Apple FRAND win over Motorola slashes Google's patent power

Posted:
in iPhone edited January 2014
A federal judge's ruling in Apple v. Motorola Mobility has strengthened the case that parties who provide patents to standards bodies must uphold their commitments to offer licensing under "Fair, Reasonable and Nondiscriminatory" terms.

The series of summary judgement requests Apple was granted in the case by Judge Barbara B. Crabb means that Apple "is in pretty good shape with a view to the Wisconsin FRAND trial," notes Florian Mueller of FOSS Patents.

Motorola was seeking to collect a 2.25 percent royalty rate from Apple over any iOS devices that use industry standards such as wireless UMTS 3G which involve Motorola's patents. Apple argues that the royalty rate Motorola is demanding is inconsistent with the FRAND restrictions on such standard essential patents (SEP).

The ruling is a major blow to Google's strategy of montizing Motorola Mobility's largely "standards essential" patent portfolio, and comes just days after Google announced plans to layoff a fifth of the company it announced plans to acquire nearly a year ago. The $12.5 billion deal was finalized in May.

Government regulators in the US and elsewhere approved the acquisition only after noting reservations about Google's commitments to FRAND licensing.

This year, the European Commission and the U.S. Federal Trade Commission both began actively investigating Google and Motorola over suspected FRAND abuse.

SEP and FRAND

Unlike proprietary patents covering technical feature or design elements, SEPs are something vendors can usually not work around by avoiding a particular implementation, because they must use the SEP to make products compatible with various industry standards (such as WiFi or 3G).

That's why standards bodies require members to license their SEPs under FRAND terms. However, a number of companies have sought to force Apple to license its valuable design and technical patents by holding up licensing of SEPs in retaliation, ignoring the FRAND commitments those firms made.

"So far there's a clear trend across multiple federal districts that FRAND is anything but the empty word that certain notorious abusers would like it to be," Mueller observed.

Obey the FRAND

Mueller noted that Judge Crabb's findings include that:

? Motorola entered into binding contractual obligations with ETSI and IEEE [standards bodies] to license its declared essential patents on fair, reasonable and nondiscriminatory terms

? In submitting technical proposals to ETSI for inclusion of Motorola technology in ETSI standards, Motorola was obligated by ETSI policy to make a bona fide effort to identify essential intellectual property rights that might be required by the technical proposal before the adoption of the technical proposal into the standard.

? Motorola was obligated to make a bona fide effort to disclose the applications leading to the issuance of its United States patents 6,175,559, 6,359,898 and 6,246,697 [the '697 patent is the one that an ITC judge held Apple, on a preliminary basis, to infringe] to ETSI before the adoption of Motorola's technical proposals, even when those patent applications were unpublished.

??Motorola disclosed the patent applications issuing as the '898, '559 and '697 patents after the adoption of the standards to which Motorola contends those patents are essential.

Apple now has to demonstrate proof that Motorola's licensing demands are not compatible with its FRAND licensing terms, but Mueller notes "the issues have been narrowed considerably."

Mueller added that the decision means Google's ability to threaten to block U.S. imports of Apple's iOS devices (or Microsoft's Xbox, involved a separate lawsuit) using its newly acquired Motorola's FRAND-pledged standards essential patents is increasingly unlikely, calling the ruling "the latest event of many that call into question the patent strategy behind that $12.5 billion impulse buy."
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Comments

  • Reply 1 of 63
    jungmarkjungmark Posts: 6,657member


    I bet a lot of Fandroids are crying now.


     


    That's 12.5 billion well spent, Google. haha

  • Reply 2 of 63
    quadra 610quadra 610 Posts: 6,743member

    Quote:

    Originally Posted by AppleInsider View Post





    Mueller added that the decision means Google's ability to threaten to block U.S. imports of Apple's iOS devices (or Microsoft's Xbox, involved a separate lawsuit) using its newly acquired Motorola's FRAND-pledged standards essential patents is increasingly unlikely, calling the ruling "the latest event of many that call into question the patent strategy behind that $12.5 billion impulse buy."


     


    $12.5 billion to purchase patents to be wielded against competitors at a later date (not very successfully), while letting Moto go to complete shit. Because 1) Google doesn't really have any meaningful patents of their own, and 2) because they're a bottom-feeding ad company that isn't above remedying 1 by behaving like 2.

  • Reply 3 of 63

    Quote:

    Motorola was seeking to collect a 2.25 percent royalty rate from Apple over any iOS devices that use industry standards such as wireless UMTS 3G which involve Motorola's patents. Apple argues that the royalty rate Motorola is demanding is inconsistent with the FRAND restrictions on such standard essential patents (SEP).


     


    So do we know yet what everyone else is paying? Or are we still speculating a year later? 

  • Reply 4 of 63
    sflocalsflocal Posts: 4,492member


    I know it won't happen but Motorola should be fined for trying to pull that stunt.  Pay all the attorney fees and extra for being such a dumba$$.



