Ericsson Extends Patent Lawsuit Against Apple to Europe

[kdarling]

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

Neat. Thanks.

Looks like a case of similar invention at the same time, although certainly the German version with the rolling ball is much more similar to modern mice.

(Btw, before mice... when I visited a then-secret USAF SAGE continental air defense facility back in the 70s, they were using light pens on a "radar" screen to mark each incoming enemy aircraft and to designate which US fighter should intercept it. Thinking about it now, that seems to make sense for that application, in that it's almost like using touch.)

 

[1Life]

From Bloomberg Business:
"At the core of the dispute is Apple’s contention that Ericsson wants Apple to pay royalties based on percentage of the price of the entire device. Apple argued it should be set on a smaller base and called Ericsson’s demands unreasonable. "

If I was Apple I would go to court as well.

 

[MikhailT]

I would suggest to not pay close attention to what both companies said in their "press releases" stuff on the internet.

We do not or will never know what each wanted or tried until the trial. Right now, this is all PR spinning at high levels to make the company look good but the reality is likely that both are misleading us.

 

[apolloa]

Good! EU courts are no way as soft on Apple as American ones are, so Apple better be prepared to agree a price soon or I can see their devices being banned and that will make global headlines, I'm not sure Apple wants that topic to be global news.....

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From Bloomberg Business:
"At the core of the dispute is Apple’s contention that Ericsson wants Apple to pay royalties based on percentage of the price of the entire device. Apple argued it should be set on a smaller base and called Ericsson’s demands unreasonable. "

If I was Apple I would go to court as well.

Except you totally missed the part where Ericsson told Apple it would ask the COURT to set the price and Apple refused.... oh and lets not forget every single cell device manufacturer most likely uses Ericssons technology and pays them for their patents.

Yeah, take Ericsson to court, steal their inventions and make billions of them in profit and don't pay the inventor a dime. That's good business.

I would also like to bring this recent story to peoples attention as it highlights Apples typical hypocritical business practice, unless you consider a camera to be essential to the operation of a mobile cell phone?

Components inside the iPhone 6 or Samsung Galaxy S6 are made by Sony. We’re referring to the image sensor. The iPhone 6 has not one, but two Sony sensors inside (one for the main camera, and one for the webcam), generating roughly $20 revenue per phone for Sony.

http://pocketnow.com/2015/04/29/sony-profits

So it's ok for Apple to give Sony $20 per iPhone 6 that's sold for it's camera modules, but it's unfair that Ericsson wants $5 or whatever it is per iPhone for patents and technology that essential make a cell phone a cell phone

If this has now been going on for over two years, then in my mind Ericsson has a very strong case and a right to take Apple to court in every market they sell, which I guess they can do? That's a ridiculous length of time for one set of patents license to be disputed, and I would presume Ericssons case will be even stronger considering Apple has already point blank refused to let a court decide the price. It seems to me Ericsson is playing the long game here, which is a lot worse for Apple in the end.

 

[mrochester]

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.

Out of interest, where have you got all these inside details of the case from? I haven't seen any details about what either party is demanding and I'd be interested to know how you know the specifics of it.

 

[macs4nw]

.....But to me, 1/4 to 3/4 of a billion dollars per year seems a bit excessive for a licensing fee.

I agree. Even considering the number of iOS devices Apple sells, that still seems like a lot of money for fees that are supposed to be 'Fair'.

It is now for the courts to decide whether Ericsson is greedy, or Apple is unwilling to pay a fair price for those patents.

 

[alexgowers]

I feel Iike patenting things like 4g services just so you can spread a standard to everyone and charge for it as slightly Mafia esq. from grumblings at apple, it seems they have wanted to develop the standards themselves just like usb type c which was kept a secret for that reason. Mobile network R&D costs aren't insignificant but it's not like they have have an option to be part of its development in the first place.

When you hear Frand and not paying I can't help but think it's not Frand then is it, especially when you hear in previous years it cost less to license the same patents!

Sure apple has to pay but you need to get the best deal in business otherwise you might as well roll over and let everyone **** you over

 

[Oletros]

When you hear Frand and not paying I can't help but think it's not Frand then is it, especially when you hear in previous years it cost less to license the same patents!

Where have you heard that in previous years it cost less to license the same pstents?

 

[BigInDallas]

Sure apple has to pay but you need to get the best deal in business otherwise you might as well roll over and let everyone **** you over

Kinda like Apple has in the past. They use they power in the industry to bully other companies.

