Probably because they have no legal power to set a rate that isn't, you know, the same as the rate paid by anyone else licensing the patent. That's what FRAND means.
The court is supposed to be there to force Motorola to offer Apple the same rate, not to force Apple to pay whatever Motorola wants. The judge has forgotten the purpose of the job.
That's part of what the trial was for TS. The judge was going to see evidence of the royalties paid by other licensees, details of how those royalties were offset by other considerations like cross-licensing, then rule on a "fair, reasonable and non-discriminating" royalty that Apple would be bound to.
That's not what Apple wanted tho, as shown by their response to the court and the judge's decision to toss the whole thing. . . with prejudice. This isn't about what everyone else was paying and the terms of their royalty basis. This came down to what Apple wanted to pay, what others were paying be damned.
That's part of what the trial was for TS. The judge was going to see evidence of the royalties paid by other licensees, details of how those royalties were offset by other considerations like cross-licensing, then rule on a "fair, reasonable and non-discriminating" royalty that Apple would be bound to.
That's not what Apple wanted tho, as shown by their response to the court and the judge's decision to toss the whole thing. . . with prejudice. This isn't about what everyone else was paying and the terms of their royalty basis. This came down to what Apple wanted to pay, what others were paying be damned.
in ia "google biased" world. this is true... if apple does not want to pay the "going" rate...
what if Google was trying to re-Negotiate the FRAND TERMS because they moved from one company to another in this case from Motorola mobility owned by Motorola to Motorola mobility owned by Google...
OR
what if Apple was trying to re-Negotiate the FRAND TERMS because they moved from one company to another in this case from Motorola mobility owned by Motorola to Motorola mobility owned by Google... ?
then who is in the right...?
but, It does seem that Apple is in the shade of wrong because if Apple will not stipulate that they will follow the amount set by the court what's the point of the trial then?...
Or it's more like I'm not going to accept this trial because my(the judges) words can't be binding... Meaning it will subvert the whole point of FRAND... Setting precedent and all that stuff...
At least a bit of good news for those that hate Google. Vringo won it's patent infringement suit against them today.
A couple weeks back FOSSPatents thought they might get as much as half a billion in just past royalty payments should they win. It ended up not quite that much, with Google owing around $16 million rather than $500M. AOL and IOC will also pay a few million each of the total $30M judgement.
On-going patent royalties to Vringo could be as much as $100M a year split between the three plus Target (yes, THAT Target) and Gannett (newspapers) until the patents expire a little over three years from now.
That's part of what the trial was for TS. The judge was going to see evidence of the royalties paid by other licensees, details of how those royalties were offset by other considerations like cross-licensing, then rule on a "fair, reasonable and non-discriminating" royalty that Apple would be bound to.
That's not what Apple wanted tho, as shown by their response to the court and the judge's decision to toss the whole thing. . . with prejudice. This isn't about what everyone else was paying and the terms of their royalty basis. This came down to what Apple wanted to pay, what others were paying be damned.
There is a clear disagreement and a need for judicial resolution. Apple proposed one solution, but the judge is not bound by that. All Apple said was that they'd agree to pay up to $1, but if it's more than that they would appeal.
So what? It's up to the judge to decide how much is appropriate - and if Apple wants to appeal, they're free to do so whether they warn the judge about it before hand or not.
The judge is saying that he's so uncertain of his decision making ability that he's afraid to subject his decision to judicial appeal.
Undoubtedly. The judge has no legitimate grounds for dismissing the case.
Motorola's brief contained some interesting statements. They didn't want this to go to trial only to end with a non-binding recommendation that doesn't really solve anything. It's from the groklaw link tooltalk posted, in case you already read it. The concern wasn't one of appeals according to this. It suggests that they can't determine anything more than a recommendation unless I grossly misinterpreted the wording there.
Motorola submits this brief in response to the Court’s order of November 2, 2012. Dkt. 487
INTRODUCTION
Since 2007, when Apple introduced the first iPhone, Motorola has always tried to reach agreement with Apple on licensing terms—as it has with other cell phone makers—for the extensive and continuing use of Motorola's valuable intellectual property. Apple has built its profitable business on technology standards that others developed. In this case, Motorola was genuinely surprised when Apple declared on the eve of trial that it wanted the Court to set a FRAND rate. Motorola would welcome a final license agreement with Apple and a process to make that happen. However, the Court is correct that it would be inappropriate to grant Apple's request that the Court set a FRAND rate that would not bind Apple. As a result, there can be no trial because there are no remedies available to Apple in this case. There is no justiciable case or controversy before the Court now that Apple has refused to commit to the terms of the specific performance that it seeks. Importantly, there are scores of companies with essential patents, and many more companies that seek to implement standards and negotiate licenses. Should the Court accept Apple’s request to declare a non-binding fair, reasonable, and non-discriminatory rate that Apple chooses not to pay, it is an open invitation for other companies to file contract-based declaratory judgment actions and burden this Court with similar requests for an advisory rate that would similarly not provide resolution of their disputes.
