I am struggling with the concept of why a patent holder of a sub-function should receive royalties based on the price of the whole product it is used in rather than the value of the functionality they provide. For example, why would the patent holder for the WIFI technology used in an Apple Watch receive more money from the sale of an Edition vs a Sport model when their technology provides the exact same functionality? Same question for a 16GB iPhone vs a 128GB iPhone?
<a data-huddler-embed="href" href="/u/64984/dasanman69" style="display:inline-block;">@dasanman69</a>
: desktop computers are still desktop computers with or without the internet.
I have zero need for a desktop computer sans the Internet, and so do a lot of other people.
or more like a company in Cupertino claiming royalties just because they got rectangles and rounded corners. ahem.
As if that was ever true...
Yet had patents for the design, not utility, for the look of the iPad, and it was considerably more complex than "rectangles" and "round corners". More to the point, Apple was never interested in royalties.
I am struggling with the concept of why a patent holder of a sub-function should receive royalties based on the price of the whole product it is used in rather than the value of the functionality they provide. For example, why would the patent holder for the WIFI technology used in an Apple Watch receive more money from the sale of an Edition vs a Sport model when their technology provides the exact same functionality? Same question for a 16GB iPhone vs a 128GB iPhone?
Do you pay taxes at a fixed rate or as a percentage? Their are innumerable professions and services that are charged for as a percentage. Real Estate agents generally charge a commission as a percentage of the sale price. Why should ebay or every other auction house in the world charge on a percentage basis?
I think Ericsson's point is that they offered Apple the same arrangement other licencees currently accept. Does Apple charge App creators a flat fee for their sales in the App store or a percentage? Doesn't Apple charge a percentage for Apple Pay transactions?
It is not usual for a purchaser to dictate the terms of a transaction. That is usually the prerogative of the seller. Apple seems to want to dictate the value of Ericsson's patents to Ericsson. Do you think anyone trying to licence any of Apple's patents would be able to set their own price?
Do you pay taxes at a fixed rate or as a percentage? Their are innumerable professions and services that are charged for as a percentage. Real Estate agents generally charge a commission as a percentage of the sale price. Why should ebay or every other auction house in the world charge on a percentage basis?
I think Ericsson's point is that they offered Apple the same arrangement other licencees currently accept. Does Apple charge App creators a flat fee for their sales in the App store or a percentage? Doesn't Apple charge a percentage for Apple Pay transactions?
It is not usual for a purchaser to dictate the terms of a transaction. That is usually the prerogative of the seller. Apple seems to want to dictate the value of Ericsson's patents to Ericsson. Do you think anyone trying to licence any of Apple's patents would be able to set their own price?
First of all, talking about services is not the same as patent licensing. A fee for service is entirely a a negotiation between the parties; there is no essentiality to it; i.e., there are other sources for the service. There are regulated industries and services, such as banks, credit, and utilities, but patents are not in that realm
Secondly, Apps are a product, not a service, so Apple requires a margin to access the store, not a royalty, and apps are also non-SEP; a vendor always has the option of a web app. This is in fact the same situation that Spotify has to deal with for its subscription; pay a 30% margin for access to the App store and all the benefits of Apple's customer base, or provide a web link.
Third, since Ericsson must adhere to FRAND rules and guidelines for its inclusion in an industry standard and all the benefits that provides, they must also provide fair and reasonable licensing. One of the caveats is that potential licensees enjoy the opportunity to negotiate price, basis and also to legally negate IP that might be either inapplicable or invalid, all without invoking automatic sales embargo. The Court may set basis and royalties, or may require non-binding or binding arbitration. This is only true for SEP. Apple will be seeking to make its case before the court.
For non-SEP, there are lawsuits for violations, and negotiations that do not require the IP holder to negotiate price, albeit the Court may become an arbitrator for that.
Apple is one of the greediest companies on the planet. Greed seems to work for them. Want that WiFi chip you paid for in you Macbook activated to N class - pay us extra. Want to sell our phones - give us a percentage of your data revenues. Want that Macbook Pro retina you paid thousands for to be able to use Ethernet - buy our dongle.
If you mean that Apple are able to charge a premium for their hardware because people value the brand then I don't begrudge them one red cent.
You have chosen to ignore the ongoing overhead costs in development of OS, software and services provided for free that come bundled when you buy an Apple product.
If it wasn't for Apple we'd all still likely be using some M$ pos hacked with a Linux distro.
Or in the case of phones an Ericsson or Nokia flip phone running M$ mobile, ugggh Imagine that. Windows Everywhere !
You have a choice - to buy or not. Fwiw I won't buy an Apple watch until it has a blood pressure sensor. My choice.
This Ericsson claim is more akin to a sales tax. GST or vat. Far more insidious. Sick.
Your glory days have long gone Ericsson. Get your measly % on your ip from yesteryear and count your chickens. Make some meatballs with lingon berries.
