Apple Faces Ericsson Lawsuit After Refusing Licensing Deal

[69Mustang]

[/COLOR]

That does not fix the issue. The 7th amendment gives unfettered right for facts in civil cases to be jury tried. The Court of Appeals is not a jury. Obviously if both parties consent it can go to mediation--which happens all the time.

I suppose you could force non-binding mediation before a jury trial. But that's not what was suggested. And if it's non-binding, what is the point? The losing party would just take it to the jury.

Now you're moving the goalpost. The question was never if this would fix the issue. It was about this not being possible. Your original assertion was: "This is a non-starter." Then you doubled down with: "So absent a revision to the constitution, this "reform" ain't happening."

Both statements were incorrect. Nothing he said affects the Constitution. So if you want to talk about fixing, that's a different subject altogether.

Non-binding mediation is exactly what rdlink's quote suggests:
"Why not create a mediation panel, tied to the USPTO that hears disputes such as this? Each side presents their case, and the panel determines questions of patent validity and value. If either of the parties is unhappy enough with their findings they can appeal the decision through the Federal appeals courts."

What's the point? The point of the mediation is to come to an amenable agreement where both parties are satisfied enough to settle the issue. That's entirely possible, thus avoiding court. Just so you know, before a civil case goes to trial, ADR or alternative dispute resolution is often the first step suggested by a judge. So without knowing it, rdlink basically suggested a process, minus the USPTO, that already exists.

 

[alexgowers]

If it's supposed to be under FRAND Apple has determined it not to be a reasonable price. What matters is if Ericsson are demanding massive increases in the license. If that's the case then it's almost Mafia like to force through courts to demand payment. Apple has the cash so I suspect it's a matter of extortionate rises in cost.

 

[roadbloc]

Yet another sad case of Patent Trolls looking for Apple's money in Tyler, Texas. (I live in Dallas, it's nothing against Tyler. It's just the ambulance-chaser/troll mentality that kills me.)

Ericsson? A patent troll? You cannot be serious. Companies like Ericsson created the fundamentals of the mobile and smartphone industry. Apple should pay them for their innovations just like any other company has to, or stop infringing their patents.

 

[TallManNY]

Why would you assume Ericksson was asking for an increase? Could it have gone something like this?

Ericksson produced a pro forma contract with the same terms as the expiring agreement. Apple, with a reputation for squeezing vendors for margin, said we want to pay X% less on this contract. Ericksson's response was we charge you, HTC, Motorola, and LG the exact same price for the same license. Apple's response was we sell more phones that those guys so you can make it up on volume.

Here's where we converge: Apple eventually pays Erickson. That is probably a given. But the question is how much.

I have no skin in the game but of those scenarios are equally probable and improbable at the same time. Schrodinger's cat and all.

That could be what happened. Apple, especially under Tim Cook, does squeeze its vendors pretty hard. I don't think that it is equally as likely as Erickson raising the rates directly after Apple has the best quarter in corporate history. But I'm just speculating. Your scenario might be the case.

 

[kdarling]

A couple of observations on rates:

- Membership in ETSI (the global telecommunications standards group) requires FRAND rates for patents that its members contribute, but does not specify how much. It also states that arbitration should be used in case of dispute. The Ericsson filing in Texas claims that Apple refused both:

"...Apple refuses to pay a FRAND royalty for a portfolio license commensurate with licenses taken by existing licensees and consistent with the parties' prior license.

Apple's gambit is indistinguishable from a "reverse hold-up," in which Apple abuses the protections afforded by FRAND while taking a free license to use Ericsson's patented technology. Such tactics give Apple a substantial, unfair edge over its telecommunications competitors who have agreed to—and who maintain—licenses under Ericsson's global portfolio of patents on FRAND terms.

Apple has therefore not fulfilled its obligations to remain a third party beneficiary of the contract between Ericsson and ETSI. "

It was Apple's refusal to enter arbitration that caused that ITC injunction from a Samsung request a couple of years ago. (A ban which the White House overturned, in a very rare move, which might get repeated here.)

- Apple has constantly avoided third party arbitration, jury determination of FRAND royalty rates, and judge determination of FRAND royalty rates.