At the final pretrial conference held November 1, 2012, the Court and the parties “discussed at length questions about the justiciability of the issues raised by Apple and the implications of the court’s picking a specific FRAND rate in view of Apple’s statement that it does not consider itself bound to accept any rate determined by the court.” Dkt. 485. The Court “questioned whether it was appropriate for a court to undertake the complex task of determining
1
a FRAND rate if the end result would be simply a suggestion that could be used later as a bargaining chip between the parties.” Dkt. 487 at 2. The Court concluded “it would be inappropriate to grant Apple’s clarified request for specific performance.” Id. The Court is entirely correct. Indeed, given Apple’s position in refusing to be bound by the FRAND rate, jurisdictional limits, as well as principles of equity, support concluding that no trial is possible.
As the Court noted, monetary damages are the “normal” remedy for breach of contract. What Apple now seeks is an extraordinary remedy of specific performance whereby the Court would set the FRAND rate that Apple would treat as non-binding and advisory. Apple will not submit to being bound by that rate and claims the right to escape the Court’s finding if it is not to its liking, a circumstance no U.S. court has abided. Even if Apple “accepts” the Court’s rate, Apple claims the right to bargain down from there—thus prolonging indefinitely the very licensing “case or controversy” this Court planned to resolve. Apple's “have my cake but may not want to eat it” approach is wasteful of resources and incompatible with the established limits of this Court's Article III jurisdiction. To adjudicate FRAND terms that would bind only Motorola while doing nothing more than inform Apple's ensuing next licensing offer (should it wish to make any offer) would amount to rendering an advisory opinion without redressing any actual grievance or resolving a ripe case or controversy.
Jurisdictional limits aside, the Court is also correct that Apple’s request fails the four-factor test of eBay. Apple identifies no harm that is irreparable; nor has it shown that money damages (which it sought then dropped) are inadequate. Also, the licensing negotiations and lawsuits that constitute the supposed injury posed by Motorola’s alleged FRAND breach stand to persist regardless of whether the Court sets a non-binding rate. Likewise, the public interest
2
factor favors declining to provide equitable relief. Once Apple’s request for equitable remedies is taken off the table, there is no purpose for an advisory trial on the FRAND question.
The remaining issues in this case are likewise unsuitable for trial because, without damages, there are no appropriate remedies. Apple alleges that Motorola’s ‘898 patent was untimely disclosed to ETSI. This, according to Apple, is a breach of contract and patent misuse even though the ‘898 patent is not asserted in this contract case. Apple seeks only equitable relief: Apple asks this Court to find the ‘898 patent unenforceable and also requests an injunction precluding Motorola from seeking an injunction in other cases in other courts in which Motorola might assert the ‘898 patent. The primary problem with this extraordinary relief is that it is in reality an affirmative defense to an assertion of patent infringement. These issues ought to be tried in the forum where the ‘898 patent is actually asserted. Indeed, Apple raised these exact affirmative defenses to Motorola’s assertion of the ‘898 patent in a recent case before Judge Posner that is currently on appeal. Should the Court accept Apple’s request to find prospectively that the ‘898 patent is unenforceable when it is not asserted in this action, this again would serve as an invitation for other parties to file timeliness lawsuits in this District (or elsewhere) about patents before those patents are ever asserted or raised. In addition, Apple’s remedies are all equitable, discretionary, and require Apple to demonstrate that damages are inadequate to compensate for any alleged harm. This, Apple cannot do.
Is $1.00 per device not the reasonable FRAND rate that Apple's competitors are being charged? Why would Apple agree to allow a judge to charge them whatever she felt like. That would be insane. Apple is required to pay no more than their competitors and that was the message Apple conveyed. Good on them for doing so.
No, $1.00 per device is not the rate others are being charged. Take a look at the 'business' sections of various chip manufacturers like say, Qualcomm. It's available online.
The average going rate is 2% to 3.5% of the cost of the device. If others pay less it's because of cross-licensing, which the rest of the industry does because they compromise, but Apple is demanding insane cross-licensing terms...
Link to an example of one patent pool comprising 49 total patents that are licensed only in regard to LTE standards, not 2G, 3G etc. The are other applicable standard-essential LTE patent pools as evidenced by Nokia and Apple's absence from this group tho they both hold FRAND-pledged IP. Wonder what their royalty demands are?
No, $1.00 per device is not the rate others are being charged. Take a look at the 'business' sections of various chip manufacturers like say, Qualcomm. It's available online.
The average going rate is 2% to 3.5% of the cost of the device. If others pay less it's because of cross-licensing, which the rest of the industry does because they compromise, but Apple is demanding insane cross-licensing terms...
An argument could be made that since Apple is buying the chips from Qualcomm, then the licensing should be $0. You don't expect to pay royalties to all the companies that you car company paid when you buy a car. If patent exhaustion is not found to be the case here, then certainly one could still argue that as a third degree implementor, that is as a customer using chips from Qualcomm, who made the chips with a license, Apple should not expect to pay the identical royalties that the first party licensees paid. That would be and is double dipping.
