Apple Pushes for Clarification on Licensing of FRAND Patents

[vrDrew]

Microsoft today joined Apple in making clear its position on "Standards Essential" Patents. Dave Heiner, the Microsoft Deputy Counsel and VP for Corporate Standards and AntiTrust, wrote what I think is a very clear explanation of a) what "Standards Essential" patents are; b) how they are arrived at; and c) how firms that contribute to, and make use of, the patent pool do business. He also explains how dangerous the behavior of companies like Samsung and Motorola can be:

Every now and then a patent holder may break its promise to make its standards essential patents available on reasonable and nondiscriminatory terms. These outliers create a lot of trouble for the international standards ecosystem. Once a standard like H.264 or 802.11 is widely adopted, firms have no choice but to implement the standard in their products. Would you buy a smartphone, an iPad or a personal computer that couldn’t play video or connect to wireless networks? Probably not. This is why antitrust enforcers have taken a keen interest recently in patent acquisitions and attempts by patent holders to block their competitors from shipping products that implement industry standards.

Its worth noting that Microsoft's position essentially mirrors that of Apple and Cisco in all significant areas: It won't demand unreasonable (ie. 2.25% of the price of the whole device) royalties (like Motorola is doing) ; It won't seek injunctions to ban products on the basis of Standards Essential patents (like Motorola is doing); It won't use the patents to force cross-licensing of non-Standards Essential IP (like Samsung and Google are doing); and it won't try to circumvent FRAND commitments by transferring or selling them to third parties (sound familiar?)

Today seems to be unofficial "Standards Essential Declaration Day" - Google has also posted their "Declaration." And, no surprise, they have pointedly NOT taken the high road that Apple and Microsoft have done. I guess that whole "Don't Be Evil" slogan is just so much hot air.

 

[Oletros]

Its worth noting that Microsoft's position essentially mirrors that of Apple and Cisco in all significant areas: It won't demand unreasonable (ie. 2.25% of the price of the whole device) royalties (like Motorola is doing)

2.25% of wholesale prices is an invention

; It won't seek injunctions to ban products on the basis of Standards Essential patents (like Motorola is doing); It won't use the patents to force cross-licensing of non-Standards Essential IP (like Samsung and Google are doing); and it won't try to circumvent FRAND commitments by transferring or selling them to third parties (sound familiar?)

Today seems to be unofficial "Standards Essential Declaration Day" - Google has also posted their "Declaration." And, no surprise, they have pointedly NOT taken the high road that Apple and Microsoft have done. I guess that whole "Don't Be Evil" slogan is just so much hot air.

Yap, perhaps both of them would be more credible if this statements would have been issued before they started to lose the trials.

And perhaps they would habe been more credible if both of them weren't the underdogs in radio technology.

But I agree that is a good PR movement for both of them

 

[kdarling]

seems pretty suspect to me...

Thanks for the pointer although I had to track down the link to read the entire opinion.

Motorola withdrawing licensing from Qualcomm, was clearly targeted at Apple.

Motorola's explanation should be interesting. (Bet they come up with some reason about wanting to deal directly with Apple.)

(Interesting also that this Wisconsin court case came into being from a non-judicial infringement case before the ITC. Didn't know you could do that.)

I don't think the f in frand stands for goody two shoes type fairness.

Right.

FAIR means you can't force the licensee to accept other conditions or do things which are outside of what they're paying for. (E.g. they can't make Apple use Motorola chips.)

REASONABLE doesn't mean the license fee has to be the same for everyone, but it must make sense to the judge. It can vary depend on license quantity, patent sharing as partial payment, credit worthiness, etc.

NON-DISCRIMINATORY means what you're basically licensing should be available for everyone. In other words, if one company got a license to use a patent in a wireless ATM machine, then everyone can get such a license.

 

[gnasher729]

They've tried to avoid paying in the past. Wasn't FRAND offered on this matter in the past as well?