If Apple truly believes that FRAND rates would be lower, why don't they allow a third party such as a Federal court to determine them? (It's been offered before in the case of Motorola's patents, and they refused unless the amount would come out to be a $1 or less.)

Their steady refusal makes it seem that Apple's lawyers are afraid that they'd actually end up paying more, if a fair rate was determined by others.

 

[Oletros]

If it's supposed to be under FRAND Apple has determined it not to be a reasonable price. What matters is if Ericsson are demanding massive increases in the license. If that's the case then it's almost Mafia like to force through courts to demand payment. Apple has the cash so I suspect it's a matter of extortionate rises in cost.

If one of the parts asked a federal court to set the royalty and the other refuses, what do you think of the part refusing?

 

[demodave]

Check your facts before you go defending your darling Apple that does no wrong. Ericsson, Nokia, and Motorola invented cell phone technology as you know it today. Apple has infringed on Nokia patents before. We don't know.

Ericsson is still a key player in the industry, for the record. They are not patent trolls. They are a company with thousands of employees even here in the US. Like Apple, they should protect their patents.

Neither you or I are qualified to make this call, let the jury decide.

I've taken my fair share (and well-deserved, I'm sure) of responses to my post. And the point is well-taken that Ericsson is not the problem. The problem (at least from my totally biased perspective (see, I admitted it)) is the use of a district court that is overwhelmingly hawkish on patent enforcement.

I think patent litigation is a good thing. Absolutely. Innovation is both exciting and necessary. Without it, there is no progress and a mobile phone is little more than a rock to be used to tear flesh from the skin of a dead animal. Intellectual property does need to be defended. But that comes to chickens, hawks, and vultures.

What I suspect is at issue is the terms of patent enforcement, be that FRAND issues between Apple and Ericsson or issues trying to figure out what was developed where and when. I admit, my comment comes out of frustration with the iTunes Content Management lawsuit that recently got decided in Tyler. This relates very much to the "where and when" point. There are patents and there are trade secrets. During the development phase, there are a lot of trade secrets. Companies with reasonably capable legal teams keep records of development. I am sure, for example, that some of my colleagues (no, not at Apple) keep logs of their progress in IC design to be able to defend them later. We can't see those relevant logs outside the confines of the case. Nor can we see the terms of the "agreement" that Ericsson is pursuing with Apple.

Your statement "for the record" that Ericsson is still relevant means nothing to me. I follow MacRumors pretty pathologically. Apart from patent litigation, I don't see much talk of Ericsson. I see a lot of Broadcom and Qualcomm, but not much Ericsson. I consume data. I generate data (a debatable point!). But I don't do the hard science that propagates it, so I don't know the IP at issue.

My guess is, the terms were unFRANDly, so Apple said no. Maybe the details become clearer and more public on appeal.

 

[deadwalrus]

Now you're moving the goalpost. The question was never if this would fix the issue. It was about this not being possible. Your original assertion was: "This is a non-starter." Then you doubled down with: "So absent a revision to the constitution, this "reform" ain't happening."

Both statements were incorrect. Nothing he said affects the Constitution. So if you want to talk about fixing, that's a different subject altogether.

Non-binding mediation is exactly what rdlink's quote suggests:
"Why not create a mediation panel, tied to the USPTO that hears disputes such as this? Each side presents their case, and the panel determines questions of patent validity and value. If either of the parties is unhappy enough with their findings they can appeal the decision through the Federal appeals courts."

What's the point? The point of the mediation is to come to an amenable agreement where both parties are satisfied enough to settle the issue. That's entirely possible, thus avoiding court. Just so you know, before a civil case goes to trial, ADR or alternative dispute resolution is often the first step suggested by a judge. So without knowing it, rdlink basically suggested a process, minus the USPTO, that already exists.

This is getting very tiresome. So I'll try to explain it really simply for you.

The original proposal was forced mediation with right to appeal, the idea being to take juries out of the equation. But as you seem to admit, this is unconstitutional due to 7th amendment right to jury trial. So yes, the original proposal is a "non-starter," just as I said.

