Ericsson Extends Patent Lawsuit Against Apple to Europe

[Simoleon547]

"Apple originally filed suit against Ericsson in January, arguing that it was demanding excessive royalties for patents not essential to LTE standards."

Apple needs to put their "big-boy pants" on.

 

[kdarling]

Didn't Apple steal the mouse from Xerox?

The inventor of the mouse, Doug Engelbart, said in this interview that Xerox licensed it to Apple for a mere $40,000.

I'm not sure how reasonable that sounds. Clearly Apple have already paid Ericsson millions to this point, now they are looking to shake Apple down for almost three quarters of a billion dollars a year, for the privilege of making a cell phone?

I get that Ericsson did a lot of work in the cell phone arena and holds 35,000 patents, but I don't see that they deserve eight BILLION dollars over the next ten years.

Without the decades and billions that companies like Ericsson, Motorola and Samsung invested in cellular and smartphone technology and infrastructure, Apple would have no market to have made their tens of billions of iPhone profit from.

As for rates, heck, Apple wanted $24 per device from Samsung to license just the vaguely defined look and feel of the iPhone. Today, that would be over $7 billion a YEAR for things like rounded colorful icons.

What's good for the goose is good for the gander. If Apple wants to claim their non-essential designs are worth up to $40 a device as they have in court, then it follows that they should pay just as much if not more for IP that is actually essential to make a phone in the first place.

Rubber-banding at the end of a screen is not essential. For worldwide 4G, LTE technology IS.

 

[69Mustang]

Good info, thanks. But issue #1 seems backwards. Wouldn't any potential licensee want to claim a patent is essential? That would mean they're guaranteed a FRAND rate.

The issue about which price to use would make this whole situation make more sense.

Not necessarily. If you want to pay less than FRAND rates for essential patents then your best bet is to assert the patents aren't essential. If the patent is deemed non-essential then it's value is less.

For someone wanting to pay as little as possible, FRAND is a considerable obstacle. Especially if the rate is based on common industry practice.

That's why I think Apples goal to achieve the smallest rate possible by diminishing the importance of the patents and using a non standard rate calculation.

edit: kdarling made it to the thread. He knows way more about this than I do.

 

[Oletros]

Oh banning the phones really shouldn't be the solution. Court should order the license price and Apple can then just pay it. Probably enough money is at stake here that someone will appeal the first adjudicated license price anyway.

ITC can only ban sales

 

[ZCT]

Without the decades and billions that companies like Ericsson, Motorola and Samsung invested in cellular and smartphone technology and infrastructure, Apple would have no market to have made their tens of billions of iPhone profit from.

If you went back in time and erased Ericsson from existence, we'd still have cell phones today.

It doesn't seem reasonable that a company wanting to make a cell phone today has to pay that kind of money to Ericsson.

As for what you said about Samsung, they did blatantly rip off the iPhone and should pay for the privilege.

 

[androidguybill]

Not Exactly. Apple Explicitly Wants To Pay Less Than Everybody Else

Not necessarily. If you want to pay less than FRAND rates for essential patents then your best bet is to assert the patents aren't essential. If the patent is deemed non-essential then it's value is less.

For someone wanting to pay as little as possible, FRAND is a considerable obstacle. Especially if the rate is based on common industry practice.

That's why I think Apples goal to achieve the smallest rate possible by diminishing the importance of the patents and using a non standard rate calculation.

edit: kdarling made it to the thread. He knows way more about this than I do.

Their position was stated earlier. Apple says:

A) You get $100 million from Motorola because they pay 25 cents per device
B) That makes the value of the patent worth $100 million
C) So since we sell 10 times as many phones as Motorola we will pay you 2.5 cents per device

Apple's position is that they should be charged less than everybody else and Ericsson should be able to "make it up on volume." Which, of course, is ridiculous. Apple did not impose those terms on HTC because HTC sold far fewer phones than Samsung. (And their getting HTC to accept licensing terms is having their desired effects; HTC is barely profitable right now and are scrambling to save their company. LG, which did not fall for Apple's pressure tactics, is doing much better.) They charged a (rather high) fee per device, which is really squeezing HTC's margins.

I do not know if Apple has a leg to stand on here. Maybe they are still angry at losing to Samsung because of Samsung's stall and delay tactics. But while Apple was unable to get Samsung's products banned because Apple winning their lawsuit would have essentially made Apple a smartphone monopoly - and no one was willing to do that - they have no chance at waiting our Ericsson. Copywriting "look and feel" is a lot different than just using someone's hardware tech.

 

[Oletros]

If you went back in time and erased Ericsson from existence, we'd still have cell phones today.

It doesn't seem reasonable that a company wanting to make a cell phone today has to pay that kind of money to Ericsson.

