Apple may still be liable for $7 billion in UK 4G iPad & iPhone patent trial

Posted:
in General Discussion edited July 2023

Apple has failed to convince a UK Court of Appeals that it should turn over an Optis patent infringement ruling against the iPhone maker, meaning it's still potentially on the hook for billions in fees.




Apple and Optis Cellular have been fighting in courts for quite a few years, with Apple accused of infringing on patents owned by Optis over 4G technology. In one thread of lawsuits in the UK, Optis sued Apple in 2019, and after multiple court appearances, Optis appears to have succeeded.

In March 2022, a London High Court ruled that two 4G patents owned by Optis were standard essential patents, and that Apple had infringed them. Apple launched an appeal in May, claiming that the patents in the suit were not essential to 4G standards, and that it hadn't infringed them either.

Reuters reports the Court of Appeal issued a ruling on Tuesday that the High Court was "right to reject (Apple's) argument for non-infringement" and about the patents being essential.

Neither Apple nor Optis have commented on the latest legal action.

While Apple has been deemed to be infringing on the patents, the actual amount it would have to pay to Optis Cellular has yet to be determined. In a 2021 hearing, Mr Justice Meade advised Apple "might be disappointed" by the set rate, with a trial expected to work out how much that rate should be.

Apple has already threatened to exit the UK if the fees are determined to be "commercially unacceptable" to the company. It was reckoned at the time of the hearing that it could cost Apple up to 5 billion pounds ($7 billion).

The UK lawsuit is only part of the long-running and expensive patent spat between Apple and Optis.

Following an original U.S. trial win for PanOptis and Optis to the tune of $506 million and a retrial, leading to a reduction of fees to $300 million, Apple attempted to get a new trial. Despite claiming there to be multiple issues with that trial, including problems with evidence and jury instructions, Apple's bid for a third trial was rejected.

Read on AppleInsider

Comments

  • Reply 1 of 8
    radarthekatradarthekat Posts: 3,866moderator
    I fail to see how a verdict that the parents ARE essential fits with an award equivalent to $7 billion.  These seem contradictory.  
    Anilu_777FileMakerFellerwatto_cobra
  • Reply 2 of 8
    chutzpahchutzpah Posts: 392member
    I fail to see how a verdict that the parents ARE essential fits with an award equivalent to $7 billion.  These seem contradictory.  
    Why?  Them being essential is what means that Apple has used them and needs to pay licensing fees.
    muthuk_vanalingam
  • Reply 3 of 8
    chutzpah said:
    I fail to see how a verdict that the parents ARE essential fits with an award equivalent to $7 billion.  These seem contradictory.  
    Why?  Them being essential is what means that Apple has used them and needs to pay licensing fees.
    To date, Apple has sold in excess of 1 billion phones around the world; it's unclear if this ruling means a fee is owed for every device sold or only for those sold in the UK where the patents are held. I can't quickly find any reports of sales numbers for 4G and newer phones so let's just stick with 1 billion devices as the ballpark figure.

    If the total damages is 5 billion pounds or US$7B, that means a fee of US$7 per device for the TWO (count 'em!) infringed patents. Maybe there's a penalty in there for wilful infringement, but it still seems high.

    I found this report which states that as of 1st Jan 2022 there are ~200k STANDARDS ESSENTIAL PATENTS for the 4G and 5G technology suites, and the number is growing at roughly 25k per annum. If every SEP is worth US$3.50 per device sold, then every 4G/5G-capable wireless chip and software package would sell for US$700k rather than (as a rough estimate) US$60-ish.

    This is another example of private interests being incapable of forming a workable technology standard and of patents being a net drain on the world's economy. The theory is that by submitting your patents to the pool you are trading a theoretically possible higher wholesale price for the theoretically increased volume of being part of every component shipped. It is therefore simpler and cheaper for manufacturers to adopt the standard and allow the authoring parties to profit from their work - no muss, no fuss.

    But of course, greed is rampant and has been exacerbated by a legal system that faces contradictions in property ownership laws; precedent in many jurisdictions has led to expectations that SEPs are, like any other patents, defensible by the IP owner where the rights have not been fully transferred to the standards body. I think you'd solve a lot of problems if standards bodies were mandated to be the legal owners of all patents submitted to the pool, but no doubt that would introduce other issues that I haven't considered.

