Apple ordered to pay $838M for infringing Caltech Wi-Fi patents

AppleInsider

A federal jury on Wednesday found Apple and Broadcom in infringement of patents owned by California Institute of Technology, awarding the university $1.1 billion to be paid by the two tech companies.

Logic board from Apple's first iPad, released in 2010. | Source: iFixit

In less than five hours of deliberations, a California jury decided Apple and Broadcom infringed on patents covering Wi-Fi technology and slapped both with massive monetary penalties based on would-be royalties, according to in-court reports from Law360.

Caltech's lawyers argued a hypothetical licensing deal in 2010 for chips used in iPhone, iPad, Mac, Apple Watch and other products would have brought in some $1.40 per device from Apple and 26 cents each from Broadcom. That calculation was adopted by the jury to level an $838 million fine for Apple and accompanying $270 million fine for Broadcom.

The university first filed suit in 2016, claiming violation of four patents related to IRA/LDPC encoding and decoding technology. As it applies to components used in Apple's devices, the IP covers chips supporting 802.11n and 802.11ac wireless technologies.

For its part, Apple claimed it used common Wi-Fi chips supplied by Broadcom. As it did not develop proprietary encoding and decoding solutions that might infringe on Caltech's IP, the company was "merely an indirect downstream party" and should not be held liable for wrongdoing, Apple argued. The argument apparently fell flat.

"We are pleased the jury found that Apple and Broadcom infringed Caltech patents," Caltech said in a statement to Reuters. "As a non-profit institution of higher education, Caltech is committed to protecting its intellectual property in furtherance of its mission to expand human knowledge and benefit society through research integrated with education."

Apple said it will appeal the ruling.

Apple and Broadcom are longtime partners and last week inked a pair of multi-year agreements for the supply of wireless components bound for devices like iPhone.

sternlight

Why charge tuition when one can sue infringers instead?

sflocal

I just don't get this.  If Apple buys chips made by Broadcom, and those chips are found to be in violation, why should Apple even be involved? Did this company go after other phone manufacturers using their chips?  

mknelson

sflocal said:

I just don't get this.  If Apple buys chips made by Broadcom, and those chips are found to be in violation, why should Apple even be involved? Did this company go after other phone manufacturers using their chips?  

All I can think of is that would be the licensing fee that Broadcom would have charged Apple IF Broadcom had licensed the CalTech patents?

JFC_PA

mknelson said:

sflocal said:

I just don't get this.  If Apple buys chips made by Broadcom, and those chips are found to be in violation, why should Apple even be involved? Did this company go after other phone manufacturers using their chips?  

All I can think of is that would be the licensing fee that Broadcom would have charged Apple IF Broadcom had licensed the CalTech patents?

Yet I’d expect then the liability would still all be Broadcom who’d be liable for having violated the patent not a downstream purchaser. 

sflocal

mknelson said:

sflocal said:

I just don't get this.  If Apple buys chips made by Broadcom, and those chips are found to be in violation, why should Apple even be involved? Did this company go after other phone manufacturers using their chips?  

All I can think of is that would be the licensing fee that Broadcom would have charged Apple IF Broadcom had licensed the CalTech patents?

Maybe, but whatever money Broadcom got from Apple I would think is irrelevant.  Broadcom sold x-number of infringing chips to Apple, and <insert other phone manufacturers), then each $1.40 in costs per chip is owed to CIT from Broadcom.  

k2kw

sternlight said:

Why charge tuition when one can sue infringers instead?

Maybe tuition is so hi because Tech companies like Apple are always stealing IP.   Hopefully this reduces their tuition but I doubt it.

k2kw

Gee.   Does the Apple legal dept ever win.   Isn’t this bigger than the Samsung victory. Lol.
its a good thing that Apple is an incredible cash printing machine.

rcfa

Totally ridiculous! If I buy chips e.g. from Newark and build some sort of computing device, why the fuck should I be liable for the IP infringement of the company producing the chips?
Apple uses standard IEEE WiFi standards by buying industry standard chips. Just because Apple has deep pockets doesn’t mean it’s more liable.

applesauce007

Apple should appeal.
Broadcom could be sued but not Apple.

CloudTalkin

sflocal said:

mknelson said:

sflocal said:

I just don't get this.  If Apple buys chips made by Broadcom, and those chips are found to be in violation, why should Apple even be involved? Did this company go after other phone manufacturers using their chips?  

All I can think of is that would be the licensing fee that Broadcom would have charged Apple IF Broadcom had licensed the CalTech patents?

Maybe, but whatever money Broadcom got from Apple I would think is irrelevant.  Broadcom sold x-number of infringing chips to Apple, and <insert other phone manufacturers), then each $1.40 in costs per chip is owed to CIT from Broadcom.  

A patent holder can sue anyone along the chain of alleged infringement.  In this particular instance, CIT can sue Broadcom who made the chips, Apple who uses the chips, and even end users who use the products that use the chips.  Obviously, there's no strategic advantage to suing end users or shipping companies that move the chips or any of the other ancillary touch points.  

I know you're probably saying to yourself, "but that's not fair".  You'd be right, but it would be pointless to make that observation.  The laws as currently constructed say that it's legal.  Here's a classic example of legal but even more unfair:  Microsoft v Datatern.  End users sued.

applesauce007 said:

Apple should appeal.
Broadcom could be sued but not Apple.