Only counting iPhones and not other LTE devices, $250 to $1.000 millions/year is between $1.25 and $5 per device. What amount would be fair?

As for what you said about Samsung, they did blatantly rip off the iPhone and should pay for the privilege.

So, are you saying that infringing (and not wilfully as the court stated) some patents is worth between 5 and 20 times more that Ericsson is asking?

----------

Not necessarily. If you want to pay less than FRAND rates for essential patents then your best bet is to assert the patents aren't essential. If the patent is deemed non-essential then it's value is less.

For someone wanting to pay as little as possible, FRAND is a considerable obstacle. Especially if the rate is based on common industry practice.

That's why I think Apples goal to achieve the smallest rate possible by diminishing the importance of the patents and using a non standard rate calculation.

edit: kdarling made it to the thread. He knows way more about this than I do.

If the patent is not essential Ericsson can ask what they want

 

[androidguybill]

If you went back in time and erased Ericsson from existence, we'd still have cell phones today.

It doesn't seem reasonable that a company wanting to make a cell phone today has to pay that kind of money to Ericsson.

As for what you said about Samsung, they did blatantly rip off the iPhone and should pay for the privilege.

This is totally being an Apple shill. First off, it doesn't matter whether someone else would have invented the technology later. It only matters who invented the technology first. If you invented it first, you own it and other people can use it only if you pay them. Keep in mind: if Ericsson wanted to, they could prevent their technology from being used AT ALL and in that case NO ONE would have cell phones, or they would be stuck with creating their own LTE and 2G tech that somehow does not infringe on Ericsson's.

And Ericsson isn't asking for that much. Remember: <b>Apple wanted Samsung to pay $24 per phone</b>! Ericsson is literally only charging pennies per phone. Your position is that you only care about Apple and could care less about - and are actually hostile to - everyone else in the industry. But just remember this: smartphones - and mobile phones in general including feature phones and dumb phones - were using 2G long before the iPhone.

Also, there is no reason why Apple should pay less than Blackberry, Microsoft, Samsung, HTC, LG, Huawei and everybody else. Everybody else is paying Ericsson the same FRAND rate. What you are arguing for is for Apple and Apple alone to get special treatment. Which by the way is precisely what Apple is demanding. Apple is claiming that their selling more phones than everyone else gives them the right to pay less per unit. When they do not even sell more phones than everyone else. Samsung does. Samsung sells more smartphones, AND they also still sell a ton of feature phones.

So add it all up, and Apple has no reason to demand special treatment - better treatment than they themselves give to people who license their tech, as well as their suppliers and component manufacturers mind you - except some conviction that they are better and more valuable than everybody else.

 

[JAT]

What's good for the goose is good for the gander. If Apple wants to claim their non-essential designs are worth up to $40 a device as they have in court, then it follows that they should pay just as much if not more for IP that is actually essential to make a phone in the first place.

Rubber-banding at the end of a screen is not essential. For worldwide 4G, LTE technology IS.

Are you trying to argue against the industry FRAND methodology? That doesn't seem like something you would argue.

 

[LordVic]

If the patent is not essential Ericsson can ask what they want

This is what I don't get.

FRAND means that no matter what, the patent holder must come to an acceptible, mutually beneficial standard pricing and one that courts can enforce as "reasonable". this takes the price control out of the hands of the supplier.

once it is no longer standard, Nothing stops erikkson from telling Apple if they want the patent, they can either pay 5x the amount, or come up with their own solutions.

like seriously... if the patents are 'non essential'.. then stop using them and use an alternative.

if it's essential. pay the already standard going industry approved rates that everyone else is paying. Apple is demanding special treatment because they're Apple.

 

[Oletros]

This is what I don't get.

FRAND means that no matter what, the patent holder must come to an acceptible, mutually beneficial standard pricing and one that courts can enforce as "reasonable". this takes the price control out of the hands of the supplier.

once it is no longer standard, Nothing stops erikkson from telling Apple if they want the patent, they can either pay 5x the amount, or come up with their own solutions.

like seriously... if the patents are 'non essential'.. then stop using them and use an alternative.

if it's essential. pay the already standard going industry approved rates that everyone else is paying. Apple is demanding special treatment because they're Apple.

The bet here is a ruling saying that the patents are not essential and then arguing that they are not infringed. If they are essential, by definition, they are infringed.

 

[androidguybill]

The bet here is a ruling saying that the patents are not essential and then arguing that they are not infringed. If they are essential, by definition, they are infringed.