Apple pays Ericsson based on the wide availability of unlocked smartphones (4G/LTE which can be had at around $200 dollars, unlocked, here in the U.S). Then Apple isn't getting stuck for its build costs, or brand value, merely a standard 4G/LTE smartphone fee based on the least common denominator, 4G/LTE compatibility.
Everybody making 4G/LTE smartphones, whatever the selling price, pay the same royalty fee to Ericsson.
No discounts for third world sales; each and every device pays the same fee.
Apple pays Ericsson based on the wide availability of unlocked smartphones (4G/LTE which can be had at around $200 dollars, unlocked, here in the U.S). Then Apple isn't getting stuck for its build costs, or brand value, merely a standard 4G/LTE smartphone fee based on the least common denominator, 4G/LTE compatibility.
Everybody making 4G/LTE smartphones, whatever the selling price, pay the same royalty fee to Ericsson.
No discounts for third world sales; each and every device pays the same fee.
Yet had patents for the design, not utility, for the look of the iPad, and it was considerably more complex than "rectangles" and "round corners". More to the point, Apple was never interested in royalties.
@tmay : not sure what you mean. Apple lost all cases on the iPad claims -- all their iPad design patents were completely rejected and invalidated everywhere. The two shapes, "rectangular" and "rounded corners," I was referring to in my comment pertains to app-icons (USD604305 - GUI for a display screen) which allowed Apple to disgorge Samsung's entire profit on infringed devices.
I am astounded by the stupidity and willful ignorance on display on this forum. It is self-evident that companies should profit from their own work, not the work done by other companies. It is also common-sense that an item has a fair value, which does not change based on the use the buyer put it to. Yet, people seem to ignore common sense when Apple is involved, and argue that Ericsson should get more from Apple than it gets from Blackberry from the exact same patent serving the exact same purpose.
Quote:
Originally Posted by tooltalk
@tmay : Ericsson is a major contributor to various communication standards at the heart of Apple iPhones/iPad and their royalty basis is fair and reasonable by the industry standard ..
So are a dozen other companies. Why is Ericsson more special than the rest of the companies contributing SEPs to industry standards? And, no their royalty basis is NOT fair, despite what you think.
Quote:
Originally Posted by Gatorguy
It's always worked until quite recently and still is the prevailing method of determining royalties in wireless standards.
No it is NOT. Why don't you provide links to the contracts between Ericsson and other smartphone manufacturers showing this royalty rate?
Quote:
Originally Posted by tooltalk
@tmay : And, further, there is absolutely no court rulings affirming such trend toward the smallest salable unit. I think we also reviewed a couple of court cases, which don't affirm such trend - the Apple v Moto case. That was the first and the only case in the US legal history to decide on a FRAND rate and, as I had explained before, the decision was largely based on what is deemed "fair" and "reasonable" by the industry standard.
WRONG. The first Microsoft vs. Motorola case on X-box royalties (https://en.wikipedia.org/wiki/Microsoft_Corp._v._Motorola_Inc.) is an exact parallel to this situation. Motorola demanded a 2.25% royalty rate on the final sale price of the X-box for patents related to a fraction of the total functionality of the finished product. The court ruled that Motorola's demand was unreasonable and disproportionate to the functionality covered by their patents. Microsoft was asked to pay $14 million, instead of the billions demanded by Motorola.
Quote:
Originally Posted by shompa
The only thing I dont understand about patents and FRAND is this:
Lets say Apple buys LTE/Baseband chips from Qualcomm. Qualcomm have already payed Ericsson patent fees for these chips. Why should Apple pay licesing fees again for something that is already payed?
There is no justification for double-dipping. Once Qualcomm pays the patent-holder, anybody who buys the chip from Qualcomm is protected by the principle of 'patent exhaustion'.
Quote:
Originally Posted by MacSince1988
It seems like a better analogy would be if there is a tire patent used by Goodyear in their tires that Ford builds into a car, and the patent holder wanted to charge Ford royalties based upon the entire value of their car instead of just the value of the tires. If the patent holder demanded 1% of the value of a $40,000 car, that amount ($400) could be as much as the full cost of the four tires on the car--which would be an absurdly high royalty amount.
This. Why should the same patent be worth different amounts when used for the exact same functionality in a $100 feature-phone and a $800 smartphone? The idea of basing royalty on the final sale price of the product is a scam meant to profit from the creativity and work of the company creating the actual product. If an Android smartphone manufacturer uses Ericsson's patents and sells their phone at a loss, will Ericsson reimburse the manufacturer for the loss? If not, where do they get the cajones to ask for a cut of the proceeds from a successful product?
Quote:
Originally Posted by Gatorguy
Ericssons' mobile SEP's have always been tied to the wholesale cost of the device. That's their royalty basis just as it is /was with Nokia, Qualcomm, Alcatel, Motorola and many others. Apple's previous licensing deal with Ericsson that expired recently was almost certainly based on the wholesale price too.