Judge got pissy that she felt Apple was dictating terms to her, it's as simple as that.
An argument could be made that since Apple is buying the chips from Qualcomm, then the licensing should be $0.
Agreed. But this wasn't about Qualcomm chipsets in the newest Apple devices. It had to do with licensing on older chipsets too, which were not supplied by Qualcomm and for which Apple isn't claiming patent exhaustion (in a separate lawsuit to be heard next fall) to the best of my knowledge.
It was cancelled after Motorola agreed to a court stipulation that they would be bound by whatever rate the judge determined to be appropriate, but Apple would not. They of course took a different tack, telling the court it would not accept it's determination if it was for more than $1 per device. In effect, to hell with you if it's not in our favor, we ain't taking a license. Judge Crabb saw no sense in having the trial if Apple's intent really wasn't to settle the license issues once and for all, which it plainly wasn't in the judges view.
As your personally favored patent blogger put it Hill60:
"It (Apple) needs to address Judge Crabb's concerns at the legal level, but it also needs to avoid coming across as an arrogant litigant who is just trying to use the court system to its advantage, respecting only those decisions it totally agrees with."
Also this case would not have included hearing the patent exhaustion issue you mentioned with regard to Apple devices that use Qualcomm chipsets. Patent exhaustion will be addressed in a different Apple lawsuit set for late next year, potentially removing current Apple models like the 4S and iPhone5 from royalty claims. Older models would still have fallen under whatever royalty rate the court would have set.
Apple had a golden opportunity to take care of this in a fair, impartial and legally binding setting that Motorola had no choice but to accept even if the royalty was a penny a unit. Wasn't good enough for Apple. They only have themselves to blame for the dismissal.
Seems you and the judge wanted Apple to waive it's appeal rights before a ruling was reached. That's not anything Apple has to abide by. Apples quote of $1 per phone was a signal of where they would appeal, not whether or not they would accept a final ruling. This judge is going to get this ruling bounced due to a priori rejecting a plaintiffs right to appeal and then retaliating by dismissing the case with prejudice.
No, $1.00 per device is not the rate others are being charged. Take a look at the 'business' sections of various chip manufacturers like say, Qualcomm. It's available online.
The average going rate is 2% to 3.5% of the cost of the device. If others pay less it's because of cross-licensing, which the rest of the industry does because they compromise, but Apple is demanding insane cross-licensing terms...
Apple never demands cross licensing in FRAND cases. It is the Android crowd that is doing so in direct violation of the standards body terms. You have an interesting alternate reality going there.
Apple never demands cross licensing in FRAND cases. It is the Android crowd that is doing so in direct violation of the standards body terms. You have an interesting alternate reality going there.
Not true. Several standards bodies make specific reference to cross-licensing as a condition. ETSI, the standards body under which Motorola pledges this particular IP package, is one of those who mentions "reciprocity" (cross-licensing) as a condition of SEP licensing.
Nokia (as they did with Apple's license negotiations) and Microsoft too require it at least in some and maybe all cases, and they're far from the "Android crowd".
This is quite bizarre. Why would a judge act like this?
My understanding on this case is that Apple went to Moto for a license but felt that the fee Moto wanted wasn't in keeping with FRAND. All well and good. But the SOP in such cases is that you don't pay and you use the items anyway and wait for the 'owners' to sue you, and that is when you produce your proof that the rate wasn't within FRAND etc. Or you pay what is being demanded and sue for being overcharged.
Apple on the other hands, sued first basically demanding that the court tell Moto what to take. And then said that they feel that no more than $1 is within FRAND so if the court set that rate they wouldn't appeal etc. But anything higher and they would.
The Judge basically called them out that they weren't playing by the accepted rules of play and dismissed it. So Apple can either use and risk a lawsuit, pay what Moto wants and then sue for being overcharged etc.
"A federal judge on Monday tossed Apple's suit against Motorola, which claimed the Google-owned company was participating in unfair licensing practices regarding declared standards-essential patents"
Look! did Apple own any of those patents back in March 2011?
That question is somewhat moot. Apple doesn't have to have any SEP to license SEP from someone else. In fact that is part of the reason the whole FRAND thing exists.Yes sometimes for easier book keeping two companies will package up SEP in such a way but it's not required. And the existence of SEP should not change the rates. If I'm going to license patent X to you for $1 Million dollars cash then I offer the same to everyone on the board for the same amount. That TS says that I can pay the $500k I owe him for Patent Y by including it in his deal for X and he pays me the other $500k in cash is beside the point. You are both paying me the same amount in the end.
Apple's contentions are that Moto is setting an unfair rate for Apple's use, perhaps trying to tie a more reasonable amount to Apple agreeing to license nonSEP which Apple can not be forced into etc.
Can you then explain why Apple asked the court to set a FRAND rate in the first place? Yes, precisely, that's why judge Crabb tossed the lawsuit.
