Apple tells court it would pay no more than $1 per iPhone to license Motorola patents

Posted:
in iPhone edited January 2014
Apple has indicated to a Wisconsin court that it is willing to pay Google-owned Motorola Mobility to license standard-essential wireless patents, but it will not pay more than $1 per iPhone sold.

The admission by Apple marks the first time the company has indicated it would license standard-essential patents from Motorola, according to Florian Mueller of FOSS Patents. Apple said that if the court sets a FRAND rate at or below $1, the company will take a license and start paying Motorola immediately.

But if the court sets a royalty rate higher than $1 per iPhone, Apple has signaled that it will appeal the decision and make it more difficult for Motorola and Google to collect.

"Motorola cannot offer evidence at this trial that the rate should be higher than $1 per phone, but to the extent the Court sets the rate higher than $1 per unit, Apple reserves the right to exhaust all appeals," Apple's filing reads, "and needs also to reserve the right available to any party offered a license: the right to refuse and proceed to further infringement litigation. Make no mistake, that is not an outcome Apple desires."

Motorola


The new details come five days ahead of the start of the FRAND contract trial in the Western District of Wisconsin. In that trial, Apple intends to employ expert testimony and "copious real-world evidence ? including Motorola's contemporaneous licenses ??that establishes a ceiling for the FRAND rate Motorola could charge Apple for Motorola's worldwide portfolio."

The rate Apple has said it is willing to pay is significantly lower than the 2.25 percent of Apple's sales that Motorola seeks for standard-essential patents. Mueller, an intellectual property expert, said he doesn't expect Motorola to "ever" receive a payout that large.

"Apple's '$1 maximum' position may be justified from a FRAND point of view (I guess it is)," Mueller wrote, "but such a deal wouldn't give Google the strategic leverage over Apple that it hoped to get when it paid $12.5 billion for Motorola Mobility."
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Comments

  • Reply 1 of 61
    cash907cash907 Posts: 893member
    Huh. Wonder how well it'll fly when Samsung follows suit and dictates to the court what penalties it's willing to pay, cuz that's apparently the world we live in now.
  • Reply 2 of 61
    vqrovqro Posts: 66member
    LOL @ Google. Those dirty bastards trying to cheat companies (read: Apple) using FRAND patents. I hope google get's their assess sued or that they get fined for unfair business practices.
  • Reply 3 of 61
    snovasnova Posts: 1,281member


    not sure what the problem is. Google will get back their ROI back when Apple ships 12.5 billion iPhones.  Just have to sell two iPhones to every single person on the planet. 

  • Reply 4 of 61
    christophbchristophb Posts: 1,448member
    cash907 wrote: »
    Huh. Wonder how well it'll fly when Samsung follows suit and dictates to the court what penalties it's willing to pay, cuz that's apparently the world we live in now.

    Licensing Fee != Penalty
  • Reply 5 of 61
    quadra 610quadra 610 Posts: 6,743member

    Quote:

    Originally Posted by AppleInsider View Post





    But if the court sets a royalty rate higher than $1 per iPhone, Apple has signaled that it will appeal the decision and make it more difficult for Motorola and Google to collect.

    "Motorola cannot offer evidence at this trial that the rate should be higher than $1 per phone, but to the extent the Court sets the rate higher than $1 per unit, Apple reserves the right to exhaust all appeals," Apple's filing reads, "and needs also to reserve the right available to any party offered a license: the right to refuse and proceed to further infringement litigation. Make no mistake, that is not an outcome Apple desires."

    "Apple's '$1 maximum' position may be justified from a FRAND point of view (I guess it is)," Mueller wrote, "but such a deal wouldn't give Google the strategic leverage over Apple that it hoped to get when it paid $12.5 billion for Motorola Mobility."


     


     


    This is what is meant by "Thermonuclear."


     


    Good on ya, Tim.   :)

  • Reply 6 of 61
    ko024ko024 Posts: 68member

    Quote:

    Originally Posted by Cash907 View Post



    Huh. Wonder how well it'll fly when Samsung follows suit and dictates to the court what penalties it's willing to pay, cuz that's apparently the world we live in now.




    Huh....  this is a FRAND patent, and every other company is paying 1 dollar, so why would apple pay more....  And apple is ONLY dictating that it would accept that amount and all other amounts will be appealed which is exactly what the court is trying to avoid...  this makes perfect sense to me.. Not sure why you have a problem with that.....

  • Reply 7 of 61
    tbelltbell Posts: 3,146member

    Quote:

    Originally Posted by Cash907 View Post



    Huh. Wonder how well it'll fly when Samsung follows suit and dictates to the court what penalties it's willing to pay, cuz that's apparently the world we live in now.


     


     


    Cash907:


     


    Perhaps you should actually go read a little first before commenting on things you obviously don't understand. This is about licensing fees, not penalties. Apple hasn't been found to infringe Motorola's patents. Apple knows it might have to pay Motorola licensing fees. Motorola moreover knows it has to give Apple access to the patents per its contractual obligations with the standard setting committee. However, also per contractual obligations Motorola cannot charge whatever it wants. The rate has to be fair, reasonable, and non-discriminatory.


     


    Apple's position is any rate higher than a dollar a phone doesn't met that standard. I for one am surprised Apple is willing to pay anything so quickly as Motorola hasn't provided any evidence that the rate it wants doesn't discriminate against Apple. Motorola has to charge everybody the same rate. 

