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Apple Pushes for Clarification on Licensing of FRAND Patents

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Apr 12, 2001
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Dow Jones Newswires reports that Apple filed a letter with the European Telecommunications Standards Institute (ETSI) last November pushing for clarification on how standards-essential patents are intended to be licensed. These standards-essential patents are currently required to be licensed under fair, reasonable and non-discriminatory (FRAND) terms in order to promote competition in the marketplace, but Apple claims that there is too much confusion in the industry about how such licensing should be handled.
Apple said in its letter--which was dated Nov. 11, but not previously disclosed--that the lack of clarity on what is fair, reasonable and nondiscriminatory has led many companies to ask unusually high rates and sue one another claiming they infringed on one another's patents.

"It is apparent that our industry suffers from a lack of consistent adherence to Frand principles in the cellular standards arena," wrote Bruce Watrous, Apple's intellectual property head.
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Apple has requested that the ETSI set "appropriate" royalty rates for FRAND patents in the wireless industry in order to help companies compete on a relatively even field with a clearer understanding of the costs involved in competing in the market. The company has also requested that FRAND patents not be used as the basis for requests for injunctions that would remove products from the market, given that those patents are intended to be licensed and that any negotiation roadblocks are related to the details of that licensing.

Apple certainly has a vested interest in seeing simplified FRAND patent licensing terms, given that it was a relatively late entrant into the mobile phone industry where the vast majority of patents covering the basic technologies are owned by other companies. While Apple has primarily relied on claims of design infringement and specific user interface functionalities in its efforts to block smartphone sales by its competitors, it has been the target of lawsuits based on more fundamental inventions.

apple_motorola_logos.jpg



In one example, Apple briefly pulled all of its 3G-capable iOS devices with the exception of the iPhone 4S from its German online store last week in the wake of a victory by Motorola Mobility in the ongoing patent dispute between the two companies.

That injunction was quickly suspended pending Apple's appeal of the ruling, with Apple arguing that the patents in question are subject to FRAND licensing requirements that are not being met by Motorola. Apple claims that Motorola has "demanded" a royalty rate of 2.5% to license the patent, a figure that would have resulted in Motorola receiving roughly $1 billion from Apple in 2011.

Article Link: Apple Pushes for Clarification on Licensing of FRAND Patents
 
Article Link
https://www.macrumors.com/2012/02/08/apple-pushes-for-clarification-on-licensing-of-frand-patents/
D

dethmaShine

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Apr 13, 2010
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Into the lungs of Hell
miles01110 said:
This coming from the company that filed a lawsuit over use of black rectangles? :rolleyes:
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It's called a community design; also designs are patentable. A number of companies do it and not just Apple.

Moreover, that design is a very big argument and an accurate form factor in the present era that was nowhere to be seen in the 90's or the early 2000's.

It's not a rectangle. Maybe you should learn how to read a community design/patent. Moreover understand that rectangle is a 2D figure whereas the design in the patent is 3D concept.

Rage on, sir.
 
WiiDSmoker

WiiDSmoker

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miles01110 said:
This coming from the company that filed a lawsuit over use of black rectangles? :rolleyes:
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Exactly.

but but but they won't license this technology. It's not fair. *cries*


That guy is making a tablet and it's a rectangle! SUE THIS GUY TO OBLIVION.


Apple is like a bully who picks on everyone else but when they get picked on they cry and whine.
 
T

Torrijos

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Jan 10, 2006
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One thing I don't understand is how the licensing fees aren't part of the chips built to use the standards (Qualcomm chips right).

How come the percentage is calculated on the total sum of the device?

Say Apple build its phones in gold and sapphire, the percentage due to the FRAND licenses owners shouldn't benefit from others design choices...

It should be like a constant fee, that why it would seem more logical for it to be part of the price of the components created to employ the standard.
 
Oletros

Oletros

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That injunction was quickly suspended pending Apple's appeal of the ruling, with Apple arguing that the patents in question are subject to FRAND licensing requirements that are not being met by Motorola.
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No, the injunction hasn't been lifted because of that. At least, German courts stated that Motorola DID offered a FRAND offer and is because this that the injunction was granted.

The most plausible reason for the injunction lifting is that Apple has offered a new deal and it is being analyzed
 
gnasher729

gnasher729

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WiiDSmoker said:
That guy is making a tablet and it's a rectangle! SUE THIS GUY TO OBLIVION.
Click to expand...

Nobody has ever been sued for making a tablet that is a rectangle. There are plenty of people making that ridiculous claim, but that doesn't make it true.
 
U

usptact

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Apr 2, 2011
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They wrote this letter because they do not wan't their cashpile be reduced by 1 billion of bucks. Themselves they are overpricing their products despite the fact that they are of very good quality.
 
M

mutantteenager

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That's what they've hired lawyers to do, keep their costs down. This isn't Apple trying to create a level playing field for their competitors.
 
V

vrDrew

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One of the most important arguments raised in Apple's letter is the call for a common royalty base.

Motorola (and Samsung) are basing their demands for royalties on the cost of the entire device, not just the part that utilizes their communications functionality. This is absurd. Are they going to ask for 2.25% of the cost of a $60,000 automobile that has an on-board navigation and computer system?

People make all sorts of claims that Apple is guilty of "stifling innovation." If anyone is guilty of such behavior it is the Samsungs and Motorolas of the world.
 
Oletros

Oletros

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vrDrew said:
Motorola (and Samsung) are basing their demands for royalties on the cost of the entire device, not just the part that utilizes their communications functionality. This is absurd. Are they going to ask for 2.25% of the cost of a $60,000 automobile that has an on-board navigation and computer system?
Click to expand...