Please provide links to the contracts between Ericsson and Nokia/Alcatel/Motorola proving your claims, or stop spouting nonsense. Ericsson's success in scamming some companies does not give them an automatic right to scam Apple too.
Quote:
Originally Posted by sd-diver
Okay, my car has built in 3G wireless. Mercedes now has 4G. Should Ericson be entitled to a % of a $50000 car?
Quote:
Originally Posted by dasanman69
Bad example. The car can function without ever using it. It's not a integral part of the car.
Wrong again! A patent is worth what it is worth - irrespective of the 'desirability' of the final product. And, why should Ericsson get more money for the same patent from Mercedes than it would get from a Kia with the exact same 4G LTE capability? Mercedes did the work to make their car more desirable than the Kia. Ericsson contributed nothing to that and should not be paid for Mercedes' success.
Quote:
Originally Posted by cnocbui
Trying to argue smartphones are computers first and phones second is nonsensical. The iPod Touch for many years was the near equivalent of an iPhone without cellular voice or data capabilities. At no point have sales of the Touch been anything but a tiny fraction of iPhone sales. It would seem then that the defining difference is a massive differentiator and is therefore clearly the primary function.
Actually, it is your arguments that are nonsensical. The question is not whether the iPod is different from an iPhone. The real question, which has been asked multiple time here, is why Ericsson should get more money from Apple than from Samsung or Motorola for patents that provide the exact same functionality in all smartphones. Why should Ericsson get a huge payday for the iPhone's success, when it has contributed nothing to it? Despite the numerous posts from the trolls, no one has answered this question yet.
If we are looking for differentiators, here is one - iOS. The BlackBerry and the iPhone having identical cellular capabilities, yet one outsells the other by a factor of 10. The only differentiators are iOS and Apple's design ... I mean, rounded rectangles. According to your logic, Ericsson's patent provides no differentiation at all and so Ericsson should refund Apple all the money Apple has paid it in the past.
Quote:
Originally Posted by cnocbui
Apple is one of the greediest companies on the planet. Greed seems to work for them. Want that WiFi chip you paid for in you Macbook activated to N class - pay us extra. Want to sell our phones - give us a percentage of your data revenues. Want that Macbook Pro retina you paid thousands for to be able to use Ethernet - buy our dongle.
Hey, you jealousy is showing. Nobody is forcing you to buy Apple products. And, by the way, no one is forcing you to troll Apple-related forums either.
Quote:
Originally Posted by tooltalk
@sd-diver : Sure, but is that what's driving "market demand" for your car or Mercedes? If folks are buying Mercedes just because of the wireless functionality, yes, otherwise, no.
Nope. Nobody cares if the feature is 'driving market demand' for your product. It only matters whether you use the patent or not. If you use it, pay for it. According to your argument, the car maker should not have to pay Ericsson anything unless Ericsson can prove that their patent was the reason the customer bought the car. Would Ericsson accept that?
Quote:
Originally Posted by dasanman69
I have zero need for a desktop computer sans the Internet, and so do a lot of other people.
Good for you. If I buy a computer and choose not to use certain features, will the patent holders for those technologies give me a refund?
Quote:
Originally Posted by cnocbui
Do you pay taxes at a fixed rate or as a percentage? Their are innumerable professions and services that are charged for as a percentage. Real Estate agents generally charge a commission as a percentage of the sale price. Why should ebay or every other auction house in the world charge on a percentage basis?
It is not usual for a purchaser to dictate the terms of a transaction. That is usually the prerogative of the seller. Apple seems to want to dictate the value of Ericsson's patents to Ericsson. Do you think anyone trying to licence any of Apple's patents would be able to set their own price?
What an stupid argument! The mere notion that Apple should be influenced by an agreement between you and eBay/IRS/realtor is idiotic beyond belief. As for the seller determining terms, it does not apply to SEPs and you know it. You are either a troll being willfully ignorant, or just too stupid to understand the difference between SEPs and non-SEPs.
Quote:
Originally Posted by tmay
Everybody making 4G/LTE smartphones, whatever the selling price, pay the same royalty fee to Ericsson. No discounts for third world sales; each and every device pays the same fee. Totally fair.
Ericsson, like Motorola and Samsung, is trying to ride Apple's coattails and profit from Apple's work.
Third, since Ericsson must adhere to FRAND rules and guidelines for its inclusion in an industry standard and all the benefits that provides, they must also provide fair and reasonable licensing. One of the caveats is that potential licensees enjoy the opportunity to negotiate price, basis and also to legally negate IP that might be either inapplicable or invalid, all without invoking automatic sales embargo. The Court may set basis and royalties, or may require non-binding or binding arbitration. This is only true for SEP. Apple will be seeking to make its case before the court.
For non-SEP, there are lawsuits for violations, and negotiations that do not require the IP holder to negotiate price, albeit the Court may become an arbitrator for that.
