Nokia warns that Nexus 7 tablet infringes its patents

Posted:
in General Discussion edited January 2014
Nokia has issued a thinly-veiled threat to Google and Asus, the makers of the new Nexus 7 Android tablet, by claiming that the device infringes its patents and recommending that the two companies "simply approach" the handset maker for a patent license.

A spokesperson for Nokia indicated to The Inquirer that it believes the Nexus 7 infringes on its intellectual property.

Google announced the $199 tablet at its developer conference last week. The 7-inch tablet features an Nvidia Tegra 3 chipset and was co-developed by Asus.

According to the report, the allegedly infringed patents are likely part of the IEEE 802.11 WiFi standard.

"Nokia has more than 40 licensees, mainly for its standards essential patent portfolio, including most of the mobile device manufacturers. Neither Google nor Asus is licensed under our patent portfolio," the company's spokesperson told the publication. "Companies who are not yet licensed under our standard essential patents should simply approach us and sign up for a license."



As one of the pioneers of the mobile industry, Nokia amassed a hefty patent portfolio with more than 10,000 patent families. The Finnish company was the world's largest handset maker for over a decade until Samsung unseated it earlier this year.

Apple and Nokia headed off the threat of a protracted legal battle last year when they reached a patent license agreement. Apple paid a one-time sum to the handset maker and agreed to pay ongoing royalties.

The Inquirer went on to speculate that Nokia will not likely pursue a sales ban against Google and Asus and will instead push for licensing.

The Nexus 7 was mostly met with enthusiasm after it was unveiled last week. Some pundits were quick to label it as a serious threat to Amazon's Kindle Fire. Others said that the device will compete with the upcoming Surface tablet from Microsoft. Brian White of Topeka Capital Markets told investors that Apple's iPad could "relax" because the Nexus 7 was "just another Android-based tablet."
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Comments

  • Reply 1 of 54
    solipsismxsolipsismx Posts: 19,566member
    Since Google is claiming to sell the Nexus 7 without a profit margin I wouldn't put it past them to TRY TO get away with not paying for FRAND licensing or even attempting to pay for it. Now if Nokia tried to do to Google and Asus what they did with Apple over standard essential patents then I can see it differently but all that seems unlikely.


    edited for clarity.
  • Reply 2 of 54
    It won't be a surprise (at all) if Google ignore this threat or even the invitation to obtain the license. Such as...
  • Reply 3 of 54
    vadaniavadania Posts: 425member
    Where's Gator(google)guy when you need an official google statement on something like this?
  • Reply 4 of 54
    lightknightlightknight Posts: 2,309member

    Quote:

    Originally Posted by Vadania View Post



    Where's Gator(google)guy when you need an official google statement on something like this?




    He does sometimes make pretty pro-Apple-ish statements... he might be just like any of us, a normal person with strong opinions generously sharing them with the needy Internetz ;)

  • Reply 5 of 54
    rokradrokrad Posts: 143member


    I have one of these because of Google I/O and I have got to say for a low end tablet it is very good. Not good enough where its better than the iPad but still very good.

  • Reply 6 of 54
    john f.john f. Posts: 83member

    Quote:

    Originally Posted by Rokrad View Post


    I have one of these because of Google I/O and I have got to say for a low end tablet it is very good. Not good enough where its better than the iPad but still very good.



    I bet it is good. Funny how in the end, the "integrated" Apple approach is what all companies are turning to. Sad for their (MS and Google) partners, though. In the end, despite the choice, people will buy things from the "source", because of guaranteed OS support and because user experience. I would buy from MS or Google if I were in for an Android or Windows 8 tablet. Slowly, Google and Windows branded tablet will overtake those OEM. Maybe not in a few months, but over 12-24 months for sure. Bye, bye, OEM.


     


    I do find 8GB too little. I already find 16GB iPad is too little.

  • Reply 7 of 54
    gtrgtr Posts: 3,230member


    Go get 'em Nokia.


     


    Quote:

    Originally Posted by Rokrad View Post


    I have one of these because of Google I/O and I have got to say for a low end tablet it is very good. Not good enough where its better than the iPad but still very good.



     


    I recently purchased a rather large rock which, besides hardly costing me anything, is quite good at smashing a window whenever I need to enter my house.


     


    Doors are for idiotic iSheep.

  • Reply 8 of 54


    Well at least now we know why is it so cheap.


    If they can get away with it because they make no profit on selling them than it will be interesting to see other companies following.

  • Reply 9 of 54
    tawilsontawilson Posts: 484member

    Quote:

    Originally Posted by SolipsismX View Post



    Since Google is claiming to sell the Nexus 7 without a profit margin I wouldn't put it past them to get away with not paying for FRAND licensing or even attempting to pay for it. Now if Nokia tried to do to Google and Asus what they did with Apple over standard essential patents then I can see it differently but all that seems unlikely.


    Not paying FRAND licensing because you make money is NOT how the patent system works.  How much is made by the infringer is an irrelevant fact.