Now you are proposing some sort of forced "non-binding" mediation. But if it's non-binding, then it doesn't accomplish anything: One party just says "no" and demands jury trial. And as you noted, parties can already agree to mediate right now--it happens all the time. So if that was really all that was proposed (it was not), then it's not a reform. It's ignorance of the current state of affairs.

So there you go. Forced binding mediation to take the juries out of the equation is unconstitutional, and "forced non-binding" mediation is nonsensical.

Feel free to try to make another distinction, but I'm done arguing with you.

 

[johnnyturbouk]

as much as find these IPL/patent stuff quite dull - i do feel both parities have a point here.

 

[apolloa]

A couple of observations on rates:

- Membership in ETSI (the global telecommunications standards group) requires FRAND rates for patents that its members contribute, but does not specify how much. It also states that arbitration should be used in case of dispute. The Ericsson filing in Texas claims that Apple refused both:



It was Apple's refusal to enter arbitration that caused that ITC injunction from a Samsung request a couple of years ago. (A ban which the White House overturned, in a very rare move, which might get repeated here.)

- Apple has constantly avoided third party arbitration, jury determination of FRAND royalty rates, and judge determination of FRAND royalty rates.

If Apple truly believes that FRAND rates would be lower, why don't they allow a third party such as a Federal court to determine them? (It's been offered before in the case of Motorola's patents, and they refused unless the amount would come out to be a $1 or less.)

Their steady refusal makes it seem that Apple's lawyers are afraid that they'd actually end up paying more, if a fair rate was determined by others.

Ericsson has already stated to Apple it will let a court decide the rates, Apple point blank refused to guarantee it would abide by any court decision on the price ruling so Ericsson has requested this block now, and frankly it makes a mockery of international business if Apple go crying to the Obama administration like baby's again, no doubt reminding them how much money they have paid the administration.

With Apples attitude I would frankly be shocked if they hadn't asked the American government to threaten to nuke the country's of these businesses.

 

[kdarling]

I suppose you could force non-binding mediation before a jury trial. But that's not what was suggested. And if it's non-bonding, what is the point? The losing party would just take it to the jury.

Unless the losing party thought that they'd get an even worse rate from a jury

Still a good point. When the FTC ruled against Google for trying to quickly get injunctions with its SEPs, they came up with this basic plan:

If a rate could not be negotiated within X number of months, Google could then proceed to the next step. At that point, the potential licensee must either request a district court (jury if they wanted) to determine the rate, or agree to binding arbitration. If they refused both, Google was free to ask for an injunction.

Such a plan takes care of it all. It has time limits so a licensee can't drag things out for years in a reverse holdup move. It gives a chance at using a court or a binding arbitration.

 

[Gasu E.]

Sounds like the patents we about to expire, and Apple headed into the boardroom expecting a quick deal to continue their licenses. But when Apple sat down for negotiations, Ericsson wanted more money for the licenses than before. Apple perplexed, reasoned that no new technologies were created and being asked for- they just wanted the same price as before, and then everyone could go play a few holes of golf and head home in their G5's. Well Ericsson knows they had Apple by the balls, and walked out of the door without making a deal, knowing they could tarnish Apple's name by making this process public- using "fair and reasonable" terminology to steer biased toward Ericsson.

This is all conjecture of course.

I think you are right. This is from Bloomberg:

In its complaint against Ericsson in January, Apple said the price of today’s electronics are driven by things like their design, operating system and touch capabilities that are unique to each product. Apple said Ericsson “seeks to exploit its patents to take the value of these cutting-edge Apple innovations” and accused the company of “abusive licensing practices.”

It sounds as though Ericsson may be asking for a percentage of Apple sales, as opposed to a flat charge per unit. Apple's argument is basically "our device is a lot more than just a way to deliver your LTE; and we don't think we should share that value-added with you."

 

[Gasu E.]

Define doing well as a state and what metrics we (Texas) are high in?

Obesity? Poverty? Both pretty high. How about state spending in welfare? Pretty high too. I guess you could also include how much Texas takes from the fed as aid. Almost as much as NY does.

Actually, both NY and Texas pay more in Federal taxes then they get back in Federal spending. But Texas gets more money from the Federal government then NY, to your specific point. http://en.wikipedia.org/wiki/Federal_taxation_and_spending_by_state

 

[PadreQuevedo]

Hate iSheeps and their double standards.