I'll probably never understand the point of non-binding arbitration. It seems like a waste of money and resources for all parties involved.
Quote:
Originally Posted by tmay
So, here's my totally fair alternative.
Apple pays Ericsson based on the wide availability of unlocked smartphones (4G/LTE which can be had at around $200 dollars, unlocked, here in the U.S). Then Apple isn't getting stuck for its build costs, or brand value, merely a standard 4G/LTE smartphone fee based on the least common denominator, 4G/LTE compatibility.
Everybody making 4G/LTE smartphones, whatever the selling price, pay the same royalty fee to Ericsson.
No discounts for third world sales; each and every device pays the same fee.
Totally fair.
Is there in fact precedence for that? I can't find the details, but it is likely that the appropriate standards body wouldn't adopt something with too high a base offer.
So are a dozen other companies. Why is Ericsson more special than the rest of the companies contributing SEPs to industry standards?
Sure, honey, and that's what exactly everyone else with the similar kind of patent portfolio charges. Do you have ANY idea how much everyone else is charging? Ericsson is among the top contributors with large number of seminal and essential SEPs -- and there are perhaps only three or four others who could demand similar or higher rate, say Qualcomm, Alcatel, and Moto, not a dozen. The exact figures are announced and published by the patent holders and GatorGuy provided the link on numerous occasions. But, of course, you already knew that, but are just playing dumb, Dr. ummm, you so smart in what again?
Quote:
WRONG. The first Microsoft vs. Motorola case on X-box royalties (https://en.wikipedia.org/wiki/Microsoft_Corp._v._Motorola_Inc.) is an exact parallel to this situation. Motorola demanded a 2.25% royalty rate on the final sale price of the X-box for patents related to a fraction of the total functionality of the finished product. The court ruled that Motorola's demand was unreasonable and disproportionate to the functionality covered by their patents. Microsoft was asked to pay $14 million, instead of the billions demanded by Motorola.
Wrong again, in the Moto v Microsoft case, Microsoft never challenged the royalty basis of Moto's claim, but argued that Moto violated "fair" and "reasonable" part of the FRAND rate demanded and accepted by the industry. The decision was likewise based on what other patent holders of the same standards were asking for their SEPs. And lo-and-behold, their licensing model wasn't even tied to some percentage of any particular component (or an entire device), but on some fixed amount for the first 10,000 units, plus per-unit cost for any additional units. The court also found that Moto's patents weren't all that large or essential in quantity or quality, so the judge awarded Moto what he thought was proportional to Moto's share of the standards. Now, the fact that you are citing a Wiki article indicates you have absolutely no have idea what you are talking about.
Quote:
There is no justification for double-dipping. Once Qualcomm pays the patent-holder, anybody who buys the chip from Qualcomm is protected by the principle of 'patent exhaustion'.
wow, you sound so smart!! Ummm, did you just figure that out? or do you actually have any proof that Qualcomm licensed all of Ericsson's patents?
Quote:
This. Why should the same patent be worth different amounts when used for the exact same functionality in a $100 feature-phone and a $800 smartphone? The idea of basing royalty on the final sale price of the product is a scam meant to profit from the creativity and work of the company creating the actual product.
I agree, why should I pay in excess of $50K in taxes every year, while some young ignorant chumps like you pay so much less? Oh, and I'm pretty sure no creativity or hard work went into creating the wireless standards Ericsson spent so much time and money on. Bad Ericsson.
Quote:
If an Android smartphone manufacturer uses Ericsson's patents and sells their phone at a loss, will Ericsson reimburse the manufacturer for the loss? If not, where do they get the cajones to ask for a cut of the proceeds from a successful product?
sell at a loss? Yeah, that sounds really stupid. And no, Ericsson is not collecting some percentage of a phone maker's profit. And there are also trade laws preventing companies from dumping their products at below cost.
Quote:
Nope. Nobody cares what is 'driving market demand' for your product. It only matters whether you use the patent or not. According to your argument, the car maker should not have to pay Ericsson anything unless Ericsson can prove that their patent drove customer demand for the car. Would Ericsson accept that? ?
Whenever people agree with me, I always feel I must be wrong. And I'm glad that your kinds don't care, because those in the lawyering business and the US judicial system do care and they do matter quite a bit in patent infringement cases.
I'll probably never understand the point of non-binding arbitration. It seems like a waste of money and resources for all parties involved.
Is there in fact precedence for that? I can't find the details, but it is likely that the appropriate standards body wouldn't adopt something with too high a base offer.
The interesting issue with the universal pricing, is that Ericsson in particular would have to understand that Apple and Samsung could afford to pay, LG and a few others would struggle, and plenty of the OEM's barely surviving would have to exit the 4G/LTE market. Apple and Samsung would love to be in a position without competition even at penalty of a price increase.
