Motorola Requested 2.25% Patent Licensing Royalty on iPhone Purchases

[MacRumors]

Late last year, Motorola Mobility requested Apple pay a potential royalty of 2.25% on its iPhone sales in recently unsealed litigation from last year. The royalty would amount to more than $1 billion in 2011 alone, though there is no indication which specific iPhone models would be covered by the license nor if it would be retroactive to the initial launch of the iPhone in 2007.

The patents appear to be covered under the FRAND standard, which requires patents to be licensed for "fair, reasonable and nondiscriminatory terms". The 2.25% request that Motorola offered was in response to a demand for a FRAND pricing offer from Apple.

Florian Mueller, writing about the issue, offers some additional insight:

I assume this relates to Apple's sales and to all of MMI's standard-essential patents, though the context is only one patent (the one over which Motorola has already forced Apple, temporarily, to remove certain products from its German online store. Assuming in Motorola's favor that this was a license to all standard-essential wireless patents, the amount still appears excessive to me given how many companies hold patents on such standards and what royalty rate this would lead to in the aggregate.

A quote in the Wall Street Journal from the chief executive of the Epicenter IP group, which helps companies license patents, noted that "there is no debate that Motorola was the inventor of the mobile phone" and its patents could be broad and necessary for a phone maker.

This is only one more step in the long and drawn-out patent battle between the two companies, but the licensing rate for patents is typically a closely held competitive secret. The 2.25% rate would be a significant amount of money, given the tremendous sales Apple is generating from its iPhone business.

Article Link: Motorola Requested 2.25% Patent Licensing Royalty on iPhone Purchases

 

[HiRez]

The 2.25% rate would be a significant amount of money, given the tremendous sales Apple is generating from its iPhone business.

The amount of money generated should be irrelevant. The question is, how fair is 2.25%? What % are other similar FRAND patents typically licensed at? Are there guidelines or limits placed on these?

 

[mikefla]

Motorola almost went out of business a few years ago. They make junk and now they want to steal from Apple, wow! All that CPU business they lost from Apple has to really hurt when all your other products suck, specially all the consumer junk they make.

-Mike

 

[Apple...]

Wirelessly posted (Mozilla/5.0 (iPod; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Mobile/9A405)

Is that unfair?

 

[Kevlar]

Motorola almost went out of business a few years ago. They make junk and now they want to steal from Apple, wow! All that CPU business they lost from Apple has to really hurt when all your other products suck, specially all the consumer junk they make.

-Mike

Well Apple is stealing from Moto. Moto developed a lot of technology back in the early days and has patents on it. They deserve to make money back on it (based on the current patent system).

Now how much money is the question. And since they are patents considered to be FRAND patents, we will have to wait and see what the judge says when he see's what Moto gets from other companies that have licences the patents.

 

[FakeWozniak]

Wirelessly posted (Mozilla/5.0 (iPod; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Mobile/9A405)

Is that unfair?

The way I see it, there were a few hundred standards required patents available. Sure Moto and Samsung hold a significant stake between them, but say there are 50 total standards required patent holders all asking for 2%. There is no way that is fair.

Also, patent exhaustion should apply IMO. Buying a chip from Qualcomm only costs $15 and has all 175 or so patents licensed in the chip already. $0.30 (1/50th) of $15 is about all I'd give Motorola/Samsung and ONLY if there isn't patent exhaustion.

 

[longofest]

This is called negotiation. Moto is starting high, and they also happen to be in a good negotiating spot having won some rulings. However, I highly doubt the number will stay above 2%. Probably end up closer to 1% (which is still a significant chunk of change)

 

[Andronicus]

Motorola almost went out of business a few years ago. They make junk and now they want to steal from Apple, wow! All that CPU business they lost from Apple has to really hurt when all your other products suck, specially all the consumer junk they make.

-Mike

Obviously you're an apple......enthusiast, but Motorola has been making phones a lot longer than apple and it's not surprising that they have patents that apple is using and if so then apple should pay.

 

[swordfish5736]

I'd be interested to see what percentage other companies have to pay for a patent like this.

 

[sjinsjca]

The amount of money generated should be irrelevant. The question is, how fair is 2.25%? What % are other similar FRAND patents typically licensed at? Are there guidelines or limits placed on these?

The court will want to know all these answers. If Motorola is deemed as attempting to gouge a FRAND patent, there will be trouble.

2.25% strikes me as a tad high, but the reporting is unclear on what the 2.25% would be levied upon.

 

[Peace]

The court will want to know all these answers. If Motorola is deemed as attempting to gouge a FRAND patent, there will be trouble.