I use an iPhone. But come on this is weak on apples part

 

[terrymr]

Didn't samsung try and fail at the same thing ?

 

[jayducharme]

This is a little off-topic, but it ties into this whole patent-infringement mania. Walt Disney is being sued over its guest-tracking system by a California company:

http://www.ocregister.com/articles/representing-659208-disney-technology.html

The irony here is that InCom Corporation (the plaintiff) exists on the Internet as a fictitious Star Wars business that made X-Wing fighters. Maybe George Lucas can sue InCom for patent infringement.

 

[aaronvan]

then-secret USAF SAGE continental air defense facility back in the 70s, they were using light pens

Here is a SAGE terminal with it's light pen. You may also notice that it has a built-in ash tray!

 

[kdarling]

Here is a SAGE terminal with it's light pen. You may also notice that it has a built-in ash tray!

Thanks! Also, I forgot that the light pen was actually a "light gun".

You held the tip of the barrel against the item you wanted to choose on the screen, then pulled the trigger. It was like the first video game, only meant for real combat

(The SAGE computer itself... the physically largest computer ever built... ran on tubes, and took up an entire floor of the building.)

Another funny thing: the command center amphitheater included an area that jutted out in the middle, so a specialist could draw the current aerial battlefield situation with markers on an overhead projector sheet. Yes, pretty low tech. And the colored light displays of friendly and enemy aircraft numbers on a "scoreboard" were also elementary-school level tech.

So when the 1983 movie "War Games" came out with its fantasy war room with giant computer monitors, the USAF was embarrassed that their real life war rooms were so far behind in comparison. I believe this helped cause a massive modernization program to begin.

 

[draugminaion]

Apple's gotten to a certain size and position where it doesn't feel the need to obey the law, pay royalties, or pay taxes. Unless of course it can use the law to it's advantage.

Eg:Options scandal, book price fixing, employee hiring scandal, etc.

Form the other side of the fence the exact same situation looks like this:

Apple's gotten to a certain size and position where it feels it can afford to do what is right where the law, royalties, or taxes are outdated, unfair or do not serve their purpose.

Often it makes most business sense to go for the cheaper or less risky option, even if it is not "right". Apple prides itself on being a "crazy one", they will sometimes ignore business sense.

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Didn't Apple steal the mouse from Xerox?

No, they bought it.
Xerox's mouse was a thing that "cost $300 to build, and breaks in 2 weeks", it needed some work before it was something that cost $15 and lasts a few years.
Apple offered 100,000 Apple shares for $1,000,000 for Xerox's stuff. Worth $700,000,000 or so now.

 

[draugminaion]

"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.

They are, they think it's wrong, Ericsson's terms are not FRAND, and they're prepared to fight for it. They can afford it, they're doing it.
The IEEE, a standards organization, which are the the entities demanding FRAND license terms for patents that become part of their standards, is on Apple's side in this.

 

[Oletros]

They are, they think it's wrong, Ericsson's terms are not FRAND, and they're prepared to fight for it. They can afford it, they're doing it.
The IEEE, a standards organization, which are the the entities demanding FRAND license terms for patents that become part of their standards, is on Apple's side in this.

IEEE new rules for the future demanding royalties mean nothing in this case.

And you have forgotten that most of the companies contributing to the actual communications standards have said that they don't agree with them. Future is very muddy for the standards

 

[kdarling]

Apple offered 100,000 Apple shares for $1,000,000 for Xerox's stuff. Worth $700,000,000 or so now.

It's a common internet myth that Apple licensed the GUI from Xerox. According to Xerox insiders, Apple's own lawsuits, and court documents, that's not what happened.

Xerox Development Corporation invested in Apple in 1979 as part of their interest in the growing personal computer field. Apple was offering a pre-IPO rate to large investors, and approached Xerox about a possible future partnership, in which Apple computers might be sold from the numerous Xerox stores of the time.

XDC thought the idea of selling Apple products in their stores had potential, and invested $1.1 million in Apple stock. Jobs used the XDC marketing connection to wrangle (insiders say bully) his way into a late 1979 demo of what an entirely different section of Xerox was working on... the GUI.

(Immediately after the Xerox visits, the Lisa team switched to creating a windows based interface. Prior to that, the UI was based on soft keys.)

So no, the Xerox investment was not compensation from Apple for that visit. On the contrary, the visit was a result of Xerox's initial investment in Apple. Nor did it involve a license in 1979, nor has the existence of such a license ever been claimed by Apple.