Holy Apple is eligible to violate any patent.

 

[Keirasplace]

Hate iSheeps and their double standards.

Holy Apple is eligible to violate any patent.

You obviously have not read the articles, or the thread. Please do before commenting again.

 

[Exhale]

Ericsson? A patent troll? You cannot be serious. Companies like Ericsson created the fundamentals of the mobile and smartphone industry. Apple should pay them for their innovations just like any other company has to, or stop infringing their patents.

Never mind that Ericsson is today in 2015 the largest supplier of 3G / LTE 'Access Points' in the world. Just like you need a 'router' for a home wifi network, so do you need these access points for your cellular network. And Ericsson is bigger than anyone when it comes to selling those devices, with a marketshare somewhere between 30-40%.

So not only do they license these patents to others, they make heavy use of these patents themselves. In products that are very much 'world best sellers'.

 

[BigInDallas]

Never mind that Ericsson is today in 2015 the largest supplier of 3G / LTE 'Access Points' in the world. Just like you need a 'router' for a home wifi network, so do you need these access points for your cellular network. And Ericsson is bigger than anyone when it comes to selling those devices, with a marketshare somewhere between 30-40%.

So not only do they license these patents to others, they make heavy use of these patents themselves. In products that are very much 'world best sellers'.

Agreed. Very curious how this works out.

 

[joe-h2o]

that actually seems reasonable to me in that case.

Ericsson licenced patented technology to Apple so Apple agreed to it in the past
Negotiations broke down over continued licencing
Licence expired
Apple continued to used the tech without permission
Ericsson offered to have a third party determine a fair compensation

Erricsson's patents are covered under FRAND terms (as a prerequisite for being included in a standard like LTE/3G etc), so they must be licensed fairly to anyone who wants to use them.

What Apple is alleging (as it did in the Nokia case) is that they are being offered unfair terms because they are very wealthy, or in retaliation for other lawsuits.

There's no indication that Apple doesn't want to pay - it obviously wants to pay because it's using technology that is by definition covered by these patents - but it believes that it is not being offered fair terms by the patent holders.

As part of having a patent accepted into a standard that is necessary for lots of vendors to implement (for example, wifi, LTE, the shape of plug sockets, system interfaces etc) you agree to be bound by terms that state that you will offer it to everyone who wants to use it on an equal footing.

 

[Oletros]

Erricsson's patents are covered under FRAND terms (as a prerequisite for being included in a standard like LTE/3G etc), so they must be licensed fairly to anyone who wants to use them.

What Apple is alleging (as it did in the Nokia case) is that they are being offered unfair terms because they are very wealthy, or in retaliation for other lawsuits.

There's no indication that Apple doesn't want to pay - it obviously wants to pay because it's using technology that is by definition covered by these patents - but it believes that it is not being offered fair terms by the patent holders.

As part of having a patent accepted into a standard that is necessary for lots of vendors to implement (for example, wifi, LTE, the shape of plug sockets, system interfaces etc) you agree to be bound by terms that state that you will offer it to everyone who wants to use it on an equal footing.

Are you aware that all of your argumentation has nothing to do with what the OP said?

 

[joe-h2o]

Are you aware that all of your argumentation has nothing to do with what the OP said?

It has everything to do with what the OP said.

The OP is trying to claim that Apple is using these patents "without permission" (they're FRAND patents that are part of the LTE standard - it's not possible to use them "without permission", only for the licence to have expired.

There's no bad faith here, or an attempt to "get away with not paying" as has been suggested.

What is alleged is that the FRAND terms are not being adhered to.

The very idea that you need "permission" from the patent holder of a FRAND-licenced patent is laughable. They are obligated to accept payment from you for using it - they don't control who can and can't use it.

 

[Oletros]

It has everything to do with what the OP said.

The OP is trying to claim that Apple is using these patents "without permission" (they're FRAND patents that are part of the LTE standard - it's not possible to use them "without permission", only for the licence to have expired.

There's no bad faith here, or an attempt to "get away with not paying" as has been suggested.

What is alleged is that the FRAND terms are not being adhered to.