  • Reply 10 of 54
    hmmhmm Posts: 3,405member

    Quote:

    Originally Posted by SolipsismX View Post



    Since Google is claiming to sell the Nexus 7 without a profit margin I wouldn't put it past them to get away with not paying for FRAND licensing or even attempting to pay for it. Now if Nokia tried to do to Google and Asus what they did with Apple over standard essential patents then I can see it differently but all that seems unlikely.


    Prior suggestions have been that FRAND is calculated on the selling price rather than the gross margin, although it's probably much more complex than what I've read on here. Nothing is ever that simple once examined. Didn't Apple initially try to ignore Nokia?

  • Reply 11 of 54
    gatorguygatorguy Posts: 18,261member

    Quote:

    Originally Posted by hmm View Post


    Prior suggestions have been that FRAND is calculated on the selling price rather than the gross margin, although it's probably much more complex than what I've read on here. Nothing is ever that simple once examined. Didn't Apple initially try to ignore Nokia?



    I haven't come across anything showing royalties based on profit yet. I've seen it as free, a fixed flat-rate, per fixed quantities such as every 100K units, based on a percentage of the Bill-of-Materials for a completed ready-to-sell device, and as percentage of the selling price.  Nokia seems to like a percentage of the BOM for a finished device from the few sources I've been able to find.

  • Reply 12 of 54
    jragostajragosta Posts: 10,473member
    hmm wrote: »
    Prior suggestions have been that FRAND is calculated on the selling price rather than the gross margin, although it's probably much more complex than what I've read on here. Nothing is ever that simple once examined. Didn't Apple initially try to ignore Nokia?

    FRAND licensing is most commonly a per-unit price. That is, you pay us $0.25 per unit sold. Sometimes, it's a modest percentage, but generally the percentage is of the component. In this case, it would be a percentage of the WiFi chip cost - and would be reasonably well established. Basically, Nokia could charge what is reasonable based on what they charge other, similar, manufacturers. Generally, the number isn't large, but when multiplied by millions of units, it can be significant.

    There is, however, a potential issue of patent exhaustion. If the WiFi chip manufacturer has a license of Nokia's patents, Nokia may not be able to collect again.

    Motorola is taking an extreme position on both of the above topics and the matter hasn't been settled. First, Motorola wants to charge a (large) royalty on the final device selling price. By that standard, a Mercedes Benz using their patented technology could owe Motorola thousands of dollars for the same license that someone making a $100 throwaway cell phone might pay only a couple of bucks for. That is most certainly not standard practice and is not likely to be upheld by the courts. Furthermore, Motorola has tried to sue Apple for technology even when the component manufacturer already had a license - which will also not normally work (the exception would be if the final device used the technology in a way that was not covered by the component manufacturer's license).
  • Reply 13 of 54
    gatorguygatorguy Posts: 18,261member

    Quote:

    Originally Posted by jragosta View Post





    FRAND licensing is most commonly a per-unit price. That is, you pay us $0.25 per unit sold. Sometimes, it's a modest percentage, but generally the percentage is of the component. In this case, it would be a percentage of the WiFi chip cost - and would be reasonably well established. Basically, Nokia could charge what is reasonable based on what they charge other, similar, manufacturers. Generally, the number isn't large, but when multiplied by millions of units, it can be significant.

    There is, however, a potential issue of patent exhaustion. If the WiFi chip manufacturer has a license of Nokia's patents, Nokia may not be able to collect again.

    Motorola is taking an extreme position on both of the above topics and the matter hasn't been settled. First, Motorola wants to charge a (large) royalty on the final device selling price. By that standard, a Mercedes Benz using their patented technology could owe Motorola thousands of dollars for the same license that someone making a $100 throwaway cell phone might pay only a couple of bucks for. That is most certainly not standard practice and is not likely to be upheld by the courts. Furthermore, Motorola has tried to sue Apple for technology even when the component manufacturer already had a license - which will also not normally work (the exception would be if the final device used the technology in a way that was not covered by the component manufacturer's license).


    Telecommunication standard-essential royalties based on a percentage of the finished device, whether the total Bill-of-materials or the device selling price, are very common Jr. I've given links here numerous times to the Qualcomm 3G and 4G basic license terms (BOM), as well as evidence of Nokia's basic royalty basis (BOM), Motorola's basic royalty basis (selling price), etc. 


     


    I have no idea how you determined the royalty base for FRAND licensing isn't commonly a percentage of a device or component price. I've never seen anything about "FRAND rules" for establishing a royalty basis or that it's most commonly a set fee per unit. so perhaps a citation would be in order if you're claiming fact. 


     


    There's also no proof that Moto has sued Apple for technology they already held a valid license for thru another licensee. Just because Apple claimed that in a US court case yet to be adjudicated does not make it factual. So another citation for that claim too would be appropriate if you're claiming it as fact. 