  • Reply 8 of 61

    Quote:

    Originally Posted by ko024 View Post




    Huh....  this is a FRAND patent, and every other company is paying 1 dollar, so why would apple pay more....  And apple is ONLY dictating that it would accept that amount and all other amounts will be appealed which is exactly what the court is trying to avoid...  this makes perfect sense to me.. Not sure why you have a problem with that.....



    He clearly has no idea of what he speaks and doesn't understand what exactly is going on here and how it differs with the Samsung suit.

  • Reply 9 of 61

    Quote:

    Originally Posted by TBell View Post


     I for one am surprised Apple is willing to pay anything so quickly ...



     


    As I recall, the issue was Apple ALWAYS had to pay SOMETHING, they haven't been paying anything as a rate could not be determined. 

  • Reply 10 of 61

    Quote:

    Originally Posted by Cash907 View Post



    Huh. Wonder how well it'll fly when Samsung follows suit and dictates to the court what penalties it's willing to pay, cuz that's apparently the world we live in now.




    That is the problem with the arm chair lawyers they think they know everything.

  • Reply 11 of 61
    gatorguygatorguy Posts: 20,009member

    Quote:

    Originally Posted by TBell View Post


     


     


    Cash907:


     


    However, also per contractual obligations Motorola cannot charge whatever it wants. The rate has to be fair, reasonable, and non-discriminatory.


     


    Apple's position is any rate higher than a dollar a phone doesn't met that standard. I for one am surprised Apple is willing to pay anything so quickly as Motorola hasn't provided any evidence that the rate it wants doesn't discriminate against Apple. Motorola has to charge everybody the same rate. 



    ...which according to them is 2.25% of the device BOM, with a cap on the total royalties for the FRAND pledged package of patents. There is evidence that their standard published base rate has been 2.25% of the device cost for several years now. Whether they actually  get that from companies with anywhere near the volume of an Apple or Microsoft is a big question-mark. Of course that's still well under the base rate that Nokia is reported to charge for their FRAND patents, and Apple found a way to settle with them.

  • Reply 12 of 61


    The root issue, I guess, is whether the license fee should be an absolute amount or a percentage. There are arguments for both. Although I am not familiar with history of FRAND patents and whether their license fees are percentage based or not, I am guessing it is not so clear out that either Motorola or Apple could convince the courts by simply citing all precedents.

  • Reply 13 of 61


    Whatever standard this is, the FRAND terms of standards just stipulate that licensing (a) must be available and (b) must have the same pricing for everyone.  


     


    Pretty much every standard has some FRAND licensing to someone (or some group).  If there weren't such licensing opportunities, nobody would build standards.  I can point you to a lot of industries where the technology developer decided not to standardize in order to have a monopoly.

  • Reply 14 of 61
    cpsrocpsro Posts: 2,442member

    Quote:

    Originally Posted by Cash907 View Post



     that's apparently the world we live in now.


    you're dreaming... you might call it a nightmare.

  • Reply 15 of 61
    jeffdmjeffdm Posts: 12,946member
    cash907 wrote: »
    Huh. Wonder how well it'll fly when Samsung follows suit and dictates to the court what penalties it's willing to pay, cuz that's apparently the world we live in now.

    That depends, is Samsung infringing on FRAND patents? These details matter, whether or not you've decided they are important.
  • Reply 16 of 61

    Quote:

    Originally Posted by snova View Post


    not sure what the problem is. Google will get back their ROI back when Apple ships 12.5 billion iPhones.  Just have to sell two iPhones to every single person on the planet. 





    Was that the price Google pay for Motorola initially?  You have to add in the loss it has quarter over quarter to come up with the real cost for Google.  Google should have fired their patent lawyers.

  • Reply 17 of 61


    Originally Posted by ko024 View Post

    Not sure why you have a problem with that.....


     


    Because he's a troll.

  • Reply 18 of 61

    Quote:

    Originally Posted by Splinemodel View Post


    Whatever standard this is, the FRAND terms of standards just stipulate that licensing (a) must be available and (b) must have the same pricing for everyone.  


     



    With due respect, neither is true, particularly the second part.

  • Reply 19 of 61
    charlitunacharlituna Posts: 7,205member
    cash907 wrote: »
    Huh. Wonder how well it'll fly when Samsung follows suit and dictates to the court what penalties it's willing to pay, cuz that's apparently the world we live in now.

    If $1 is what everyone else pays then under FRAND rules, Moto has to use that fee, or close to, for everyone. And if Apple is making this demand they likely have proof that this is the case. So letting everyone else pay $1 and asking more like $50 from Apple isn't particularly fair or reasonable and might not be non discrim.

    As for the Samsung comment, penalties aren't what this is about. But yes Samsung has dictated terms they are willing to pay for licenses. Sometimes folks say okay, sometimes they say no. It's how the game works. If it was a SEP and Samsung thought the other side was being non FRAND they sued. Also part of the game
  • Reply 20 of 61
    aaarrrggghaaarrrgggh Posts: 1,570member
    gatorguy wrote: »
    ...which according to them is 2.25% of the device BOM, with a cap on the total royalties for the FRAND pledged package of patents. There is evidence that their standard published base rate has been 2.25% of the device cost for several years now. Whether they actually  get that from companies with anywhere near the volume of an Apple or Microsoft is a big question-mark. Of course that's still well under the base rate that Nokia is reported to charge for their FRAND patents, and Apple found a way to settle with them.

    Is it confirmed that the rate is on BOM vs sale price for Moto? (I know you have been religiously saying it is BOM, but I thought I understood otherwise.)
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