Ericsson would then risk killing off any growth and probably see a recession in base station equipment sales. It would also have the effect of driving a shift to different standards, or create competitors out of consumer electronics companies.
Apple's stock price would drop from the increase, and Apple would borrow money and just buy more stock back, but Ericsson likely would see a substantially drop in corporate value, making it a takeover target.
The point in this little academic exercise is that Ericsson is acting like a monopoly, even though it must adhere to SEP standards. See how they handled the Samsung negotiations in the past, and yes I provided a link earlier.
While Gatorguy and others accept and defend the status quo in licensing, and have stated as much, I see it that the consumer electronics industry has outgrown the telecom industry, and while communication is one of the primary values of a smartphone, it doesn't define a smartphone, which I have noted it a being defined as a computer in terms of its place in the world. Why should the successful Smartphone players have to pay any more than the unsuccessful ones in royalties?
For many posters, the discussion here centers around punishing Apple and rewarding Ericssion, and has nothing to do with defining a fair solution.
That is why I am supportive of Apple's legal battle with Ericsson.
While Gatorguy and others accept and defend the status quo in licensing, and have stated as much...
I neither accept nor defend it. I believe you know that. What I've done is explained the facts as it currently stands as well as point out common misconceptions. I've also given examples of why it's not going to be simple nor painless to change it midstream. No company is going to willingly leave money on the table nor will any of them part with more than they absolutely have to. .And really that's what it all boils down to money and not what's ethical or fair. Will it change tho. IMO absolutely.
Comments
Connectivity being the deciding factor. How many desktop computers would people buy if there was no Internet?
@dasanman69 : desktop computers are still desktop computers with or without the internet.
I have zero need for a desktop computer sans the Internet, and so do a lot of other people.
I have zero need for a desktop computer sans the Internet, and so do a lot of other people.
Sure, that's just you and other people. I also know a lot of folks who still need desktops computers, even without the internet.
or more like a company in Cupertino claiming royalties just because they got rectangles and rounded corners. ahem.
As if that was ever true...
Yet had patents for the design, not utility, for the look of the iPad, and it was considerably more complex than "rectangles" and "round corners". More to the point, Apple was never interested in royalties.
I am struggling with the concept of why a patent holder of a sub-function should receive royalties based on the price of the whole product it is used in rather than the value of the functionality they provide. For example, why would the patent holder for the WIFI technology used in an Apple Watch receive more money from the sale of an Edition vs a Sport model when their technology provides the exact same functionality? Same question for a 16GB iPhone vs a 128GB iPhone?
Do you pay taxes at a fixed rate or as a percentage? Their are innumerable professions and services that are charged for as a percentage. Real Estate agents generally charge a commission as a percentage of the sale price. Why should ebay or every other auction house in the world charge on a percentage basis?
I think Ericsson's point is that they offered Apple the same arrangement other licencees currently accept. Does Apple charge App creators a flat fee for their sales in the App store or a percentage? Doesn't Apple charge a percentage for Apple Pay transactions?
It is not usual for a purchaser to dictate the terms of a transaction. That is usually the prerogative of the seller. Apple seems to want to dictate the value of Ericsson's patents to Ericsson. Do you think anyone trying to licence any of Apple's patents would be able to set their own price?
Do you pay taxes at a fixed rate or as a percentage? Their are innumerable professions and services that are charged for as a percentage. Real Estate agents generally charge a commission as a percentage of the sale price. Why should ebay or every other auction house in the world charge on a percentage basis?
I think Ericsson's point is that they offered Apple the same arrangement other licencees currently accept. Does Apple charge App creators a flat fee for their sales in the App store or a percentage? Doesn't Apple charge a percentage for Apple Pay transactions?
It is not usual for a purchaser to dictate the terms of a transaction. That is usually the prerogative of the seller. Apple seems to want to dictate the value of Ericsson's patents to Ericsson. Do you think anyone trying to licence any of Apple's patents would be able to set their own price?
First of all, talking about services is not the same as patent licensing. A fee for service is entirely a a negotiation between the parties; there is no essentiality to it; i.e., there are other sources for the service. There are regulated industries and services, such as banks, credit, and utilities, but patents are not in that realm
Secondly, Apps are a product, not a service, so Apple requires a margin to access the store, not a royalty, and apps are also non-SEP; a vendor always has the option of a web app. This is in fact the same situation that Spotify has to deal with for its subscription; pay a 30% margin for access to the App store and all the benefits of Apple's customer base, or provide a web link.
Third, since Ericsson must adhere to FRAND rules and guidelines for its inclusion in an industry standard and all the benefits that provides, they must also provide fair and reasonable licensing. One of the caveats is that potential licensees enjoy the opportunity to negotiate price, basis and also to legally negate IP that might be either inapplicable or invalid, all without invoking automatic sales embargo. The Court may set basis and royalties, or may require non-binding or binding arbitration. This is only true for SEP. Apple will be seeking to make its case before the court.