    However, it does bring me great joy that the judge pissed in the Fandroid's pool. :)

  • Reply 5 of 63
    jason98jason98 Posts: 763member

    Quote:

    Originally Posted by AppleInsider View Post



    Motorola was seeking to collect a 2.25 percent royalty rate from Apple over any iOS devices that use industry standards such as wireless UMTS 3G which involve Motorola's patents. 


     


    Just wonder, where it is written that 2.25% is NOT reasonable?


    What is the definition of a "reasonable royalty"?

  • Reply 6 of 63
    lkrupplkrupp Posts: 6,782member
    Apple patiently getting its ducks in a row until it's time to go for Google's carotid arteries. The throat slashing, when it comes, will be spectacular.
  • Reply 7 of 63

    Quote:

    Originally Posted by thataveragejoe View Post


     


    So do we know yet what everyone else is paying? Or are we still speculating a year later? 



    I think the 2.25% rate is common, however, 2.25% of WHAT became the issue. Apple buys communication chips with the patented circuitry built-in. The chip manufacturers have already paid MotoMo 2.25% of the cost to manufacture the chip. (pennies). However, MotoMo wanted Apple to pay 2.25% of the retail price of the finished device. (dollars)


     


    Besides being unfair, unreasonable and discriminatory terms; the industry standard is to base the payment on the point where the patent enters the device. For example, using Motomo's way they wanted to charge Apple; if a car-maker wanted to add a we-fi card to their BMW, then they would need to pay Motomo 2.25% of the retail prices of the automobile.


     


     

  • Reply 8 of 63
    adamiigsadamiigs Posts: 355member

    Quote:


    Just wonder, where it is written that 2.25% is NOT reasonable?


    What is the definition of a "reasonable royalty"?




     


     


     


    It is way out of line with what they charge other companies, if you are changing one company .25% you cannot by terms of the FRAND agreement charge another company 2.25% just because they have more products or are more successful, that's the point you get more overall from them because they are selling more units.


     


    Read up a bit at least.

     

  • Reply 9 of 63
    hill60hill60 Posts: 6,989member

    Quote:

    Originally Posted by jason98 View Post


     


    Just wonder, where it is written that 2.25% is NOT reasonable?


    What is the definition of a "reasonable royalty"?



     


    2.25% of the chip that actually uses the patent, paid for by the chipmaker such as Qualcomm and passed on in the price of the chip, seems to be the industry norm, as shown by Motorola's attempts to rescind this agreement when chips are sold to Microsoft and Apple.


     


    Imposing it on entire completed devices is many, many times this amount and is where the "unreasonable" part comes in.


     


    Imagine if you bought a car which had a security system containing a SIM card, would 2.25% of the entire value of that car be "reasonable", given that the particular functionality given by the patent forms such a small part of the overall purpose of the car?

  • Reply 10 of 63
    galbigalbi Posts: 968member


    Companies who invest in real R&D will hog their patents after these decision.


     


    Watch as technological progress will take a hit of never meeting its full potential.

     


     


    "Come on dude, lets share your patent with us so we can standardize this technology?"


     




    "Sorry, I'm keeping it to myself. If anybody tries to use it, I'm gonna sue your ass".


     


    Result?


     


    Technology standardization never materializes and hinders progress.

  • Reply 11 of 63
    gatorguygatorguy Posts: 20,278member

    Quote:

    Originally Posted by AdamIIGS View Post


     


     


     


    It is way out of line with what they charge other companies, if you are changing one company .25% you cannot by terms of the FRAND agreement charge another company 2.25% just because they have more products or are more successful, that's the point you get more overall from them because they are selling more units.


     


    Read up a bit at least.

     



    Do you have a link to what Moto is charging other licensees for it's (F)RAND patent set it's asserting Apple won't license in acccordance with standard terms? You should have one at the ready if you're going to try to mock another poster.

  • Reply 12 of 63
    gatorguygatorguy Posts: 20,278member

    Quote:

    Originally Posted by hill60 View Post


     


    2.25% of the chip that actually uses the patent, paid for by the chipmaker such as Qualcomm and passed on in the price of the chip, seems to be the industry norm, as shown by Motorola's attempts to rescind this agreement when chips are sold to Microsoft and Apple.


     


    Imposing it on entire completed devices is many, many times this amount and is where the "unreasonable" part comes in.


     


    Imagine if you bought a car which had a security system containing a SIM card, would 2.25% of the entire value of that car be "reasonable", given that the particular functionality given by the patent forms such a small part of the overall purpose of the car?



    Incorrect. I've listed proof otherwise numerous times that royalties based on the price of a finished ready-to-sell device is both common and considered fair by other industry players... even Qualcomm. You may have the mistaken belief that it's highly unusual, or worse Apple is being singled out, if you depend only on FOSSPatents or AI articles.