Apple is required to pay what everyone else pays? why? because you said so? ROLF!!
Actually the rules of FRAND require it. Perhaps not down to the penny but you can't change one person $1 for a SEP and then someone else $10 just cause they can afford it. It's not non discriminatory.
By the same token you can't use different math. If you are going to charge one person based on the cost of the chip that uses the patent that's how you have to change everyone, you can't charge some folks based on the whole unit cost, or whole unit retail etc.
No, Infineon or Qualcomm can't dictate how much Motorola charges its own customers.
Actually in one particular way they can.
That way is their contract with the patent holder. If they pay a license to create the chips and that contract states that said payment exhausts the licensing requirement, then they actually covered everything. That contract then demands that the patent holder can't take payment from the chip purchaser.
Actually the rules of FRAND require it. Perhaps not down to the penny but you can't change one person $1 for a SEP and then someone else $10 just cause they can afford it. It's not non discriminatory.
By the same token you can't use different math. If you are going to charge one person based on the cost of the chip that uses the patent that's how you have to change everyone, you can't charge some folks based on the whole unit cost, or whole unit retail etc.
That's one reason why I'd question Apple's offer to pay no more than $1 per device. If that was a typical royalty, FRAND-friendly and same as offered to other Moto licensees, then there would be little danger of the court ordering them to pay more than others were paying. That measn no reason for Apple not to commit to accepting the courts fair determination.
For that reason I think it's more likely that Apple is well-aware the typical "non-discriminating" licensing royalty basis is higher than that, which is something Apple plainly stated it won't pay.
The average going rate is 2% to 3.5% of the cost of the device.
But how much does that rate come down to. One of Apple's common arguments is that applying the same percent on the surface seems FRAND but it isn't because the cost of the other devices is only 30-50% of Apple's meaning that the actual cash is much higher for Apple.
When Apple points this out to the patent holders, they say that the response is that the holder would be happen to cut the rate to make it more similar in actual cash value but only if Apple is willing to license some non SEP patent that they legally can't be forced to license particular during a SEP negotiation.
If that 2-3.5% for the other guys is roughly $1 then Apple isn't really making a crazy demand.
That's one reason why I'd question Apple's offer to pay no more than $1 per device. If that was a typical royalty, FRAND-friendly and same as offered to other Moto licensees, then there would be little danger of the court ordering them to pay more than others were paying. That measn no reason for Apple not to commit to accepting the courts fair determination.
For that reason I think it's more likely that Apple is well-aware the typical "non-discriminating" licensing royalty basis is higher than that, which is something Apple plainly stated it won't pay.
The trick is that royalty terms is one of those trade secret items. No company makes that information public without being forced to. So Apple really doesn't have any grounds to know if it is or isn't. It's typical in these cases, you go with your gut. And then the lawsuit forces parties to give up the information you need.
As others noted, it's typical for such a rate to be a percent of item. If Moto was demanding say 2% of the cost of the item using the chip requires the patent then Apple would be assuming that's how they charge everyone. But 2% of a $600 iPhone is way different than 2% of a $250 Samsung Galaxy. Not to mention simply the argument that a rate on a patent that applies to a single chip in a phone should be based off that chip and not off the whole device. So Apple might have picked $1 because it was 2% of the cost they pay for the chip in question.
Apple basically said they would take a judgement of up to $1 as final.No appeals on their part. But Moto would have appealed in a heart beat etc. Given that no one seems to understand how Wisconsin is a relevant jurisdiction in the first place since both are Cali companies not that Moto is owned by Google, I can't really say I blame the judge for wanting a pass on this and using this stunt as a way to try to get it.
The trick is that royalty terms is one of those trade secret items. No company makes that information public without being forced to. So Apple really doesn't have any grounds to know if it is or isn't. It's typical in these cases, you go with your gut. And then the lawsuit forces parties to give up the information you need.
Apple in all probablity does know what several others are paying, and it's not the $1 they're offering or they would have committed to accept the court's determination IMO. They went thru a similar exercise with Nokia, and also hold several SEP's of their own that require licensing. They'd certainly be considered industry insiders.
But the issue you raised is absolutely valid with respect to us common folk. In the related Moto-Microsoft FRAND case both parties have filed motions to keep their contracts and terms secret. IBM and Nokia, both of whom were obligated to give that court documentation of their SEP contracts, also petitioned the court to keep them secret. It's not as tho the players don't know the basic terms. It's that they don't want anyone who's not already an insider, licensee or licensor to know the terms. Apple is in both the licensee and licensor group. They know.
Comments
Quote:
Originally Posted by Tallest Skil
Probably because they have no legal power to set a rate that isn't, you know, the same as the rate paid by anyone else licensing the patent. That's what FRAND means.
The court is supposed to be there to force Motorola to offer Apple the same rate, not to force Apple to pay whatever Motorola wants. The judge has forgotten the purpose of the job.