For non-SEP, there are lawsuits for violations, and negotiations that do not require the IP holder to negotiate price, albeit the Court may become an arbitrator for that.
lmao - v funny
I think tmay has dealt with that little jab.
If you mean that Apple are able to charge a premium for their hardware because people value the brand then I don't begrudge them one red cent.
You have chosen to ignore the ongoing overhead costs in development of OS, software and services provided for free that come bundled when you buy an Apple product.
If it wasn't for Apple we'd all still likely be using some M$ pos hacked with a Linux distro.
Or in the case of phones an Ericsson or Nokia flip phone running M$ mobile, ugggh Imagine that. Windows Everywhere !
You have a choice - to buy or not. Fwiw I won't buy an Apple watch until it has a blood pressure sensor. My choice.
This Ericsson claim is more akin to a sales tax. GST or vat. Far more insidious. Sick.
Your glory days have long gone Ericsson. Get your measly % on your ip from yesteryear and count your chickens. Make some meatballs with lingon berries.
So, here's my totally fair alternative.
Apple pays Ericsson based on the wide availability of unlocked smartphones (4G/LTE which can be had at around $200 dollars, unlocked, here in the U.S). Then Apple isn't getting stuck for its build costs, or brand value, merely a standard 4G/LTE smartphone fee based on the least common denominator, 4G/LTE compatibility.
Everybody making 4G/LTE smartphones, whatever the selling price, pay the same royalty fee to Ericsson.
No discounts for third world sales; each and every device pays the same fee.
Totally fair.
That's only fair for Apple.
That's only fair for Apple.
Pray tell why?
As if that was ever true...
Yet had patents for the design, not utility, for the look of the iPad, and it was considerably more complex than "rectangles" and "round corners". More to the point, Apple was never interested in royalties.
@tmay : not sure what you mean. Apple lost all cases on the iPad claims -- all their iPad design patents were completely rejected and invalidated everywhere. The two shapes, "rectangular" and "rounded corners," I was referring to in my comment pertains to app-icons (USD604305 - GUI for a display screen) which allowed Apple to disgorge Samsung's entire profit on infringed devices.
I am astounded by the stupidity and willful ignorance on display on this forum. It is self-evident that companies should profit from their own work, not the work done by other companies. It is also common-sense that an item has a fair value, which does not change based on the use the buyer put it to. Yet, people seem to ignore common sense when Apple is involved, and argue that Ericsson should get more from Apple than it gets from Blackberry from the exact same patent serving the exact same purpose.
@tmay : Ericsson is a major contributor to various communication standards at the heart of Apple iPhones/iPad and their royalty basis is fair and reasonable by the industry standard ..
So are a dozen other companies. Why is Ericsson more special than the rest of the companies contributing SEPs to industry standards? And, no their royalty basis is NOT fair, despite what you think.
It's always worked until quite recently and still is the prevailing method of determining royalties in wireless standards.
No it is NOT. Why don't you provide links to the contracts between Ericsson and other smartphone manufacturers showing this royalty rate?
@tmay : And, further, there is absolutely no court rulings affirming such trend toward the smallest salable unit. I think we also reviewed a couple of court cases, which don't affirm such trend - the Apple v Moto case. That was the first and the only case in the US legal history to decide on a FRAND rate and, as I had explained before, the decision was largely based on what is deemed "fair" and "reasonable" by the industry standard.
WRONG. The first Microsoft vs. Motorola case on X-box royalties (https://en.wikipedia.org/wiki/Microsoft_Corp._v._Motorola_Inc.) is an exact parallel to this situation. Motorola demanded a 2.25% royalty rate on the final sale price of the X-box for patents related to a fraction of the total functionality of the finished product. The court ruled that Motorola's demand was unreasonable and disproportionate to the functionality covered by their patents. Microsoft was asked to pay $14 million, instead of the billions demanded by Motorola.
The only thing I dont understand about patents and FRAND is this:
Lets say Apple buys LTE/Baseband chips from Qualcomm. Qualcomm have already payed Ericsson patent fees for these chips. Why should Apple pay licesing fees again for something that is already payed?
There is no justification for double-dipping. Once Qualcomm pays the patent-holder, anybody who buys the chip from Qualcomm is protected by the principle of 'patent exhaustion'.
It seems like a better analogy would be if there is a tire patent used by Goodyear in their tires that Ford builds into a car, and the patent holder wanted to charge Ford royalties based upon the entire value of their car instead of just the value of the tires. If the patent holder demanded 1% of the value of a $40,000 car, that amount ($400) could be as much as the full cost of the four tires on the car--which would be an absurdly high royalty amount.