Unfortunately, that's not how the law works.

chasm

The reason Apple was also sued is because they are far richer than Broadcom. Period, end of story.

jd_in_sb

I would think Broadcom will be liable for Apple’s fine since Broadcom’s product is the source of infringement.  

seanj

My guess would be that Apple is seen to be culpable by not checking that the Broadcom chips did not infringe on patents before using them in its products: ie due diligence. Apple would have checked the chips for their functionality, reliability, cost effectiveness, safety, environmental impact, etc, so it would have been argued that Apple should have checked for possible IP infringement too.

klock379

CloudTalkin said:

A patent holder can sue anyone along the chain of alleged infringement.  In this particular instance, CIT can sue Broadcom who made the chips, Apple who uses the chips, and even end users who use the products that use the chips.  Obviously, there's no strategic advantage to suing end users or shipping companies that move the chips or any of the other ancillary touch points.  

I know you're probably saying to yourself, "but that's not fair".  You'd be right, but it would be pointless to make that observation.  The laws as currently constructed say that it's legal.  Here's a classic example of legal but even more unfair:  Microsoft v Datatern.  End users sued.

Typically speaking, won’t the indemnification clause in the contract between parties be protecting the downstream party from being sued or suffering any penalties for the wrongdoing of the upstream party?

beowulfschmidt

We really have to do something about these patent trolls.  This is getting ridiculous.

/s

GeorgeBMac

sflocal said:

I just don't get this.  If Apple buys chips made by Broadcom, and those chips are found to be in violation, why should Apple even be involved? Did this company go after other phone manufacturers using their chips?  

A question/accusation could be made that Apple effectively was guilty of receiving stolen goods.

... I think that's bull, but the argument could be made.

But what really strikes me about this is:  We have this major propaganda campaign going on accusing China of stealing U.S. IP -- yet it appears that most of the theft occurs by western companies against western companies.   In his case, while Apple was an obvious bystander Broadcomm is convicted of doing exactly what so many are outraged that China is supposedly doing.   So where is the outrage?

Essentially its a double standard:  when an American company steals IP it's a technical legal issue.  If a Chinese company does the same it is accused of a National Security violation and the outrage explodes.

CloudTalkin

klock379 said:

CloudTalkin said:

A patent holder can sue anyone along the chain of alleged infringement.  In this particular instance, CIT can sue Broadcom who made the chips, Apple who uses the chips, and even end users who use the products that use the chips.  Obviously, there's no strategic advantage to suing end users or shipping companies that move the chips or any of the other ancillary touch points.  

I know you're probably saying to yourself, "but that's not fair".  You'd be right, but it would be pointless to make that observation.  The laws as currently constructed say that it's legal.  Here's a classic example of legal but even more unfair:  Microsoft v Datatern.  End users sued.

Typically speaking, won’t the indemnification clause in the contract between parties be protecting the downstream party from being sued or suffering any penalties for the wrongdoing of the upstream party?

Let's make this conversation hypothetical.  Then we can introduce an indemnity clause without questioning whether one exists (there are typically 6 types of indemnity clauses in commercial contracts) between Broadcom and Apple.  That settled, the answer is no.  An indemnity clause has no bearing on this issue.  That hypothetical contract clause would be between Broadcom and Apple.  It would have nothing to do with CalTech and who they choose to sue.

Indemnity clauses transfer risk from one party to another in a contract.  They don't provide protections against being sued by a 3rd party.

jdgarvin50

(Deleted duplicate content)

jdgarvin50

If Apple loses on appeal, that would set a precedent where all manufacturers are then responsible for vetting their vendors’ compliance with patents related to THEIR products? Instead of fixing the patent system, let’s break it some more! CalTech’s response to the judgement makes it sound like they know it would put another break in the system, but don’t really care, since it would line their pockets in a big way. How long until we, as downstream customers, are liable for infringement because we failed to audit patent compliance of every seller and manufacturer of every component involved the products of any kind we purchase from ANY company? Think about your car, or all the products used to make the home you live in, like ranges, refrigerators, HVAC systems. Sounds like a nightmare to me.

CloudTalkin

jdgarvin50 said:

If Apple loses on appeal, that would set a precedent where all manufacturers are then responsible for vetting their vendors’ compliance with patents related to THEIR products? Instead of fixing the patent system, let’s break it some more! CalTech’s response to the judgement makes it sound like they know it would put another break in the system, but don’t really care, since it would line their pockets in a big way. How long until we, as downstream customers, are liable for infringement because we failed to audit patent compliance of every seller and manufacturer of every component involved the products of any kind we purchase from ANY company? Think about your car, or all the products used to make the home you live in, like ranges, refrigerators, HVAC systems. Sounds like a nightmare to me.

This wouldn't set any precedent.  Patent holders have had the ability to sue up and down the chain of distribution for as long as I can remember.  This is nothing new.  That chain unfortunately includes end users.  End users have already been sued by patent holders.  Again, this is nothing new.  I mentioned earlier where Datatern sued end users.  Innovatio IP Ventures sued end users. MPHJ tried massive extortion against end users.