The very idea that you need "permission" from the patent holder of a FRAND-licenced patent is laughable. They are obligated to accept payment from you for using it - they don't control who can and can't use it.

I think you don't know very well how FRAND licensing works

 

[Tiger8]

Your statement "for the record" that Ericsson is still relevant means nothing to me. I follow MacRumors pretty pathologically. Apart from patent litigation, I don't see much talk of Ericsson. I see a lot of Broadcom and Qualcomm, but not much Ericsson. I consume data. I generate data (a debatable point!). But I don't do the hard science that propagates it, so I don't know the IP at issue.

I like mentioned in an earlier response, Ericsson is pretty much alive and has over 120 thousand employees worldwide. In the US, majority of AT&T and Verizon network was sourced to Ericsson. They did pretty much most of the LTE upgrades. IN addititon, several key parts of 'internet backbone' is provided by Ericsson.

They might not be a household name, but they are definitely a pioneer company with much longer history in telecommunications than Apple. Definitely NOT patent trolls.

 

[kdarling]

Erricsson's patents are covered under FRAND terms (as a prerequisite for being included in a standard like LTE/3G etc), so they must be licensed fairly to anyone who wants to use them.

FRAND is not a requirement. It's something entered into voluntarily.

In the case of Ericsson's patents, ETSI is the group that determines the obligation. Their FRAND agreement states this:



Notice that it's okay to ask for reciprocal IP sharing. This is something that Apple does not want to do. In other words, Apple wants to be treated special. That is not fair.

What Apple is alleging (as it did in the Nokia case) is that they are being offered unfair terms because they are very wealthy, or in retaliation for other lawsuits.

As the ITC put it when they imposed that previous ban requested by Samsung because Apple refused to negotiate, it is not up to Apple alone to determine what is fair or not.



The trouble with Apple, is that they refuse to negotiate or enter into any binding arbitration. Instead, they try to get courts to declare no obligation at all, or refuse arbitration above a tiny limit. Judges have noticed this behavior on the part of Apple's lawyers, and that's why several have dismissed Apple's cases.

There's no indication that Apple doesn't want to pay - it obviously wants to pay because it's using technology that is by definition covered by these patents - but it believes that it is not being offered fair terms by the patent holders.

For two decades, the standard has been that FRAND terms from ETSI contributors are greatly based on patent sharing to get the rates down. Heck, Nokia is said to have so many reciprocal agreements in place, that they pay only a very tiny FRAND rate.

(This has been the main problem with Apple-Samsung and Apple-Motorola dealings: the fact that there has never been a cash rate needed before.)

Sure, Apple can refuse to share their patents if they wish, but they cannot then turn around and claim that they should get the same rates as those who do share IP. That is unfair to all the other companies.

 

[joe-h2o]

FRAND is not a requirement. It's something entered into voluntarily.

In the case of Ericsson's patents, ETSI is the group that determines the obligation. Their FRAND agreement states this:

View attachment 532427

Notice that it's okay to ask for reciprocal IP sharing. This is something that Apple does not want to do. In other words, Apple wants to be treated special. That is not fair.

How is it asking to be treated specially by declining an IP sharing offer?

The terms say "may", they don't say "obligated".

What they *are* obligated to do is licence the patents to Apple, however, when they come up with terms that are agreeable to both and also comparable to the terms set with other vendors who have licensed the patents.

The point made by the OP that Apple was using these patents "without permission" because the previous deal had expired is what I was addressing. There is no "permission" - there is just the issue of how much Apple needs to pay (either in cash, or in equivalent trade).

The value is pretty well determined though - it's the same amount that everyone else paid, and the same amount that Apple paid last time. Edit: And by "same amount" I am including the valuation of any patents that have been included in the trade, not just pure cash value only. If Apple wants to pay purely in cash it can do so. It obviously won't be taken for a ride though, and it wants to pay a fair rate as is guaranteed by the FRAND terms.

 

[LordVic]

Most people are saying this is just a negotiation play by both parties There will be an agreement eventually on a "fair" price. One party will get a bit more or less than they wanted. No high drama.

You can save your outrage for some other thread .

you know the old saying about compromise.

its not a compromise till both parties leave unsatisfied.