That's part of what the trial was for TS. The judge was going to see evidence of the royalties paid by other licensees, details of how those royalties were offset by other considerations like cross-licensing, then rule on a "fair, reasonable and non-discriminating" royalty that Apple would be bound to.
That's not what Apple wanted tho, as shown by their response to the court and the judge's decision to toss the whole thing. . . with prejudice. This isn't about what everyone else was paying and the terms of their royalty basis. This came down to what Apple wanted to pay, what others were paying be damned.
in ia "google biased" world. this is true... if apple does not want to pay the "going" rate...
what if Google was trying to re-Negotiate the FRAND TERMS because they moved from one company to another in this case from Motorola mobility owned by Motorola to Motorola mobility owned by Google...
OR
what if Apple was trying to re-Negotiate the FRAND TERMS because they moved from one company to another in this case from Motorola mobility owned by Motorola to Motorola mobility owned by Google... ?
then who is in the right...?
but, It does seem that Apple is in the shade of wrong because if Apple will not stipulate that they will follow the amount set by the court what's the point of the trial then?...
Or it's more like I'm not going to accept this trial because my(the judges) words can't be binding... Meaning it will subvert the whole point of FRAND... Setting precedent and all that stuff...
At least a bit of good news for those that hate Google. Vringo won it's patent infringement suit against them today.
A couple weeks back FOSSPatents thought they might get as much as half a billion in just past royalty payments should they win. It ended up not quite that much, with Google owing around $16 million rather than $500M. AOL and IOC will also pay a few million each of the total $30M judgement.
On-going patent royalties to Vringo could be as much as $100M a year split between the three plus Target (yes, THAT Target) and Gannett (newspapers) until the patents expire a little over three years from now.
Quote:
Originally Posted by Gatorguy
That's part of what the trial was for TS. The judge was going to see evidence of the royalties paid by other licensees, details of how those royalties were offset by other considerations like cross-licensing, then rule on a "fair, reasonable and non-discriminating" royalty that Apple would be bound to.
That's not what Apple wanted tho, as shown by their response to the court and the judge's decision to toss the whole thing. . . with prejudice. This isn't about what everyone else was paying and the terms of their royalty basis. This came down to what Apple wanted to pay, what others were paying be damned.
I guess u r right
Quote:
Originally Posted by jragosta
Because the judge is a wanker?
There is a clear disagreement and a need for judicial resolution. Apple proposed one solution, but the judge is not bound by that. All Apple said was that they'd agree to pay up to $1, but if it's more than that they would appeal.
So what? It's up to the judge to decide how much is appropriate - and if Apple wants to appeal, they're free to do so whether they warn the judge about it before hand or not.
The judge is saying that he's so uncertain of his decision making ability that he's afraid to subject his decision to judicial appeal.
Undoubtedly. The judge has no legitimate grounds for dismissing the case.
Motorola's brief contained some interesting statements. They didn't want this to go to trial only to end with a non-binding recommendation that doesn't really solve anything. It's from the groklaw link tooltalk posted, in case you already read it. The concern wasn't one of appeals according to this. It suggests that they can't determine anything more than a recommendation unless I grossly misinterpreted the wording there.
http://www.groklaw.net/article.php?story=2012110322254380
Quote:
Motorola submits this brief in response to the Court’s order of November 2, 2012. Dkt. 487
Since 2007, when Apple introduced the first iPhone, Motorola has always tried to reach agreement with Apple on licensing terms—as it has with other cell phone makers—for the extensive and continuing use of Motorola's valuable intellectual property. Apple has built its profitable business on technology standards that others developed. In this case, Motorola was genuinely surprised when Apple declared on the eve of trial that it wanted the Court to set a FRAND rate. Motorola would welcome a final license agreement with Apple and a process to make that happen. However, the Court is correct that it would be inappropriate to grant Apple's request that the Court set a FRAND rate that would not bind Apple. As a result, there can be no trial because there are no remedies available to Apple in this case. There is no justiciable case or controversy before the Court now that Apple has refused to commit to the terms of the specific performance that it seeks. Importantly, there are scores of companies with essential patents, and many more companies that seek to implement standards and negotiate licenses. Should the Court accept Apple’s request to declare a non-binding fair, reasonable, and non-discriminatory rate that Apple chooses not to pay, it is an open invitation for other companies to file contract-based declaratory judgment actions and burden this Court with similar requests for an advisory rate that would similarly not provide resolution of their disputes.INTRODUCTION
At the final pretrial conference held November 1, 2012, the Court and the parties “discussed at length questions about the justiciability of the issues raised by Apple and the implications of the court’s picking a specific FRAND rate in view of Apple’s statement that it does not consider itself bound to accept any rate determined by the court.” Dkt. 485. The Court “questioned whether it was appropriate for a court to undertake the complex task of determining
a FRAND rate if the end result would be simply a suggestion that could be used later as a bargaining chip between the parties.” Dkt. 487 at 2. The Court concluded “it would be inappropriate to grant Apple’s clarified request for specific performance.” Id. The Court is entirely correct. Indeed, given Apple’s position in refusing to be bound by the FRAND rate, jurisdictional limits, as well as principles of equity, support concluding that no trial is possible.1
As the Court noted, monetary damages are the “normal” remedy for breach of contract. What Apple now seeks is an extraordinary remedy of specific performance whereby the Court would set the FRAND rate that Apple would treat as non-binding and advisory. Apple will not submit to being bound by that rate and claims the right to escape the Court’s finding if it is not to its liking, a circumstance no U.S. court has abided. Even if Apple “accepts” the Court’s rate, Apple claims the right to bargain down from there—thus prolonging indefinitely the very licensing “case or controversy” this Court planned to resolve. Apple's “have my cake but may not want to eat it” approach is wasteful of resources and incompatible with the established limits of this Court's Article III jurisdiction. To adjudicate FRAND terms that would bind only Motorola while doing nothing more than inform Apple's ensuing next licensing offer (should it wish to make any offer) would amount to rendering an advisory opinion without redressing any actual grievance or resolving a ripe case or controversy.
