Motorola seeking 2.25% of Apple's sales for standard-essential patent license
Recently uncovered court documents from Motorola Mobility's legal complaints against Apple have revealed that the handset maker is seeking 2.25 percent of Apple's sales of wireless devices in exchange for a patent license covering its standard-essential intellectual property.
The figure came to light as a result of a motion from Apple requesting Qualcomm's patent license agreement with Motorola, as reported by Florian Mueller of FOSS Patents.
The Cupertino, Calif., company argued that its devices could potentially be covered by extension under its own license for baseband chips from Qualcomm. It also sought to prove that Motorola's request for 2.25 percent in royalties was unfair. The patent in question was committed by Motorola to be subject to Fair Reasonable and Non-Discriminatory licensing, which means that the company must offer a licensing agreement to competitors asking for it.
Motorola opposed Apple's motion, but was ultimately shot down at the end of January. Apple has also filed motions requesting Motorola's agreements with rivals Nokia, HTC, LG and Ericsson in order to determine the specifics of their respective agreements and how much they pay in royalties.
Mueller noted that the revelation of the actual royalty rate is a rare occurrence. "In this case, the related document was not sealed, and it appears that Motorola's counsel did not allege a violation of a protective order," he wrote.
Though the letter outing Motorola's demands did not specifically state that the proposed 2.25 percent royalty covers all of its standards-related patents, Mueller assumed "in Motorola's favor" that it did, since that rate for a single patent would be unheard of. Even with that assumption, he went on to note that the rate "still appears excessive," since the number of companies that hold patents for standards would result in an unfeasible aggregate royalty rate if all of them requested a similar percentage.
Credit: Foss Patents
The patent in question, which is related to push services, has already caused trouble for Apple in Germany, as Motorola won on Friday an injunction against Apple's iCloud and MobileMe services. Apple quickly pulled its 3G iPads and older iPhone models from its German online store, but it recommenced sales after managing to win a suspension on the ruling later in the day.
“Apple appealed this ruling because Motorola repeatedly refuses to license this patent to Apple on reasonable terms, despite having declared it an industry standard patent seven years ago,” the company said in a statement.
If Motorola is found to have abusively wielded its FRAND patents, it could face an antitrust investigation from a European agency. Rival Samsung is currently the subject to a formal investigation into its use of standard-essential FRAND patents in lawsuits, particularly in its complaints against Apple.
Mueller speculated that Apple will take a similar approach with Motorola as it has with Samsung. That would entail arguing that Motorola's proposed rate is discriminatory because it is presumably higher than the royalties paid by other market players. Motorola would likely respond by arguing that the others cross-licensed their own standard-essential wireless patents. Apple could then argue that Motorola's offer was a "prohibitive license offer that Apple couldn't possibly accept" with Motorola's end goal being an injunction against its rival in order to force it to leverage its own "non-standards-related innovations."
[ View article on AppleInsider ]
Comments
2) Looking at just the iPhone, last quarter sold 37.04 million and had an average sale price of $650(?) which comes out to $24,076,000,000 in revenue. For Moto to take 2.25% is $541,710,000 in profit for a single quarter. You can probably add at least another $100 million for the iPad. As SDW2001 says, "Good luck with that, Moto."
1) Wireless devices is missleading. It's only cellular networks, excluding WiFi, Bluetooth, et al. That means it's just the iPhone and 3G iPads.
2) Looking at just the iPhone, last quarter sold 37.04 million and had an average sale price of $650(?) which comes out to $24,076,000,000 in revenue. For Moto to take 2.25% is $541,710,000 in profit for a single quarter. You can probably add at least another $100 million for the iPad. As SDW2001 says, "Good luck with that, Moto."
Well, Motorola needs some way to make money. Considering Google, just dropped the Xoom from official support on their page, and the fact that they posted a loss this past quarter, maybe this is their only option to stay solvent and maintain their near $40 per share stock, in order for the deal with Google to continue.
Personally, I hope the EU does find them in violation, gives them a hefty fine, followed by Apple suing them again (and this time with Google) and winning another $billion or so.
... Personally, I hope the EU does find them in violation, gives them a hefty fine, followed by Apple suing them again (and this time with Google) and winning another $billion or so.
I love how it's the European Union that's really taking the ball forward here.
It's like they are hardly bothering with the US legal system at all. It's nice to see some legal standards set in the world and for the EU to show how corrupt and toothless the US legal system is.
It's like they are hardly bothering with the US legal system at all. It's nice to see some legal standards set in the world and for the EU to show how corrupt and toothless the US legal system is.
There is a human tendency to over praise (or over despise) what is strange to our culture. Not being an expert on those matters, I will not try to argue... It is different, for sure, although trying to achieve the same goals (protection of innovators, benefit to the consumers ..).
The main difference, as I see it, seems to be about software, for which the two systems have different approaches. But this is probably a very superficial judgement.
2.5%, what's that, about twice the total value of Motorola as a company?
Motorola Mobility (NYSE:MMI) has a current market cap of $11.67 billion, about $1 billion less than what Google paid for them. If they win this licensing they'd be making about $3-4 billion from Apple in 2012. That's pure profit and would make them the most profitable company in the handset market after Apple.