No. Both with Nokia and Motorola, a patent license was offered, but Apple claimed that the license offer didn't meet the standard of being free, reasonable, and non discriminatory. So yes, Apple tried to avoid paying extortionate rates, and yes, Apple tries to avoid paying extortionate rates again. Which they are quite right to do, and in the case of Nokia, it worked.

What phone costs $30? Any that I've seen that low are heavily subsidized. I've never seen pay as you go type phones for such a small amount.

http://shop.o2.co.uk/mobile_phones/Pay_And_Go/all_phones/all_brands

Nokia 100 and Samsung 1080 at £14.99 each including 20% VAT, so that is £12.50 excluding VAT. Which is right now a bit under $20.

It's very easy for Apple to criticize FRAND because they have nothing to lose. A reform to FRAND would only benefit Apple. Again - they have nothing to lose. I don't blame Apple for trying or even making the comment. I just find it "funny."

It wouldn't only benefit Apple. It would also benefit consumers. Because who do you think is paying of patent licenses? The consumer.

 

[TMay]

Microsoft today joined Apple in making clear its position on "Standards Essential" Patents. Dave Heiner, the Microsoft Deputy Counsel and VP for Corporate Standards and AntiTrust, wrote what I think is a very clear explanation of a) what "Standards Essential" patents are; b) how they are arrived at; and c) how firms that contribute to, and make use of, the patent pool do business. He also explains how dangerous the behavior of companies like Samsung and Motorola can be:



Its worth noting that Microsoft's position essentially mirrors that of Apple and Cisco in all significant areas: It won't demand unreasonable (ie. 2.25% of the price of the whole device) royalties (like Motorola is doing) ; It won't seek injunctions to ban products on the basis of Standards Essential patents (like Motorola is doing); It won't use the patents to force cross-licensing of non-Standards Essential IP (like Samsung and Google are doing); and it won't try to circumvent FRAND commitments by transferring or selling them to third parties (sound familiar?)

Today seems to be unofficial "Standards Essential Declaration Day" - Google has also posted their "Declaration." And, no surprise, they have pointedly NOT taken the high road that Apple and Microsoft have done. I guess that whole "Don't Be Evil" slogan is just so much hot air.

Seems to me that Motorola used threats of a "knife the baby strategy" to get Google to purchase them in the first place, ie, Motorola was making noise about going after Android OEM's.

Patents may be the only effective asset left to Motorola, so I would expect Google to maximize patent licensing income.

 

[Oletros]

Which they are quite right to do, and in the case of Nokia, it worked.

You can repeat a thousand times, it won't be more real.

 

[TMay]

Yap, perhaps both of them would be more credible if this statements would have been issued before they started to lose the trials.

And perhaps they would habe been more credible if both of them weren't the underdogs in radio technology.

But I agree that is a good PR movement for both of them

Apple did just that.

From the front page of this thread:

"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"

Oh, but you wanted a public letter...

Business dealings are seldom Public, and Apple surely didn't release the letter themselves.

 

[Oletros]

Apple did just that.

Yes, they sent the letter when they started to have problems, right.

And good for them, if Motorola was in the place of Apple, they would do the same. And if in the place of Motorola were Apple or Microsoft, you can bet that those letters and statements wouldn't exist.

Business, as usual

 

[TMay]

Yes, they sent the letter when they started to have problems, right.

And good for them, if Motorola was in the place of Apple, they would do the same. And if in the place of Motorola were Apple or Microsoft, you can bet that those letters and statements wouldn't exist.

Business, as usual

Apple had the very same problems with Nokia, so I don't see this as anything other than what they say it is, an inefficient means of licensing FRANDed patents.

 

[Oletros]

Apple had the very same problems with Nokia, so I don't see this as anything other than what they say it is,

No, it didn't have the same problems and they didn't faced consequences like they are facing with Motorola

an inefficient means of licensing FRANDed patents.