Jurisdictional limits aside, the Court is also correct that Apple’s request fails the four-factor test of eBay. Apple identifies no harm that is irreparable; nor has it shown that money damages (which it sought then dropped) are inadequate. Also, the licensing negotiations and lawsuits that constitute the supposed injury posed by Motorola’s alleged FRAND breach stand to persist regardless of whether the Court sets a non-binding rate. Likewise, the public interest
factor favors declining to provide equitable relief. Once Apple’s request for equitable remedies is taken off the table, there is no purpose for an advisory trial on the FRAND question.2
The remaining issues in this case are likewise unsuitable for trial because, without damages, there are no appropriate remedies. Apple alleges that Motorola’s ‘898 patent was untimely disclosed to ETSI. This, according to Apple, is a breach of contract and patent misuse even though the ‘898 patent is not asserted in this contract case. Apple seeks only equitable relief: Apple asks this Court to find the ‘898 patent unenforceable and also requests an injunction precluding Motorola from seeking an injunction in other cases in other courts in which Motorola might assert the ‘898 patent. The primary problem with this extraordinary relief is that it is in reality an affirmative defense to an assertion of patent infringement. These issues ought to be tried in the forum where the ‘898 patent is actually asserted. Indeed, Apple raised these exact affirmative defenses to Motorola’s assertion of the ‘898 patent in a recent case before Judge Posner that is currently on appeal. Should the Court accept Apple’s request to find prospectively that the ‘898 patent is unenforceable when it is not asserted in this action, this again would serve as an invitation for other parties to file timeliness lawsuits in this District (or elsewhere) about patents before those patents are ever asserted or raised. In addition, Apple’s remedies are all equitable, discretionary, and require Apple to demonstrate that damages are inadequate to compensate for any alleged harm. This, Apple cannot do.
BACKGROUND
Quote:
Originally Posted by Eluard
Is $1.00 per device not the reasonable FRAND rate that Apple's competitors are being charged? Why would Apple agree to allow a judge to charge them whatever she felt like. That would be insane. Apple is required to pay no more than their competitors and that was the message Apple conveyed. Good on them for doing so.
No, $1.00 per device is not the rate others are being charged. Take a look at the 'business' sections of various chip manufacturers like say, Qualcomm. It's available online.
The average going rate is 2% to 3.5% of the cost of the device. If others pay less it's because of cross-licensing, which the rest of the industry does because they compromise, but Apple is demanding insane cross-licensing terms...
Link to an example of one patent pool comprising 49 total patents that are licensed only in regard to LTE standards, not 2G, 3G etc. The are other applicable standard-essential LTE patent pools as evidenced by Nokia and Apple's absence from this group tho they both hold FRAND-pledged IP. Wonder what their royalty demands are?
http://www.vialicensing.com/licensecontent.aspx?id=1506
Quote:
Originally Posted by Mikeb85
No, $1.00 per device is not the rate others are being charged. Take a look at the 'business' sections of various chip manufacturers like say, Qualcomm. It's available online.
The average going rate is 2% to 3.5% of the cost of the device. If others pay less it's because of cross-licensing, which the rest of the industry does because they compromise, but Apple is demanding insane cross-licensing terms...
An argument could be made that since Apple is buying the chips from Qualcomm, then the licensing should be $0. You don't expect to pay royalties to all the companies that you car company paid when you buy a car. If patent exhaustion is not found to be the case here, then certainly one could still argue that as a third degree implementor, that is as a customer using chips from Qualcomm, who made the chips with a license, Apple should not expect to pay the identical royalties that the first party licensees paid. That would be and is double dipping.
Judge got pissy that she felt Apple was dictating terms to her, it's as simple as that.
Quote:
Originally Posted by Tulkas
An argument could be made that since Apple is buying the chips from Qualcomm, then the licensing should be $0.