    I mean, seriously: if the patents are essential to the standard then they should be ratified by the standards body and that should be prima facie evidence. They should also then be covered by the licensing fee that any manufacturer pays to the standards body, end of story.
    muthuk_vanalingamradarthekatdavenwatto_cobra
  • Reply 4 of 8
    chutzpahchutzpah Posts: 392member
    I mean, seriously: if the patents are essential to the standard then they should be ratified by the standards body and that should be prima facie evidence. They should also then be covered by the licensing fee that any manufacturer pays to the standards body, end of story.
    Ideally, sure.  But if the standards body doesn't receive or doesn't ratify a patent then that doesn't mean that the patent isn't valid or essential for the standard.  The world is a complicated place.
    watto_cobra
  • Reply 5 of 8
    carnegiecarnegie Posts: 1,078member
    I fail to see how a verdict that the parents ARE essential fits with an award equivalent to $7 billion.  These seem contradictory.  
    chutzpah said:
    I fail to see how a verdict that the parents ARE essential fits with an award equivalent to $7 billion.  These seem contradictory.  
    Why?  Them being essential is what means that Apple has used them and needs to pay licensing fees.
    To date, Apple has sold in excess of 1 billion phones around the world; it's unclear if this ruling means a fee is owed for every device sold or only for those sold in the UK where the patents are held. I can't quickly find any reports of sales numbers for 4G and newer phones so let's just stick with 1 billion devices as the ballpark figure.

    If the total damages is 5 billion pounds or US$7B, that means a fee of US$7 per device for the TWO (count 'em!) infringed patents. Maybe there's a penalty in there for wilful infringement, but it still seems high.

    I found this report which states that as of 1st Jan 2022 there are ~200k STANDARDS ESSENTIAL PATENTS for the 4G and 5G technology suites, and the number is growing at roughly 25k per annum. If every SEP is worth US$3.50 per device sold, then every 4G/5G-capable wireless chip and software package would sell for US$700k rather than (as a rough estimate) US$60-ish.

    This is another example of private interests being incapable of forming a workable technology standard and of patents being a net drain on the world's economy. The theory is that by submitting your patents to the pool you are trading a theoretically possible higher wholesale price for the theoretically increased volume of being part of every component shipped. It is therefore simpler and cheaper for manufacturers to adopt the standard and allow the authoring parties to profit from their work - no muss, no fuss.

    But of course, greed is rampant and has been exacerbated by a legal system that faces contradictions in property ownership laws; precedent in many jurisdictions has led to expectations that SEPs are, like any other patents, defensible by the IP owner where the rights have not been fully transferred to the standards body. I think you'd solve a lot of problems if standards bodies were mandated to be the legal owners of all patents submitted to the pool, but no doubt that would introduce other issues that I haven't considered.

    I mean, seriously: if the patents are essential to the standard then they should be ratified by the standards body and that should be prima facie evidence. They should also then be covered by the licensing fee that any manufacturer pays to the standards body, end of story.
    Yes, $7 billion would be an absurd amount for just Optis' patents. But the actual amount, pending appeal, was already determined a couple of months ago and it was around $5 million per year. Apple would get a global license and have to pay around $60 million total which would cover previous years plus interest and 5 years into the future.

    There have been multiple trials and corresponding appeals in this case; it was broken up into 5 parts. So AI might have missed the judgment (from the so-called Trial E) that determined the FRAND rate and that's why it suggests that a much higher number is still on the table. (For what it's worth, I don't think such a high number was ever really on the table.)
    muthuk_vanalingamradarthekatwatto_cobra
  • Reply 6 of 8
    MacProMacPro Posts: 19,776member
    Apple should just buy the UK. 
    purplepearwatto_cobra
  • Reply 7 of 8
    radarthekatradarthekat Posts: 3,866moderator
    chutzpah said:
    I fail to see how a verdict that the parents ARE essential fits with an award equivalent to $7 billion.  These seem contradictory.  
    Why?  Them being essential is what means that Apple has used them and needs to pay licensing fees.
    But fees for standards essential patents are always set to reasonable rates. There are many many standards essential patents.  Do you mean to say Apple has paid hundreds of billions in SEP fees?  
    edited July 2023 watto_cobra
  • Reply 8 of 8
    chutzpahchutzpah Posts: 392member
    chutzpah said:
    I fail to see how a verdict that the parents ARE essential fits with an award equivalent to $7 billion.  These seem contradictory.  
    Why?  Them being essential is what means that Apple has used them and needs to pay licensing fees.
    But fees for standards essential patents are always set to reasonable rates. There are many many standards essential patents.  Do you mean to say Apple has paid hundreds of billions in SEP fees?  
    License fees for patents are set to whatever the licensor chooses to set them at.  A standards body cannot unilaterally adopt a patented technology and force the patent holder to reduce their rates.  F/RAND is a voluntary principle.
    muthuk_vanalingam
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