They are not going to get a ruling that claims that the patents are not essential. Without 2G and LTE, what is a smart phone left with? Without 2G and LTE technology, Apple would have to invent their own communications standards and technology AND have all the cell phone carriers adopt it. Good luck with that. Want to implement 4G without Ericsson's patents by creating different hardware that conforms to the protocol? You can't. Ericsson's patents cover both the hardware AND the standard. It isn't like TCP/IP where you can avoid the licensing of any particular hardware design to produce data that conforms to the protocol. Where TCP/IP is "open", with 4G both the hardware and the standards are patented. And yes, as smartphones are useless without high speed mobile Internet, the patents are necessary AND valuable.

It is appalling to believe that others should pay Apple - and pay exactly whatever exhorbitant fee that Apple demands - for Apple's tech (or design or user experience or whatever) but that others should just accept what Apple gives them and be happy. Especially when Apple's position is that they should be able to pay less because they sell more (when they actually sell fewer units than Samsung).

 

[69Mustang]

Apple's position is that they should be charged less than everybody else...

I stated the same thing in post 16. You and I are on the same page.

If the patent is not essential Ericsson can ask what they want

True. That's why I put the qualifier 'not necessarily' in my quote. Yes, Ericsson can ask what they want. Apple can also assert the patent isn't essential so it's worth less. One does not negate the other in a dispute. They are simply different sides of the same coin.

Apple's going to end up paying. Most likely, more than they want to pay. From a personal standpoint, Apple makes a pretty crappy victim in this drama. It's hard to sympathize with a company sitting on 40% margins when they are essentially telling another company to get by on volume.

 

[kdarling]

Are you trying to argue against the industry FRAND methodology? That doesn't seem like something you would argue.

I've come to believe what many learned IP judges have said: that just because you submit your patent to a standard, it does not follow that you lose basic patent rights. I.e. you should still be able to get an injunction if another company fails to negotiate at all.

ETSI cellular FRAND participation is voluntary, and so are the rates that are asked. There is no rule that limits how much any member can ask for a patent.

In practice, it's been self-regulatory. If any single company tries to rip off the others, they can do the same to it in reverse, and more importantly, refuse to accept patents as essential from such a rogue company. Plus higher rates affect all their bottom lines.

So the upshot has been that they tend to sign cross-licenses and share a lot of basic IP. This lowered costs all around, and competition was then based on features and price, not IP.

Apple came in and didn't want to cross-license their IP. That's their right, of course. But they cannot then expect to pay the same lower rates as everyone else.

There's another factor here: that of determining the basis for the royalty. This is more what Apple is complaining about, and deserves a separate post when I get off work.

If you went back in time and erased Ericsson from existence, we'd still have cell phones today.

If you erased Apple, we'd still have smartphones today, and a lot of them would be capacitive touch and finger friendly, because that's where part of the market was already heading.

 

[TallManNY]

ITC can only ban sales

What court could hear Apple's theory that it should pay less based on volume? That seems the route the players should take. Kind of crappy theory on its face though. Worth a shot though. I guess Apple's view is that Erickson is making plenty off of the high Apple volume. And that therefore they fully and sufficiently compensated for the work they did creating the tech and the standards.

The fact that Samsung sells more phones but is not choosing to make this argument is an interesting fact, but does not seem determinative to me. Folks come up with clever legal theories all the time. Just because Apple might be the first here doesn't mean they are wrong. Of course if Apple prevails, then Samsung will seek the same treatment.

 

[Gasu E.]

Ericsson own the patents and should be able to demand the value they believe they are worth. Who are Apple to set the price?

No, if they are standard-essential, the patent owner has already agreed NOT "to demand the value they believe they are worth." If all the essential patent owners do not agree to this upfront, the standards body will not establish the standard.

 

[aaronvan]

Didn't Apple steal the mouse from Xerox?

That old thing was way too big to fit in a pocket, so Woz walked out with it under his hat.

 

[lkrupp]

Ericsson own the patents and should be able to demand the value they believe they are worth. Who are Apple to set the price?

No, you’ve got it wrong. The entire concept of FRAND is to prevent patent holders of essential technology (technology that is the basis for the very operation of standard systems) cannot charge predatory rates for licenses to use that technology. So no, Ericsson cannot set whatever price it wants for its FRAND patents and furthermore cannot charge different rates for different licensees. They cannot charge Apple more than they charge HTC for example.

 

[Oletros]

No, you’ve got it wrong. The entire concept of FRAND is to prevent patent holders of essential technology (technology that is the basis for the very operation of standard systems) cannot charge predatory rates for licenses to use that technology. So no, Ericsson cannot set whatever price it wants for its FRAND patents and furthermore cannot charge different rates for different licensees. They cannot charge Apple more than they charge HTC for example.

Yes, they can charge differently. FRAND doesn't means every one is charged the same

 

[lkrupp]

I find it interesting that whenever a story like this appears the resident MacRumors trolls crawl out of their spider holes to condemn and declare Apple guilty. No trial necessary, no examination of the evidence needed. Ericsson sues Apple so that makes Apple guilty by default. Why don’t we just sit back and see what happens? It sounds to me like there’s a chess game going on or a game of chicken to see who blinks first. An agreement will be reached eventually. There’s always an agreement eventually.