Agreed. But this wasn't about Qualcomm chipsets in the newest Apple devices. It had to do with licensing on older chipsets too, which were not supplied by Qualcomm and for which Apple isn't claiming patent exhaustion (in a separate lawsuit to be heard next fall) to the best of my knowledge.
Quote:
Originally Posted by Gatorguy
Right. Apple initiated this suit.
It was cancelled after Motorola agreed to a court stipulation that they would be bound by whatever rate the judge determined to be appropriate, but Apple would not. They of course took a different tack, telling the court it would not accept it's determination if it was for more than $1 per device. In effect, to hell with you if it's not in our favor, we ain't taking a license. Judge Crabb saw no sense in having the trial if Apple's intent really wasn't to settle the license issues once and for all, which it plainly wasn't in the judges view.
As your personally favored patent blogger put it Hill60:
"It (Apple) needs to address Judge Crabb's concerns at the legal level, but it also needs to avoid coming across as an arrogant litigant who is just trying to use the court system to its advantage, respecting only those decisions it totally agrees with."
http://www.fosspatents.com/2012/11/next-weeks-apple-google-frand-trial-may.html
Also this case would not have included hearing the patent exhaustion issue you mentioned with regard to Apple devices that use Qualcomm chipsets. Patent exhaustion will be addressed in a different Apple lawsuit set for late next year, potentially removing current Apple models like the 4S and iPhone5 from royalty claims. Older models would still have fallen under whatever royalty rate the court would have set.
Apple had a golden opportunity to take care of this in a fair, impartial and legally binding setting that Motorola had no choice but to accept even if the royalty was a penny a unit. Wasn't good enough for Apple. They only have themselves to blame for the dismissal.
Seems you and the judge wanted Apple to waive it's appeal rights before a ruling was reached. That's not anything Apple has to abide by. Apples quote of $1 per phone was a signal of where they would appeal, not whether or not they would accept a final ruling. This judge is going to get this ruling bounced due to a priori rejecting a plaintiffs right to appeal and then retaliating by dismissing the case with prejudice.
Quote:
Originally Posted by Mikeb85
No, $1.00 per device is not the rate others are being charged. Take a look at the 'business' sections of various chip manufacturers like say, Qualcomm. It's available online.
The average going rate is 2% to 3.5% of the cost of the device. If others pay less it's because of cross-licensing, which the rest of the industry does because they compromise, but Apple is demanding insane cross-licensing terms...
Apple never demands cross licensing in FRAND cases. It is the Android crowd that is doing so in direct violation of the standards body terms. You have an interesting alternate reality going there.
Quote:
Originally Posted by Hiro
Apple never demands cross licensing in FRAND cases. It is the Android crowd that is doing so in direct violation of the standards body terms. You have an interesting alternate reality going there.
Not true. Several standards bodies make specific reference to cross-licensing as a condition. ETSI, the standards body under which Motorola pledges this particular IP package, is one of those who mentions "reciprocity" (cross-licensing) as a condition of SEP licensing.
http://www.etsi.org/WebSite/document/Legal/ETSI_IPR-Policy.pdf
Nokia (as they did with Apple's license negotiations) and Microsoft too require it at least in some and maybe all cases, and they're far from the "Android crowd".
Quote:
Originally Posted by mrrodriguez
What does this mean?
Quote:
Originally Posted by Eluard
This is quite bizarre. Why would a judge act like this?
My understanding on this case is that Apple went to Moto for a license but felt that the fee Moto wanted wasn't in keeping with FRAND. All well and good. But the SOP in such cases is that you don't pay and you use the items anyway and wait for the 'owners' to sue you, and that is when you produce your proof that the rate wasn't within FRAND etc. Or you pay what is being demanded and sue for being overcharged.
Apple on the other hands, sued first basically demanding that the court tell Moto what to take. And then said that they feel that no more than $1 is within FRAND so if the court set that rate they wouldn't appeal etc. But anything higher and they would.
The Judge basically called them out that they weren't playing by the accepted rules of play and dismissed it. So Apple can either use and risk a lawsuit, pay what Moto wants and then sue for being overcharged etc.
Quote:
Originally Posted by hjb
"A federal judge on Monday tossed Apple's suit against Motorola, which claimed the Google-owned company was participating in unfair licensing practices regarding declared standards-essential patents"
Look! did Apple own any of those patents back in March 2011?
That question is somewhat moot. Apple doesn't have to have any SEP to license SEP from someone else. In fact that is part of the reason the whole FRAND thing exists.Yes sometimes for easier book keeping two companies will package up SEP in such a way but it's not required. And the existence of SEP should not change the rates. If I'm going to license patent X to you for $1 Million dollars cash then I offer the same to everyone on the board for the same amount. That TS says that I can pay the $500k I owe him for Patent Y by including it in his deal for X and he pays me the other $500k in cash is beside the point. You are both paying me the same amount in the end.
Apple's contentions are that Moto is setting an unfair rate for Apple's use, perhaps trying to tie a more reasonable amount to Apple agreeing to license nonSEP which Apple can not be forced into etc.