The only contract that is known to exist, was the later 1981 license that Xerox gave HP, Apple, DEC and Tektronix for Smalltalk 80 Version 1.

Later in 1987, when Apple filed for copyright registration of the Mac Finder, their application described it as a derivative work based on Lisa, with no mention of Xerox. That's why Xerox felt that the Mac copyrights should be declared invalid and sued Apple. And even then, Apple NEVER claimed they had a Xerox license. They simply claimed the copyrighted elements were all their own.

 

[AleXXXa]

Never heard of Ericsson. Who are they? Are they related to Sony-Ericsson?

 

[cjmillsnun]

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

If they are essential to the technology being used then they should be licensed on a FRAND basis. That said, I suspect Apple is going to have to pay dearly for playing hardball previously.

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Who is Ericsson again? Are they a cell phone manufacturer, because I don't remember seeing anything they've done recently? Are they still a valid entity? Do they still have a pulse? Are they gerbils?

Really? Most of the backend of mobile phone networks worldwide uses Ericsson technology. They are one of the biggest players in the market.

 

[kdarling]

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.

From Bloomberg Business:
"At the core of the dispute is Apple’s contention that Ericsson wants Apple to pay royalties based on percentage of the price of the entire device. Apple argued it should be set on a smaller base and called Ericsson’s demands unreasonable. "

Ericsson's case (PDF here) is basically that they've offered Apple the same FRAND rates as everyone else:



Apple's case (sorry, I don't have any free links) is basically that they don't the the rate basis is fair:



---

Summary: As with many/most ETSI cellular patents for the past two decades, Ericsson's royalty is based off the price of the device. (Which, btw, Apple usually claims is the $250 they pay Foxconn for a boxed unit ready to sell, not the $650+ they charge customers.)

The idea behind this method is partly that it encouraged manufacturers to also sell affordable devices, which are the primary reason we have the current worldwide infrastructure and why Apple has a market to make billions off now. In short, more expensive devices subsidizes the cheaper models. (A phone that sells for $20 cannot pay $30 in royalties.)

Over 100 licensees currently pay this royalty, giving weight as to its legitimacy. Moreover, this method was approved by the US DOJ long ago, and repeated many times in front of Congress since then.





So Apple cannot claim that they're not getting the same deal as others. What they really mean is, they don't like the deal, and are hoping to change it.

Apple's desire is to base the royalty off the least saleable part. As they themselves noted above, this is a rather recent legal concept. In many ways this lower royalty base makes sense, and is now in favor in many legal and technical circles.

In other ways it does not, especially whenever someone claims it should be based off the chip price itself. Chips get cheaper all the time, while good IP value stays fairly constant.

It also doesn't fit Apple's own arguments used against Samsung, where Apple wanted a disproportionate royalty for things like swipe-to-unlock. But that's hypocrticial lawsuits for you.

It'll be interesting to see if a long-standing royalty method can survive today's legal climate.

 

[cjmillsnun]

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.

Agreed, apart from your spelling of Ericsson.

 

[draugminaion]

IEEE new rules for the future demanding royalties mean nothing in this case.

And you have forgotten that most of the companies contributing to the actual communications standards have said that they don't agree with them. Future is very muddy for the standards

IEEE new rules exist because they are unhappy by how FRAND is interpreted now. What a standards organization thinks FRAND should be is not "nothing". If it's enough to make a difference, we'll have to see.

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Ericsson's case (PDF here) is basically that they've offered Apple the same FRAND rates as everyone else:

View attachment 550905

Apple's case (sorry, I don't have any free links) is basically that they don't the the rate basis is fair:

View attachment 550904

---

Summary: As with many/most ETSI cellular patents for the past two decades, Ericsson's royalty is based off the price of the device. (Which, btw, Apple usually claims is the $250 they pay Foxconn for a boxed unit ready to sell, not the $650+ they charge customers.)

The idea behind this method is partly that it encouraged manufacturers to also sell affordable devices, which are the primary reason we have the current worldwide infrastructure and why Apple has a market to make billions off now. In short, more expensive devices subsidizes the cheaper models. (A phone that sells for $20 cannot pay $30 in royalties.)

Over 100 licensees currently pay this royalty, giving weight as to its legitimacy. Moreover, this method was approved by the US DOJ long ago, and repeated many times in front of Congress since then.

View attachment 550903

View attachment 550906

So Apple cannot claim that they're not getting the same deal as others. What they really mean is, they don't like the deal, and are hoping to change it.