  • Reply 13 of 63
    pendergastpendergast Posts: 1,358member
    galbi wrote: »
    Companies who invest in real R&D will hog their patents after these decision.

    Watch as technological progress will take a hit of never meeting its full potential.

     

    "Come on dude, lets share your patent with us so we can standardize this technology?"



    "Sorry, I'm keeping it to myself. If anybody tries to use it, I'm gonna sue your ass".

    Result?

    Technology standardization never materializes and hinders progress.

    Lol, but I bet you don't consider what Apple patents "real R&D", right?

    Also, you completely misunderstand why companies decide to make a patent an SEP. It's not an altruistic thing. Some patents (I.e. patents like those involved in communications) are ONLY valuable if they become part of a standard. If it remained proprietary, who would want to use it? Communications depend on ubiquitous adoption.

    And if EVERYONE uses it, you can collect a pretty penny. The judge did not rule that Moto can't collect licensing fees. It's just that they're bound to be fair and reasonable and non-discriminatory.
  • Reply 14 of 63
    pendergastpendergast Posts: 1,358member
    gatorguy wrote: »
    Incorrect. I've listed proof otherwise numerous times that royalties based on the price of a finished ready-to-sell device is both common and considered fair by other industry players... even Qualcomm. You may have the mistaken belief that it's highly unusual, or worse Apple is being singled out, if you depend only on FOSSPatents or AI articles.

    Incorrect. You've listed sources who are likewise speculating, as the final agreements between companies are not disclosed.

    Common sense says that things don't cost as much as you seem to think they do.
  • Reply 15 of 63
    gatorguygatorguy Posts: 20,278member

    Quote:

    Originally Posted by Pendergast View Post





    Incorrect. You've listed sources who are likewise speculating, as the final agreements between companies are not disclosed.

    Common sense says that things don't cost as much as you seem to think they do.


    Wrong again. . .


    Straight from the horses mouth, Qualcomm's royalty statement:


    http://www.qualcomm.com/media/documents/ltewimax-patent-licensing-statement#node-10731

  • Reply 16 of 63

    Quote:

    Originally Posted by AdamIIGS View Post


    Read up a bit at least.



    LOL. That's asking for a lot around these forums....

  • Reply 17 of 63
    ssquirrelssquirrel Posts: 1,196member

    Quote:

    Originally Posted by Gatorguy View Post


    Do you have a link to what Moto is charging other licensees for it's (F)RAND patent set it's asserting Apple won't license in acccordance with standard terms? You should have one at the ready if you're going to try to mock another poster.



     


    Top of page 7.  It's from the MS vs Motorola lawsuit over 802.11 and H.264.  http://www.scribd.com/doc/94512159/ITC-Xbox-ruling


     


     


    If those sets of 2.25% were 45x and 16x greater than what they usually charge people, then they usually charge as follows (when compared to the full retail price)


     


    45x greater: .05%

    16x greater: .140625%

  • Reply 18 of 63
    pendergastpendergast Posts: 1,358member
    gatorguy wrote: »
    Wrong again. . .
    Straight from the horses mouth, Qualcomm's royalty statement:
    http://www.qualcomm.com/media/documents/ltewimax-patent-licensing-statement#node-10731

    No, that's still not confirmed numbers as to what people are actually paying. You've presented speculation and published terms, which are not necessarily reflective of the actual terms that are agreed upon.

    Think about it logically: if, as people have used as an example, Ford purchased a Qualcomm chipset for use in the Focus, would they pay 2.25% of the RETAIL price of the car? If you think so, I'm going to laugh.

    Logic says that since the iPhone has been out since 2007 and Apple currently has a good relationship with Qualcomm, they are likely paying Qualcomm money. Since Qualcomm uses tech from Motorola, etc. Qualcomm is paying Moto (as evidenced by Moto's request to terminate their license to sell to Apple). Thus, Apple is maybe paying a total of a couple percentage points of their retail price, but no more than that, given their gross margins.
  • Reply 19 of 63


    Apple has been though the courts before and I can see it's learned some lessons; Google is going to be screwed when Apple wins against samsung.

  • Reply 20 of 63
    tooltalktooltalk Posts: 766member

    Quote:

    Originally Posted by Pendergast View Post





    Lol, but I bet you don't consider what Apple patents "real R&D", right?

    Also, you completely misunderstand why companies decide to make a patent an SEP. It's not an altruistic thing. Some patents (I.e. patents like those involved in communications) are ONLY valuable if they become part of a standard. If it remained proprietary, who would want to use it? Communications depend on ubiquitous adoption.

    And if EVERYONE uses it, you can collect a pretty penny. The judge did not rule that Moto can't collect licensing fees. It's just that they're bound to be fair and reasonable and non-discriminatory.


     


    There is nothing preventing companies from cross-licensing on bilateral basis. It just means that it will be a bit more cumbersome to work out licensing & some patents won't be available to much wider audience, like Apple. 

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