Quote:
Originally Posted by tooltalk
Can you then explain why Apple asked the court to set a FRAND rate in the first place? Yes, precisely, that's why judge Crabb tossed the lawsuit.
Apple is required to pay what everyone else pays? why? because you said so? ROLF!!
Actually the rules of FRAND require it. Perhaps not down to the penny but you can't change one person $1 for a SEP and then someone else $10 just cause they can afford it. It's not non discriminatory.
By the same token you can't use different math. If you are going to charge one person based on the cost of the chip that uses the patent that's how you have to change everyone, you can't charge some folks based on the whole unit cost, or whole unit retail etc.
Quote:
Originally Posted by tooltalk
No, Infineon or Qualcomm can't dictate how much Motorola charges its own customers.
Actually in one particular way they can.
That way is their contract with the patent holder. If they pay a license to create the chips and that contract states that said payment exhausts the licensing requirement, then they actually covered everything. That contract then demands that the patent holder can't take payment from the chip purchaser.
Quote:
Originally Posted by charlituna
Actually the rules of FRAND require it. Perhaps not down to the penny but you can't change one person $1 for a SEP and then someone else $10 just cause they can afford it. It's not non discriminatory.
By the same token you can't use different math. If you are going to charge one person based on the cost of the chip that uses the patent that's how you have to change everyone, you can't charge some folks based on the whole unit cost, or whole unit retail etc.
That's one reason why I'd question Apple's offer to pay no more than $1 per device. If that was a typical royalty, FRAND-friendly and same as offered to other Moto licensees, then there would be little danger of the court ordering them to pay more than others were paying. That measn no reason for Apple not to commit to accepting the courts fair determination.
For that reason I think it's more likely that Apple is well-aware the typical "non-discriminating" licensing royalty basis is higher than that, which is something Apple plainly stated it won't pay.
Quote:
Originally Posted by Mikeb85
The average going rate is 2% to 3.5% of the cost of the device.
But how much does that rate come down to. One of Apple's common arguments is that applying the same percent on the surface seems FRAND but it isn't because the cost of the other devices is only 30-50% of Apple's meaning that the actual cash is much higher for Apple.
When Apple points this out to the patent holders, they say that the response is that the holder would be happen to cut the rate to make it more similar in actual cash value but only if Apple is willing to license some non SEP patent that they legally can't be forced to license particular during a SEP negotiation.
If that 2-3.5% for the other guys is roughly $1 then Apple isn't really making a crazy demand.
Quote:
Originally Posted by Gatorguy
That's one reason why I'd question Apple's offer to pay no more than $1 per device. If that was a typical royalty, FRAND-friendly and same as offered to other Moto licensees, then there would be little danger of the court ordering them to pay more than others were paying. That measn no reason for Apple not to commit to accepting the courts fair determination.
For that reason I think it's more likely that Apple is well-aware the typical "non-discriminating" licensing royalty basis is higher than that, which is something Apple plainly stated it won't pay.
The trick is that royalty terms is one of those trade secret items. No company makes that information public without being forced to. So Apple really doesn't have any grounds to know if it is or isn't. It's typical in these cases, you go with your gut. And then the lawsuit forces parties to give up the information you need.
As others noted, it's typical for such a rate to be a percent of item. If Moto was demanding say 2% of the cost of the item using the chip requires the patent then Apple would be assuming that's how they charge everyone. But 2% of a $600 iPhone is way different than 2% of a $250 Samsung Galaxy. Not to mention simply the argument that a rate on a patent that applies to a single chip in a phone should be based off that chip and not off the whole device. So Apple might have picked $1 because it was 2% of the cost they pay for the chip in question.
Apple basically said they would take a judgement of up to $1 as final.No appeals on their part. But Moto would have appealed in a heart beat etc. Given that no one seems to understand how Wisconsin is a relevant jurisdiction in the first place since both are Cali companies not that Moto is owned by Google, I can't really say I blame the judge for wanting a pass on this and using this stunt as a way to try to get it.
Quote:
Originally Posted by charlituna
The trick is that royalty terms is one of those trade secret items. No company makes that information public without being forced to. So Apple really doesn't have any grounds to know if it is or isn't. It's typical in these cases, you go with your gut. And then the lawsuit forces parties to give up the information you need.
Apple in all probablity does know what several others are paying, and it's not the $1 they're offering or they would have committed to accept the court's determination IMO. They went thru a similar exercise with Nokia, and also hold several SEP's of their own that require licensing. They'd certainly be considered industry insiders.
But the issue you raised is absolutely valid with respect to us common folk. In the related Moto-Microsoft FRAND case both parties have filed motions to keep their contracts and terms secret. IBM and Nokia, both of whom were obligated to give that court documentation of their SEP contracts, also petitioned the court to keep them secret. It's not as tho the players don't know the basic terms. It's that they don't want anyone who's not already an insider, licensee or licensor to know the terms. Apple is in both the licensee and licensor group. They know.