Inefficient? Since when?

 

[Tigger11]

Please, can you link where are more parts of the letter? I didn't knew that has been disclosed more parts

And the thing I'm arguing is the claim that Motorola wants 2.25% of the price sale of ALL the products with GPRS tech.




And nothing there says that motorola did want to receive more money for a 64 GB phone vs a 16 GB phone, (or Ipads for that matter)

I'll find you the rest of the letter tomorrow, I'm home now and going to have to rebuild my path (I think it was on the WSJ article, but I could be wrong), but if you look at the judges ruling from July 2011 (Kdarling has a link on his email), first on page 6, and then several other pages that "Motorola demanded a royalty rate based on the total revenue of the covered devices" it also shows that Motorola was canceling licenses with first Chi Mei, the Qualcomm as Apple went to chips with licenses covering these patents owned by Motorola. Again I dont think you can take it any other way then more money for a 16 GB phone then a 64 GB phone, and money for all the 3G Ipads as well given the judges frequent mention of it in his decision on the matters before the court in Wisconsin.

 

[unlinked]

You can repeat a thousand times, it won't be more real.

The great thing about cases like that is both sides can claim they won. Evil Nokia tried to extort Apple and in the end Apple paid a fair price or Evil Apple refused to pay a fair price but in the end they were forced to.

 

[itickings]

No. Both with Nokia and Motorola, a patent license was offered, but Apple claimed that the license offer didn't meet the standard of being free, reasonable, and non discriminatory.

I think Apple may face difficulties convincing the court that the license should be free.

 

[thekev]

No. Both with Nokia and Motorola, a patent license was offered, but Apple claimed that the license offer didn't meet the standard of being free, reasonable, and non discriminatory. So yes, Apple tried to avoid paying extortionate rates, and yes, Apple tries to avoid paying extortionate rates again. Which they are quite right to do, and in the case of Nokia, it worked.



http://shop.o2.co.uk/mobile_phones/Pay_And_Go/all_phones/all_brands

Nokia 100 and Samsung 1080 at £14.99 each including 20% VAT, so that is £12.50 excluding VAT. Which is right now a bit under $20.




It wouldn't only benefit Apple. It would also benefit consumers. Because who do you think is paying of patent licenses? The consumer.

I stand corrected. I hadn't seen any that were that cheap. I was under the impression that Motorola had offered terms compliant with FRAND. Regarding patent cost, it impacts profits more than anything. Apple would have people to run the numbers in order to estimate what their growth would look like at one price point or another. Their patent fees could go to zero, and this wouldn't necessarily reduce the price of the iphone. It would increase profits for Apple.

 

[dethmaShine]

It's very easy for Apple to criticize FRAND because they have nothing to lose. A reform to FRAND would only benefit Apple. Again - they have nothing to lose. I don't blame Apple for trying or even making the comment. I just find it "funny."

WoW.

I think you misunderstood (and I wasn't clear). I don't mean other parties wouldn't benefit. I mean that Apple has nothing to lose here. They can only stand to gain...

A company that holds very important and essential wireless patents (just like Apple that holds essential patents in a number of fields and technologies) agrees with Apple.

http://www.scribd.com/fullscreen/80985517

But I guess, according to your comment, I think they are doing this for their own loss as only Apple can benefit from this. Cisco wants this too although they have so much to lose. Ah well, you figure.

 

[unlinked]

I think Apple may face difficulties convincing the court that the license should be free.

FRAND = free, reasonable and non discriminatory

You heard it here first.

 

[Stratus Fear]

To those people saying that Apple has no vested interest in how FRAND licensing, you should consider that Apple along with the consortium has a significant number of LTE patents from Nortel. If Apple is such a bully, I don't see them throwing lawsuits against manufacturers regarding LTE.