(Just to be clear, I don't think Moto has any chance of winning this.)
There is a human tendency to over praise (or over despise) what is strange to our culture. Not being an expert on those matters, I will not try to argue... It is different, for sure, although trying to achieve the same goals (protection of innovators, benefit to the consumers ..).
The main difference, as I see it, seems to be about software, for which the two systems have different approaches. But this is probably a very superficial judgement.
So nice to read a reasoned comment
Motorola Mobility (NYSE:MMI) has a current market cap of $11.67 billion, about $1 billion less than what Google paid for them. If they win this licensing they'd be making about $3-4 billion from Apple in 2012. That's pure profit and would make them the most profitable company in the handset market after Apple.
(Just to be clear, I don't think Moto has any chance of winning this.)
Do you think this may be the point at which Apple takes the gloves off regarding Google. I understand the reasoning behind Apple going after Android OEMs thus far but this was a planned strategy from the get go by Google when buying MotoMob I suspect.
Quit whining about the 2.25% cut or go somewhere else!
There is a rule book for Apple and one for everyone else on this planet?
There is a rule book for Apple and one for everyone else on this planet?
And what "rule book" would that be?
So nice to read a reasoned comment
I will not try to open the Pandora box of the metric system (especially with the British part of your personality ...). Just to remind the amazing story of Jean-Baptiste Delambre & Pierre Méchain, who spend seven years of their life (without seeing their wifes, from 1792 to 1799), triangulating the distance from Dunkerque to Barcelone, to establish the definition of the meter.
This could be now performed instantaneously by a satellite ... They overcome numerous difficulties, including the fact that during one part of this period France & Spain where fighting each other, which was not a favorable circumstance for scientific cooperation ....
Like other Apple fans in this forum say:
Quit whining about the 2.25% cut or go somewhere else!
There is a rule book for Apple and one for everyone else on this planet?
I'm sure you will equally supportive of any decision if Apple win the appeal.
I will not try to open the Pandora box of the metric system (especially with the British part of your personality ...). Just to remind the amazing story of Jean-Baptiste Delambre & Pierre Méchain, who spend seven years of their life (without seeing their wifes, from 1792 to 1799), triangulating the distance from Dunkerque to Barcelone, to establish the definition of the meter.
This could be now performed instantaneously by a satellite ... They overcome numerous difficulties, including the fact that during one part of this period France & Spain where fighting each other, which was not a favorable circumstance for scientific cooperation ....
I didn't know that story, thank you for sharing. I am as you can imagine stuck half way between systems. I grew up with the antiquaited British Imperial System only to move half way through the conversion. Money was metric but not measurements. Now the UK is ahead of the USA in this matter. It is useful to have my widgets for conversions.
I didn't know that story, thank you for sharing. I am as you can imagine stuck half way between systems. I grew up with the antiquaited British Imperial System only to move half way through the conversion. Money was metric but not measurements. Now the UK is ahead of the USA in this matter. It is useful to have my widgets for conversions.
I found the UK to be more messed up with it came to measurements. They use imperial units and metrics, MPH and KPH for road speed, F and C for temp depending on which sounds more extreme, and still use stones as a valid unit of mass.
Like other Apple fans in this forum say:
Quit whining about the 2.25% cut or go somewhere else!
There is a rule book for Apple and one for everyone else on this planet?
You seem to be confusing Apple's terms for participants in the App Store market it created...
... with Motorola promising to give a patent FRAND licensing terms to build an open industry standard and then turning around and demanding half a billion dollars a quarter from Apple because it uses chips that already licensed the technology.
One is a reasonable, supporting cost of benefitting from market Apple created and maintains, where the terms were clear from the start and for a service (retail) that more typically takes a 50% cut...
and the other is a mix of fraudulent backtracking on promises, attempted monopolization of a market Motorola did not create, and double charging over a flimsy patent claim.
What's most interesting is the extremely foul pretense of righteousness Google so publicly announced when it realized it needed to pay $12 billion for Motorola lest it lose the only exclusive Android licensee to Microsoft: saying Android was "under frivolous patent attack" and that Motorola would defend the platform.
Instead, Google's new acquisition has been fueled with the most phony, patent trolling desperate cash grab strategy imaginable. After stealing everything about the iPhone from Apple apart from its profitability, Google is now trying to steal Apple's earnings through extremely shady attempts to subvert the open standards process into a way to patent troll worthless old pager patents.
Like other Apple fans in this forum say:
Quit whining about the 2.25% cut or go somewhere else!
There is a rule book for Apple and one for everyone else on this planet?
In this case, yes there is. They're called frand patents and they are governed by a different set of rules than normal patents. Try to keep up now
Motorola Mobility (NYSE:MMI) has a current market cap of $11.67 billion, about $1 billion less than what Google paid for them. If they win this licensing they'd be making about $3-4 billion from Apple in 2012. That's pure profit and would make them the most profitable company in the handset market after Apple.
(Just to be clear, I don't think Moto has any chance of winning this.)
Except the patent in question doesn't apply to the iPhone 4S (because it uses a Qualcomm chip instead) so the amont going forward Apple would have to pay is considerably less than what you are predicting.