Why is still people using that absurd analogy?
 
A

ABernardoJr

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Dec 19, 2006
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WiiDSmoker said:
Exactly.

but but but they won't license this technology. It's not fair. *cries*


That guy is making a tablet and it's a rectangle! SUE THIS GUY TO OBLIVION.


Apple is like a bully who picks on everyone else but when they get picked on they cry and whine.
Click to expand...

You're good at comprehending lawsuits aren't you? Analogies are impeccable too. :rolleyes:
 
C

cdmoore74

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Jun 24, 2010
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What ever the amount its nice to know that Apple will have to pay Motorola something.
 
nagromme

nagromme

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This isn’t the latest info, but as of about a year ago, Apple was the most-sued tech company—and that wave of attacks on Apple began with the iPhone in 2008:

http://www.tomshardware.com/news/lawyers-lawsuit-legal-steve-jobs,11721.html

So Apple’s the bully?

Of course, the number of suits isn’t important, it’s the merits. Hard to judge for armchair lawyers (who exactly was sued for nothing more specific than a “rectangle”?) but:

1. Are others abusing FRAND to attack Apple? If so, that’s wrong.

2. Did others re-use designs (and more importantly, underlying tehcnologies—it’s not just about cloning looks) that were never seen on Earth before Apple? Is that somehow mere coincidence or is it others profiting from Apple’s work?

3. If Apple’s designs are the “only way” to make a tablet/phone/touch OS/whatever, then why were they never seen before the iPhone/iPad?

4. Everyone copies/borrows, and that’s often a good thing. But is any amount of copying always OK, or is there a limit to what Apple should accept, if they have legal grounds?

5. Did Apple in fact invent some useful things with the iPhone? Would Android devices truly exist in anything like their current form without Apple to copy? (Android started as a BlackBerry clone, a heritage still seen in sluggish graphical performance.)

6. Did Apple really create the current business reality (which is nothing new) where companies use IP against each other? Could they choose not to play the game and just sit back and let themselves be sued, or do they have to play the game the same as their competitors?

And most importantly:

7. Wouldn’t we love to see the innovations and choice that would happen if more companies innovated, and fewer copied Apple? What if Samsung, for instance, was like Microsoft/Metro? Instead of parroting Apple right down to the packaging, the charging brick, and the me-too addition of white faceplates, we’d have something more unique/new in the market! Isn’t THAT a better kind of competition?
 
V

vrDrew

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Oletros said:
Why is still people using that absurd analogy?
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Why is that absurd?

The iPhone has all sorts of functionality built into it beyond its ability to access wireless networks. You can build a 3G-enabled dumb phone for less than $30 in costs, whereas the iPhone has a BOM cost of more than $300 - most of which has to do with things like the touchscreen; camera; case; and battery. Why does Motorola take a whack at those costs?

The important thing about FRAND is that it implies the royalties be a) reasonable and b) non-discriminatory. Motorola basing their demands on the cost of the entire device essentially discriminates against manufacturers who put extra functionality into their products. Thats what stifles innovation.
 
P

paul4339

macrumors 65816
Sep 14, 2009
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One theory is that making a difficult-to-accept offer is a tactic to seek injunction.
One party can make an absurd offer; when the other party says 'no', the first party can say 'we tried' and then seek an injunction on their competition's product.

.
 
BobbyRond

BobbyRond

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Dec 13, 2011
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Oh how cunning the Apple lawyers are... I think they knew very well what FRAND patents imply, they just couldn't reach an agreement on the fee and refused to pay (or whatever the deal is), but writing this letter is a brilliant move! I like it! :D
 
Oletros

Oletros

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Kaibelf said:
Motorola isn't entitled to a certain percentage of a finished product, they are entitled to a flat fee like everyone else, especially with FRAND.
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It's a pity but royalties for FRAND licenses are not only a flat fee, but flat fees, percentage of the products, even a mixture of the two.
 
*LTD*

*LTD*

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BobbyRond said:
Oh how cunning the Apple lawyers are... I think they knew very well what FRAND patents imply, they just couldn't reach an agreement on the fee and refused to pay (or whatever the deal is), but writing this letter is a brilliant move! I like it! :D
Click to expand...

Apple has massive amounts of clout and mindshare with consumers. They can lose virtually every patent battle and still sell an obscene amount of iDevices for obscene amounts of profit. Apple loses nothing at all by testing the waters at higher regulatory levels.

Keep in mind, Apple operates from this position:

http://mashable.com/2012/01/24/apple-quarter-by-the-numbers/

http://macdailynews.com/2012/02/07/apple-shares-hit-new-all-time-intraday-closing-highs-7/

The only parties here who are threatened by any of Apple's legal moves are Apple's competitors. Motorola, for instance, has already made it very clear (last month) that their continuing legal battles with Apple have been causing them financial strain. So of course, being the no-account, has-been dinosaurs that they are, they decided to grab money another way. Guess if they can't make money by making great products, they have to make money somehow, through paper.

Apple’s lawyer wrote in the letter that “It is apparent that our industry suffers from a lack of consistent adherence to Frand principles in the cellular standards arena”.

This is becoming quite obvious.
 
KnightWRX

KnightWRX

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Oletros said:
It's a pity but royalties for FRAND licenses are not only a flat fee, but flat fees, percentage of the products, even a mixture of the two.
Click to expand...

FRAND doesn't mean anything other than fair, and frankly, fair is quite subjective. As long as the deal Apple gets is similar to other manufacturers, it doesn't have to be identical at all.

A faily common misconception around these parts.
 
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