This. Why should the same patent be worth different amounts when used for the exact same functionality in a $100 feature-phone and a $800 smartphone? The idea of basing royalty on the final sale price of the product is a scam meant to profit from the creativity and work of the company creating the actual product. If an Android smartphone manufacturer uses Ericsson's patents and sells their phone at a loss, will Ericsson reimburse the manufacturer for the loss? If not, where do they get the cajones to ask for a cut of the proceeds from a successful product?
Ericssons' mobile SEP's have always been tied to the wholesale cost of the device. That's their royalty basis just as it is /was with Nokia, Qualcomm, Alcatel, Motorola and many others. Apple's previous licensing deal with Ericsson that expired recently was almost certainly based on the wholesale price too.
Please provide links to the contracts between Ericsson and Nokia/Alcatel/Motorola proving your claims, or stop spouting nonsense. Ericsson's success in scamming some companies does not give them an automatic right to scam Apple too.
Okay, my car has built in 3G wireless. Mercedes now has 4G. Should Ericson be entitled to a % of a $50000 car?
Bad example. The car can function without ever using it. It's not a integral part of the car.
Wrong again! A patent is worth what it is worth - irrespective of the 'desirability' of the final product. And, why should Ericsson get more money for the same patent from Mercedes than it would get from a Kia with the exact same 4G LTE capability? Mercedes did the work to make their car more desirable than the Kia. Ericsson contributed nothing to that and should not be paid for Mercedes' success.
Trying to argue smartphones are computers first and phones second is nonsensical. The iPod Touch for many years was the near equivalent of an iPhone without cellular voice or data capabilities. At no point have sales of the Touch been anything but a tiny fraction of iPhone sales. It would seem then that the defining difference is a massive differentiator and is therefore clearly the primary function.
Actually, it is your arguments that are nonsensical. The question is not whether the iPod is different from an iPhone. The real question, which has been asked multiple time here, is why Ericsson should get more money from Apple than from Samsung or Motorola for patents that provide the exact same functionality in all smartphones. Why should Ericsson get a huge payday for the iPhone's success, when it has contributed nothing to it? Despite the numerous posts from the trolls, no one has answered this question yet.
If we are looking for differentiators, here is one - iOS. The BlackBerry and the iPhone having identical cellular capabilities, yet one outsells the other by a factor of 10. The only differentiators are iOS and Apple's design ... I mean, rounded rectangles. According to your logic, Ericsson's patent provides no differentiation at all and so Ericsson should refund Apple all the money Apple has paid it in the past.
Apple is one of the greediest companies on the planet. Greed seems to work for them. Want that WiFi chip you paid for in you Macbook activated to N class - pay us extra. Want to sell our phones - give us a percentage of your data revenues. Want that Macbook Pro retina you paid thousands for to be able to use Ethernet - buy our dongle.
Hey, you jealousy is showing. Nobody is forcing you to buy Apple products. And, by the way, no one is forcing you to troll Apple-related forums either.
@sd-diver : Sure, but is that what's driving "market demand" for your car or Mercedes? If folks are buying Mercedes just because of the wireless functionality, yes, otherwise, no.
Nope. Nobody cares if the feature is 'driving market demand' for your product. It only matters whether you use the patent or not. If you use it, pay for it. According to your argument, the car maker should not have to pay Ericsson anything unless Ericsson can prove that their patent was the reason the customer bought the car. Would Ericsson accept that?
I have zero need for a desktop computer sans the Internet, and so do a lot of other people.
Good for you. If I buy a computer and choose not to use certain features, will the patent holders for those technologies give me a refund?
Do you pay taxes at a fixed rate or as a percentage? Their are innumerable professions and services that are charged for as a percentage. Real Estate agents generally charge a commission as a percentage of the sale price. Why should ebay or every other auction house in the world charge on a percentage basis?
It is not usual for a purchaser to dictate the terms of a transaction. That is usually the prerogative of the seller. Apple seems to want to dictate the value of Ericsson's patents to Ericsson. Do you think anyone trying to licence any of Apple's patents would be able to set their own price?
What an stupid argument! The mere notion that Apple should be influenced by an agreement between you and eBay/IRS/realtor is idiotic beyond belief. As for the seller determining terms, it does not apply to SEPs and you know it. You are either a troll being willfully ignorant, or just too stupid to understand the difference between SEPs and non-SEPs.
Everybody making 4G/LTE smartphones, whatever the selling price, pay the same royalty fee to Ericsson. No discounts for third world sales; each and every device pays the same fee. Totally fair.
Ericsson, like Motorola and Samsung, is trying to ride Apple's coattails and profit from Apple's work.
Third, since Ericsson must adhere to FRAND rules and guidelines for its inclusion in an industry standard and all the benefits that provides, they must also provide fair and reasonable licensing. One of the caveats is that potential licensees enjoy the opportunity to negotiate price, basis and also to legally negate IP that might be either inapplicable or invalid, all without invoking automatic sales embargo. The Court may set basis and royalties, or may require non-binding or binding arbitration. This is only true for SEP. Apple will be seeking to make its case before the court.