----------


From AI forums:

Originally Posted by PowerMach
Here's a link to court documents: http://articles.law360.s3.amazonaws....doc_num-93.pdf

Apple’s original iPhone went on sale in June 2007. Apple’s original iPhone contained
an Infineon baseband chipset, which incorporated technology covered by patents that
Motorola has declared as essential. Apple purchased the Infineon baseband chipset through
a manufacturing agreement with Chi Mei Corporation, which manufactured the Infineon
baseband chipset under a licensing agreement with Motorola. On August 4, 2007, Motorola gave Chi Mei a 60-day suspension notice on its licensing agreement.

On December 16, 2009, Apple and Qualcomm entered into a contract whereby Apple
would purchase chipsets from Qualcomm that were compliant with the CDMA2000
standard. The chipsets incorporated technology that Qualcomm licensed from Motorola.
On January 11, 2011, on the day Apple announced the Verizon iPhone 4, Motorola notified
Qualcomm of its intent to terminate any and all license covenant rights with respect to
Qualcomm’s business with Apple, effective February 10, 2011.

seems pretty suspect to me...

The entire linked court document is a pretty good read and I suggest those posting in this thread read it. Especially for those jumping to attack Apple and defend Motorola -- Motorola's actions as described in the document and the result of the case are pretty damning for them, TBH. Some people like to describe this whole situation as "Motorola approached Apple with a fair license agreement and Apple flipped them the bird." That's not anywhere near an accurate description of the situation, and is pretty far separated from reality. I originally thought it was probably somewhat more like that but was rather surprised to find out (upon research) that it really wasn't.

 

[hchung]

Thanks for the pointer although I had to track down the link to read the entire opinion.

Motorola withdrawing licensing from Qualcomm, was clearly targeted at Apple.

Thanks for finding and posting the link; it's quite an interesting read.

 

[Tigger11]

Thanks for finding and posting the link; it's quite an interesting read.

I especially find it interesting that Motorola thought 2.25% a FRAND price given for most if not all of the units that value would exceed what Apple was paying for a chip for the phone that included those royalties as well as the part that actually carried out the function. I think it will hard to show that a FRAND price for use of the patents is one that exceeds the cost of the part with the royalties rolled into it.
-Tig

 

[Oletros]

I'll find you the rest of the letter tomorrow, I'm home now and going to have to rebuild my path (I think it was on the WSJ article, but I could be wrong), but if you look at the judges ruling from July 2011 (Kdarling has a link on his email), first on page 6, and then several other pages that "Motorola demanded a royalty rate based on the total revenue of the covered devices" it also shows that Motorola was canceling licenses with first Chi Mei, the Qualcomm as Apple went to chips with licenses covering these patents owned by Motorola.

Thanks

 

[Peace]

Cisco is now jumping into the fray.

http://www.appleinsider.com/article..._and_open_licensing_of_standards_patents.html

Lang wrote that "Cisco shares Apple's view that the telecommunications industry would benefit from a more consistent and transparent application of FRAND," adding that it believed the groups "should grant licenses on terms that are consistent with the frameworks set out in Apple's letter."

 

[justperry]

Thanks for finding and posting the link; it's quite an interesting read.

I second that.


Looking forward to March.

The Commission has set a target date of March
8, 2012, at which time the Commission expects to complete its final review of the matter.

 

[roasted]

It's called a community design; also designs are patentable. A number of companies do it and not just Apple.

So because other companies do it, though on a lesser scale, it still makes it okay for Apple to do it. Ah ha! I see now.

This is further proof that things like this should not be patentable. It gets so incredibly old to continually hear about patent squabbling like this.

 

[dethmaShine]

So because other companies do it, though on a lesser scale, it still makes it okay for Apple to do it. Ah ha! I see now.

This is further proof that things like this should not be patentable. It gets so incredibly old to continually hear about patent squabbling like this.

Lesser scale? You must be kidding yourself.

 

[pmjoe]

They should tie the price for these essential patents to the number of absurd GUI patents the license requester is suing the essential patent holder for.