  • Reply 14 of 54
    waybacmacwaybacmac Posts: 309member

    Quote:

    Originally Posted by Gatorguy View Post


    I haven't come across anything showing royalties based on profit yet. I've seen it as free, a fixed flat-rate, per fixed quantities such as every 100K units, based on a percentage of the Bill-of-Materials for a completed ready-to-sell device, and as percentage of the selling price.  Nokia seems to like a percentage of the BOM for a finished device from the few sources I've been able to find.



     


    Here's my take (FWIW). When a company agrees to license a critical patent they own under FRAND conditions, they are supposed to: 1) license it to anyone who wants it; 2) offer basically the same or reasonably similar conditions for use to all licensees; and 3) offer basically the same or reasonably similar fees. Conditions and fees can and do vary from one licensee to another and are negotiated. The emphasis is on "fair and reasonable". For example, it's ok to charge a big company with deep pockets more than a new startup with limited resources. However, there are some big no-no's: 1) flatly refusing to license the patent; 2) requiring ridiculously high fees out of line with licenses already granted; and 3) draconian conditions also out of line with licenses already granted that would make the license virtually worthless.


     


    Now by Nokia bringing the licensing matter to the attention of Google and Asus in a "can't-we-all-just-get-along" manner, G&A can no longer claim, "Oh, I forgot. My bad. Sorry." If G&A were now to try and ignore Nokia they would be totally open to a suit and the onus would be on them for failing to come to the license-negotiation table. And this might not reflect well on Google (+Motorola) which are already facing investigations in both Europe and the US for misuse of FRAND patents.


     


    I expect Nokia will indeed license their patents to G&A under FRAND conditions, but I expect those fees will be on the high side of "fair and reasonable".   image

  • Reply 15 of 54
    markbyrnmarkbyrn Posts: 586member
    Okay Fandroids, it's time to add Nokia and their partner in crime - Microsoft to our boycott list. Down with Apple, Nokia, and Microsoft - Googlez for the win!
  • Reply 16 of 54
    gatorguygatorguy Posts: 18,261member

    Quote:

    Originally Posted by waybacmac View Post


    I expect Nokia will indeed license their patents to G&A under FRAND conditions, but I expect those fees will be on the high side of "fair and reasonable".   image



    As would I. Claims are that Nokia asks around 5% of the finished device price when there's 10 or more patents in the package.


    http://www.ecommercetimes.com/story/56757.html

  • Reply 17 of 54
    jragostajragosta Posts: 10,473member
    gatorguy wrote: »
    As would I. Claims are that Nokia asks around 5% of the finished device price when there's 10 or more patents in the package.
    http://www.ecommercetimes.com/story/56757.html

    That's not what the article says. Here's a direct quote:
    San Diego-based Qualcomm contends that Nokia's assertion about "what are fair and reasonable rates for Qualcomm's patents are directly contradicted by its demands for its own patents." According to Qualcomm, Nokia demands 2.5 percent for a single essential patent, 3.5 percent for two, three patents run 4 percent and 10 or more will go for 5 percent or higher.


    They're talking about how much QUALCOMM pays in license fees. Qualcomm manufactures one chip for phones - so those percentages are percent of component cost, not finished device cost.
  • Reply 18 of 54
    gatorguygatorguy Posts: 18,261member

    Quote:

    Originally Posted by jragosta View Post





    That's not what the article says. Here's a direct quote:

    They're talking about how much QUALCOMM pays in license fees. Qualcomm manufactures one chip for phones - so those percentages are percent of component cost, not finished device cost.


    Read carefully JR. Where does the article say that's the fee Nokia is charging Qualcomm for patents included in Qualcomm chipsets? It doesn't. While you read the article again, more carefully this time, note this sentence too:


    "In fact, the company asserted, Nokia has been paying a royalty on WCDMA handsets in excess of 3 percent to Qualcomm alone."

  • Reply 19 of 54
    hattighattig Posts: 810member


    I'm wondering when this whole technology patents thing collapses in a great big black hole. The only winners are the lawyers. The consumer is certainly not winning - either they pay more for their products or they don't get a choice of products. Since patents (theoretically) exist to spur innovation, which is good for the consumer, yet they're being used to prevent competition and increase costs, both of which are bad for the consumer, I simply find the entire situation distasteful, whoever the party is.


     


    Or a group of companies form a patent-cartel, and prevent any newcomer from entering. Again, bad for the consumer.


     


    Of course the government rarely pays any attention to the consumer these days, not when business and lobby groups can pay for so many lavish meals and other entertainment, and guaranteed jobs on the board of directors once you've left politics. And when all the political parties are in in up to their grubby necks, the voter merely chooses which shower of bastards they want to screw them over.


     


    OTOH you can't blame the companies for exploiting all they can from the laws and regulations that modern society has set up for them.

  • Reply 20 of 54

    Quote:

    Originally Posted by SolipsismX View Post



    Since Google is claiming to sell the Nexus 7 without a profit margin


     


     


     


    Are they really making that claim?  I don't remember them saying that.   Do you have a cite?

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