2.25% strikes me as a tad high, but the reporting is unclear on what the 2.25% would be levied upon.

If Motorola is shown to charge less to other phone makers they can and will be under scrutiny for anti-competitive monopoly laws in Europe. That's a big no no.

 

[kdarling]

A few information tidbits for the thread:

• Re: Motorola's 2.25%. Samsung had asked Apple for 2.4% for their patents.
  
  
• It's probable that one reason other companies aren't making as much profit on their phones as Apple, is that they're paying far more in license fees, some of which Apple has been avoiding as long as possible.
  
  
• Motorola first asked Apple for royalties a month after the iPhone went on sale in 2007. Reportedly Apple stalled four years to respond with a counter-offer. (Similar to what they did with Nokia.)
  
  
• Over 150 companies belong to the GSM FRAND alliance. Unknown how many get license fees.
  
  
• Fee example: in 2007, Broadcom won an ITC import injunction on certain Qualcomm chips. Verizon ended up themselves paying the $6 patent fee per CDMA phone to Broadcom for a while, just to be able to import phones into the US and not run out of stock.
  
  
• FRAND does NOT mean that everyone, big or small, new or old, must get the same terms. Quantity, length of contract, cross licensing of patents, all these and more are factors.
  
  

 

[Koodauw]

I say pay them. Maybe that money will go to R&D and we can finally get the powerbook G5.

 

[Rajani Isa]

I say pay them. Maybe that money will go to R&D and we can finally get the powerbook G5.

So Apple paying out a billion or so bucks to Motorola is supposed to make the G5 come about?

 

[jontech]

I say pay them. Maybe that money will go to R&D and we can finally get the powerbook G5.

LOL


I have seen one.... I promise!!

 

[Imhotep397]

At the end of the day I suspect Motorola won't get much of anything, simply because they've not asserted the violation of these basic patents with the release of any of the other of the thousands of mobile phones that have been released over the years or even when the iPhone was first released which would indicate that patent issues were never an issue.

 

[ChristianVirtual]

Actually it will not be Apple who is paying for it ... eventually it will end up on our wallet ... at least for the next generation. For the last generations they must have some big accruals in their balance sheet.

 

[Rodimus Prime]

At the end of the day I suspect Motorola won't get much of anything, simply because they've not asserted the violation of these basic patents with the release of any of the other of the thousands of mobile phones that have been released over the years or even when the iPhone was first released which would indicate that patent issues were never an issue.

That or they already have FRAUD agreements in place with the others. This would not be the first time Apple avoided trying to pay FRAUD patents. They did the same on Nokia. Question is how much did Apple end up paying Nokia at the end of that case as Apple did settle and it was an undisclosed amount.

 

[zapnyc]

I think Apple should just buy Motorola and dissolve their languishing mobile business. buuuuuh-bye

 

[justperry]

Wow, 2.25% seems a lot to Me.

Isn't this all about GPRS, an "outdated" technology, In the last few years I can't even remember that My connection fell back to GPRS.
Why pay that much if it's so rare that a connection is made through GPRS.

Should Apple pay a fair amount, Yes they should pay as long as this technology is part of the iPhone but to Me a fairer deal should be more or less a few hundreds of a Percent, something like 0.2-3%.

 

[Istranka]

Hello everyone, I'm new here

 

[justperry]

Hello everyone, I'm new here

Bye bye

 

[mijail]

That or they already have FRAUD agreements in place with the others. This would not be the first time Apple avoided trying to pay FRAUD patents. They did the same on Nokia. Question is how much did Apple end up paying Nokia at the end of that case as Apple did settle and it was an undisclosed amount.

What is a FRAUD agreement? Does it have anything to do with organized crime or some such?


(anyway, I would also try to avoid paying for that )

 

[Steve121178]

I think Apple should just buy Motorola and dissolve their languishing mobile business. buuuuuh-bye

You are aware that Google are in the process of acquiring it for $12.5bn, yes?

 

[samcraig]

At the end of the day I suspect Motorola won't get much of anything, simply because they've not asserted the violation of these basic patents with the release of any of the other of the thousands of mobile phones that have been released over the years or even when the iPhone was first released which would indicate that patent issues were never an issue.

Yes. They have. And yes they did. They approached Apple in 2007 and Apple has been stalling ever since.

Instead of making things up - maybe you should do some research? You don't even have to go far. KDarling posted the facts a few posts up from yours...

----------

You are aware that Google are in the process of acquiring it for $12.5bn, yes?

Makes you wonder if people just knee-jerk a silly response as if buying every company in Apple's "way" is a solution and/or they actually read tech news.