For non-SEP, there are lawsuits for violations, and negotiations that do not require the IP holder to negotiate price, albeit the Court may become an arbitrator for that.
I'll probably never understand the point of non-binding arbitration. It seems like a waste of money and resources for all parties involved.
So, here's my totally fair alternative.
Apple pays Ericsson based on the wide availability of unlocked smartphones (4G/LTE which can be had at around $200 dollars, unlocked, here in the U.S). Then Apple isn't getting stuck for its build costs, or brand value, merely a standard 4G/LTE smartphone fee based on the least common denominator, 4G/LTE compatibility.
Everybody making 4G/LTE smartphones, whatever the selling price, pay the same royalty fee to Ericsson.
No discounts for third world sales; each and every device pays the same fee.
Totally fair.
Is there in fact precedence for that? I can't find the details, but it is likely that the appropriate standards body wouldn't adopt something with too high a base offer.
Way to go !
????
@spock1234 :
So are a dozen other companies. Why is Ericsson more special than the rest of the companies contributing SEPs to industry standards?
Sure, honey, and that's what exactly everyone else with the similar kind of patent portfolio charges. Do you have ANY idea how much everyone else is charging? Ericsson is among the top contributors with large number of seminal and essential SEPs -- and there are perhaps only three or four others who could demand similar or higher rate, say Qualcomm, Alcatel, and Moto, not a dozen. The exact figures are announced and published by the patent holders and GatorGuy provided the link on numerous occasions. But, of course, you already knew that, but are just playing dumb, Dr. ummm, you so smart in what again?
Wrong again, in the Moto v Microsoft case, Microsoft never challenged the royalty basis of Moto's claim, but argued that Moto violated "fair" and "reasonable" part of the FRAND rate demanded and accepted by the industry. The decision was likewise based on what other patent holders of the same standards were asking for their SEPs. And lo-and-behold, their licensing model wasn't even tied to some percentage of any particular component (or an entire device), but on some fixed amount for the first 10,000 units, plus per-unit cost for any additional units. The court also found that Moto's patents weren't all that large or essential in quantity or quality, so the judge awarded Moto what he thought was proportional to Moto's share of the standards. Now, the fact that you are citing a Wiki article indicates you have absolutely no have idea what you are talking about.
wow, you sound so smart!! Ummm, did you just figure that out? or do you actually have any proof that Qualcomm licensed all of Ericsson's patents?
I agree, why should I pay in excess of $50K in taxes every year, while some young ignorant chumps like you pay so much less? Oh, and I'm pretty sure no creativity or hard work went into creating the wireless standards Ericsson spent so much time and money on. Bad Ericsson.
sell at a loss? Yeah, that sounds really stupid. And no, Ericsson is not collecting some percentage of a phone maker's profit. And there are also trade laws preventing companies from dumping their products at below cost.
Nope. Nobody cares what is 'driving market demand' for your product. It only matters whether you use the patent or not. According to your argument, the car maker should not have to pay Ericsson anything unless Ericsson can prove that their patent drove customer demand for the car. Would Ericsson accept that? ?
Whenever people agree with me, I always feel I must be wrong. And I'm glad that your kinds don't care, because those in the lawyering business and the US judicial system do care and they do matter quite a bit in patent infringement cases.
@ spock1234
Way to go !
????
@robm : go down.
I'll probably never understand the point of non-binding arbitration. It seems like a waste of money and resources for all parties involved.
Is there in fact precedence for that? I can't find the details, but it is likely that the appropriate standards body wouldn't adopt something with too high a base offer.
The interesting issue with the universal pricing, is that Ericsson in particular would have to understand that Apple and Samsung could afford to pay, LG and a few others would struggle, and plenty of the OEM's barely surviving would have to exit the 4G/LTE market. Apple and Samsung would love to be in a position without competition even at penalty of a price increase.
Ericsson would then risk killing off any growth and probably see a recession in base station equipment sales. It would also have the effect of driving a shift to different standards, or create competitors out of consumer electronics companies.
Apple's stock price would drop from the increase, and Apple would borrow money and just buy more stock back, but Ericsson likely would see a substantially drop in corporate value, making it a takeover target.
The point in this little academic exercise is that Ericsson is acting like a monopoly, even though it must adhere to SEP standards. See how they handled the Samsung negotiations in the past, and yes I provided a link earlier.
While Gatorguy and others accept and defend the status quo in licensing, and have stated as much, I see it that the consumer electronics industry has outgrown the telecom industry, and while communication is one of the primary values of a smartphone, it doesn't define a smartphone, which I have noted it a being defined as a computer in terms of its place in the world. Why should the successful Smartphone players have to pay any more than the unsuccessful ones in royalties?
For many posters, the discussion here centers around punishing Apple and rewarding Ericssion, and has nothing to do with defining a fair solution.
That is why I am supportive of Apple's legal battle with Ericsson.