 

[MrRage]

I imagine this would get settled quickly if Apple lost the ability to sell its products (iPhone in particular) in any global region.

 

[BigInDallas]

If you went back in time and erased Ericsson from existence, we'd still have cell phones today.

It doesn't seem reasonable that a company wanting to make a cell phone today has to pay that kind of money to Ericsson.

As for what you said about Samsung, they did blatantly rip off the iPhone and should pay for the privilege.

the problem with this argument is Erickson is the company that built these lte components. it doesn't matter that cell tech might have followed the same path. It didn't, Apple is gonna pay at ton of money to Erickson and they should. stealing is stealing, even if Apple is the one stealing

----------

What court could hear Apple's theory that it should pay less based on volume? That seems the route the players should take. Kind of crappy theory on its face though. Worth a shot though. I guess Apple's view is that Erickson is making plenty off of the high Apple volume. And that therefore they fully and sufficiently compensated for the work they did creating the tech and the standards.

The fact that Samsung sells more phones but is not choosing to make this argument is an interesting fact, but does not seem determinative to me. Folks come up with clever legal theories all the time. Just because Apple might be the first here doesn't mean they are wrong. Of course if Apple prevails, then Samsung will seek the same treatment.

Clearly this is essential tech if all other phone manufacters are paying Erickson. When you are 700 billion dollars its ridiculous to argue over this kind of thing. Grow up Apple

 

[69Mustang]

No, you’ve got it wrong. The entire concept of FRAND is to prevent patent holders of essential technology (technology that is the basis for the very operation of standard systems) cannot charge predatory rates for licenses to use that technology. So no, Ericsson cannot set whatever price it wants for its FRAND patents and furthermore cannot charge different rates for different licensees. They cannot charge Apple more than they charge HTC for example.

No, you've got wrong. FRAND does not mean the same for everyone. It never has. This isn't about Ericsson wanting to charge Apple more than everyone else. It's about Apple wanting to pay less than everyone else. Apple wants Ericsson to make their money on volume. I mean, who needs profits amirite?

I find it interesting that whenever a story like this appears the resident MacRumors trolls crawl out of their spider holes to condemn and declare Apple guilty. No trial necessary, no examination of the evidence needed. Ericsson sues Apple so that makes Apple guilty by default. Why don’t we just sit back and see what happens? It sounds to me like there’s a chess game going on or a game of chicken to see who blinks first. An agreement will be reached eventually. There’s always an agreement eventually.

So I guess you overlook the majority of the comments attempting to discuss the actual issue, and instead focus on the outliers. Did you also see the sycophantic posts declaring Apple's innocence? No trial necessary, no examination of the evidence needed. How about we try this: Apple sues Ericsson and Ericsson then sues Apple. Isn't that what actually happened? But I'll admit it does sound better to certain individuals to believe Ericsson started the round of lawsuits.

 

[kdarling]

So no, Ericsson cannot set whatever price it wants for its FRAND patents and furthermore cannot charge different rates for different licensees. They cannot charge Apple more than they charge HTC for example.

The rates can be very different.

FRAND only means that similar deals must be available to similar licensees. The rates themselves can vary depending on particulars such as quantity purchased, longevity of contract, credit rating, and cross-licensing.

Especially the latter. For example, Nokia is known to have extensive cross-licensing deals in place, to the point that they pay almost nothing (less than 3% total) in royalties whereas other makers might pay almost ten times that.

Motorola, who invented modern cell technology, used to not even have a patent cash rate at all. There were only two possible deals: either you had to purchase chips and equipment from Motorola, or you had to cross-license everything, in which case the patents were "free".

So yes, they could charge one company more than another. Just not for the same kind of deal.

--

Edit: I would add though, that they don't seem to be charging Apple more than others. From Ericsson's similar complaint in a US court:

"The parties' licensing negotiations have been unsuccessful because Apple refuses to pay a FRAND royalty corresponding to those paid by its competitors for Ericsson's Essential Patents. Apple fails to honor the fact that FRAND licensing is a two-way street, requiring not only that the licensor is fair and reasonable in providing licensing terms, but also that the licensee negotiates in good faith and accepts FRAND terms when they are offered."

Especially since Ericsson has said they'll go along with whatever the court rules as FRAND royalties. You can't get much fairer than that.

Note that Samsung tried to fight a similar contract renewal, but ended up owing almost a billion dollars to Ericsson.

 

[TETENAL]

The inventor of the mouse, Doug Engelbart, said in this interview that Xerox licensed it to Apple for a mere $40,000.

Good for Xerox, but the mouse was invited by Telefunken.