Apple's desire is to base the royalty off the least saleable part. As they themselves noted above, this is a rather recent legal concept. In many ways this lower royalty base makes sense, and is now in favor in many legal and technical circles.

In other ways it does not, especially whenever someone claims it should be based off the chip price itself. Chips get cheaper all the time, while good IP value stays fairly constant.

It also doesn't fit Apple's own arguments used against Samsung, where Apple wanted a disproportionate royalty for things like swipe-to-unlock. But that's hypocrticial lawsuits for you.

It'll be interesting to see if a long-standing royalty method can survive today's legal climate.

Swipe to unlock is not part of a standard, Apple has no obligations for licensing. swipe to unlock was never available for licensing. Apple asked a ridiculous price because they did not want Samsung to use it at all, and the courts demanded a number.

 

[kdarling]

Swipe to unlock is not part of a standard, Apple has no obligations for licensing. swipe to unlock was never available for licensing. Apple asked a ridiculous price because they did not want Samsung to use it at all, and the courts demanded a number.

Apple stated what they thought they should get for back-royalty awards.

They calculated the numbers based off what they thought the value of each patent was by itself, not from its relative contribution to the estimated 250,000 smartphone patents that exist. In other words, they also chose the most expensive method, not necessarily the one that made the most sense.

Obligation doesn't matter. Nothing in the ETSI FRAND contract limits rates. In fact, it even states that requiring cross-licensing is okay.



Again, ETSI royalties have operated off device price for decades. It's part of what you sign up for when you make a phone.

For example, Apple is known to give Qualcomm two separate payments for each chip. First, they pay $15-$35 for the silicon itself, and then they pay another 3.4% of the iPhone price on top of that, for the IP.

Not that it's not entirely understandable that Apple would like to change the rules, even though they're hardly suffering from them, profit-wise.

 

[sanook997]

You deserve an award just for bringing some well needed levity to a thread about Patent Warfare. Well done.

On a more serious note, Ericsson has been around since roughly forever in the mobile world. I don't follow the patent cases closely, but this one seems like it probably could carry some weight. I don't envision Ericsson burning cash for the sake of it or entering the race for King Patent Troll.

The license expired, so yeah I think theres little question that Apple thinks they have to pay, the question is only how much, they will also continue to reserve an amount that they think the courts will find as "reasonable". In the end, a final number will be reached and Apple will either be +/- to that reserve. So next to no financial impact and conflict resolved.

People that have absolutely no experience in business acumen rant about this and that when in fact this is a common tactic used in long term contract negotiations, if you feel you have a better hand you play it right up until the judge rules, its just good business....one time legal expenses aside.

 

[draugminaion]

Apple stated what they thought they should get for back-royalty awards.

They calculated the numbers based off what they thought the value of each patent was by itself, not from its relative contribution to the estimated 250,000 smartphone patents that exist. In other words, they also chose the most expensive method, not necessarily the one that made the most sense.

Obligation doesn't matter. Nothing in the ETSI FRAND contract limits rates. In fact, it even states that requiring cross-licensing is okay.

View attachment 550914

Again, ETSI royalties have operated off device price for decades. It's part of what you sign up for when you make a phone.

For example, Apple is known to give Qualcomm two separate payments for each chip. First, they pay $15-$35 for the silicon itself, and then they pay another 3.4% of the iPhone price on top of that, for the IP.

Not that it's not entirely understandable that Apple would like to change the rules, even though they're hardly suffering from them, profit-wise.

How is ETSI FRAND in any way relevant to slide to unlock?
A patent is an exclusive right (for as long as it lasts), there is no obligation to share, there is no obligation for reasonable pricing.

This obviously does not work for standards, so standards organisations demand restrictions in exercising these exclusive rights.

That Apple has been paying a percentage of the end product for IP does not mean that ever thought it is "right", it does not mean that they will, or should, continue to leave that unchallenged.

Ericsson thinks that their IP is worth $2 in a cheap Android, $20 in an iPhone and if Bugatti were to use the same chip in their cars the same IP would be worth $5000. Ericsson thinks this is fair and reasonable, Apple does not.

Patents and standards exist for a purpose.
The purpose is not to allow inventors to make lost of money, the purpose is to serve the common good. Allowing inventors to make lost of money is secondary, a means to an end, it's an incentive to inventors to help serve this purpose.

If those that are tasked to guard this purpose, the standards organizations, think that a different pricing method than has been used in the past better serves this purpose, a judge might be inclined to agree more with the standards organizations, than with the inventors.

I think this is what Apple is hoping for, at least for the future.