hear the iWhaaaaaambulance.
That's called tinnitus and it has nothing to do with this.
At this point Google hasn't done anything with Moto's FRAND patents, nor does it control them. This process with Apple started looong before Google had any pending purchase agreement with Motorola.
Shame on Gatorguy for this shameless lie, which he knows not to be the case. Google, by virtue of it's offer agreement for Moto exercises approval of Moto's legal actions, so all of this was approved in Mountain View -- i.e., Google is playing puppet-master with Moto.
Maybe binding arbitration is the answer. But companies who would rather pay zero can drag out that process too, and it is not very different from going to court. And if a company still refuses to license the tech after the arbitrator orders them to do so, then what? It still goes to court.
Yes and no. If an arbitration body doesn't exist, and one was set up for this exact thing (eg discussing royalties) then there is no reason for it string out anything regardless of what lawyers on both sides want - present your case and get the hell out of here.
I don't believe companies like Apple want to string these things out either as this is just lawyer time and is a distraction to the business of selling kit. Maybe Samsung and the rest do, and maybe they like paying their lawyers $200p/h - who knows.
Do you really believe that Tim Cook enjoys sitting down with the Apple lawyers discussing the ongoing legal cases?
I don't think that just eliminating the main remedy for patent holders will be sufficient.
That would leave the door wide open to companies, like Apple, who use patented tech and don't pay for it. If an injunction will no longer be available, then what sort of incentive will Apple offer as a substitute? What can be done about companies who refuse to license FRAND patents, but use them in products nevertheless? A huge fine? Rescission of all other licenses granted to the scofflaws?
IMO, an injunction is an extraordinary remedy, to be used in appropriate cases, that is, used rarely, but eliminating the biggest stick just makes it easier for companies who steal patented tech.
Maybe binding arbitration is the answer. But companies who would rather pay zero can drag out that process too, and it is not very different from going to court. And if a company still refuses to license the tech after the arbitrator orders them to do so, then what? It still goes to court.
ISTM that eliminating the most effective remedy for patent holders is not the answer. Maybe triple damages for the period of time that the scofflaw refuses to license?
The remedy needs to eliminate all incentive for scofflaws to game the system. Unless it does that, the system will be abused, like what is happening now.
There needs to be an equivalent stick that can be used against patent owners who are using a standards related patent to extort high royalties. Perhaps if a few of these companies had their patents taken away and released into the public domain it would stop a lot of this nonsense.
Yes and no. If an arbitration body doesn't exist, and one was set up for this exact thing (eg discussing royalties) then there is no reason for it string out anything regardless of what lawyers on both sides want - present your case and get the hell out of here.
I don't believe companies like Apple want to string these things out either as this is just lawyer time and is a distraction to the business of selling kit. Maybe Samsung and the rest do, and maybe they like paying their lawyers $200p/h - who knows.
Do you really believe that Tim Cook enjoys sitting down with the Apple lawyers discussing the ongoing legal cases?
uhhhh....yeah. isn't that what steve said he wanted to do?
I don't believe companies like Apple want to string these things out either as this is just lawyer time and is a distraction to the business of selling kit. Maybe Samsung and the rest do, and maybe they like paying their lawyers $200p/h - who knows.
Do you really believe that Tim Cook enjoys sitting down with the Apple lawyers discussing the ongoing legal cases?
I think that it all depends on bigger strategies. The strategy that Apple is now using means that they have not yet paid royalties for unlicensed tech. That is a cost savings, perhaps. Whether or not it is eventually a winning strategy, ISTM that the current system creates perverse incentives.
If injunctions against sales of infringing products is no longer a remedy, which is what Apple wants, IMO the perverse incentives increase greatly.
The longer a company can stretch out the time before they have to start paying royalties, the better off they may be. That is no way to structure things.
Often situations like this are handled so that it is nearly inevitable that such a strategy will not work out, so the perverse incentive is eliminated. What you don't want is a pre-settlement amount which is the same as the ongoing and future costs. Often triple penalties are attached, to ruin any incentive to drag things out and not pay.
Maybe the answer is to license things only as a package, with independent (hah!) salespeople striking deals? I don't know the answer. But as o now, it looks like a house of cards trembling.
There needs to be an equivalent stick that can be used against patent owners who are using a standards related patent to extort high royalties. Perhaps if a few of these companies had their patents taken away and released into the public domain it would stop a lot of this nonsense.
Isn't that remedy currently being sought against someone in Europe right now? Is it Samsung who has been charged with anti-competitive behavior for doing something like that?
I'm not sure the public domain thing is the best idea - economic penalties can be devised that are a much sharper tool than that.
But some people think that with the new "Corporations are people too, my friend" policies we've seen, the corporations should be subject to capital punishment for some criminal acts. Forced liquidation of banks may be a start.
I don't think that just eliminating the main remedy for patent holders will be sufficient.
That would leave the door wide open to companies, like Apple, who use patented tech and don't pay for it.
Yes and no. If the company was offered FRAND terms and they refused then they should be hit with everything they deserve.
But if the company was offered terms that violate FRAND and refused, then the owning company shouldn't be allowed to shut down sales because they didn't play fair. I think that's what Apple is asking for.
That said, I think that the owning companies shouldn't be allowed to set the terms. There needs to be a 3rd party that isn't involved in the markets that sets the terms up front (with feedback from the owners) that all licensees will have to pay to use the body of patents for the standard. They would receive say 5% to cover admin costs and the rest goes to the owning companies to divide up equally. This administrator would make the call on who pays what part of the fees, the chip creators or the buyers, that each party has paid appropriately etc.
If they were really concerned about "inconsistency" they would've brought it up in the beginning.
Only AFTER they get sued does Apple bother to cry foul about it. Just another legal tactic on the part of Apple.
That's called tinnitus and it has nothing to do with this.
I guess you dont know the meme.
I guess you dont know the meme.
I certainly do; it just doesn't apply here.
Yes and no. If the company was offered FRAND terms and they refused then they should be hit with everything they deserve.
But if the company was offered terms that violate FRAND and refused, then the owning company shouldn't be allowed to shut down sales because they didn't play fair. I think that's what Apple is asking for.
That said, I think that the owning companies shouldn't be allowed to set the terms. There needs to be a 3rd party that isn't involved in the markets that sets the terms up front (with feedback from the owners) that all licensees will have to pay to use the body of patents for the standard. They would receive say 5% to cover admin costs and the rest goes to the owning companies to divide up equally. This administrator would make the call on who pays what part of the fees, the chip creators or the buyers, that each party has paid appropriately etc.
I mostly agree. One sticking point is the question of how to divvy up profits. One method is to pay more to those who contribute "more important" patents, and another is to do it based upon the sheer number of contributed patents, without regard to their underlying worth.
Both methods have problems. But ISTM that deals need to be struck quickly on terms which are as non-discriminatory as possible. Today's setup seems to reward people who don't do the right thing. It should instead be structured so that it is in everybody's best interest to play nice.