Nokia Claims Apple Does "Legal Alchemy" To Mask IP Theft

CWmike writes "Nokia asked a federal judge last week to toss out Apple's antitrust claims, saying the iPhone maker indulged in 'legal alchemy' when it tried to divert attention from its infringement of Nokia's intellectual property. The filing was the latest salvo in a battle that began in October 2009 when handset maker Nokia sued Apple, saying the iPhone infringed on 10 of its patents, and that Apple was trying 'to get a free ride on the back of Nokia's innovation.' Apple countered in December with a lawsuit of its own that not only claimed Nokia infringed 13 of its patents, but that Nokia also violated antitrust law by legally attacking Apple after it declined to pay what it called 'exorbitant royalties' and refused to give Nokia access to iPhone patents. 'These non-patent counterclaims are designed to divert attention away from free-riding off of Nokia's intellectual property, a practice Apple evidently believes should only be of paramount concern when it is the alleged victim,' Nokia charged in the motion. Apple is on a legal roll, having also recently sued the maker of Google's Nexus One, HTC, for patent infringement."

Comments

I hope Bilski invalidates them all

[linuxrocks123]

Hopefully the Bilski decision will come out and invalidate software patents. Then these companies can get back to competing on innovation.

Re:I hope Bilski invalidates them all

[Anonymous Coward]

Hopefully the Bilski decision will come out and invalidate software patents. Then these companies can get back to competing on innovation.

Note that the patents Nokia are using against Apple are not Software patents, but real technology patents. The fact that Apple has nothing but software patents to respond with is a signal about how fragile Apple in fact is, with no real "valuable" intellectual property.

Re:I hope Bilski invalidates them all

[Locke2005]

Wait a minute... they do have a patent on the "Steve Jobs reality distortion field", don't they?

Re:I hope Bilski invalidates them all

[klingens]

That's a trade secret. For a patent, you have to show how it actually works. No one managed to dissect His Holiness Steve yet.

Re:I hope Bilski invalidates them all

[fuzzyfuzzyfungus]

Is his entire transplant team under NDA, then?

Re:I hope Bilski invalidates them all

[ircmaxell]

Nokia has already paid off its research costs many times over from the sale of cellphones

Sure, for those specific innovations. But R&D is an expensive, time consuming process that leads to many dead ends and few profitable results (if done in the Bell Atlantic method). So they do need to capitalize on the relatively few innovations that are profitable to pave the way for the vast number that are directly profitable (Consider that Bell invented basically DLP way back in the 1970's. Sure, it's a good innovation, but it never paid them profits, because it didn't become economically feasible for decades later).

I think personally software patents are stupid, because the barrier to entry into such a field are so small that it's very hard to realistically say "I'm the first one to ever come up with this idea" and prove it (After all, it could have been part of some student's senior research project in the 70's, but was never "published")... With technologies with a large barrier to entry (especially large barriers to research), patents offer some protection to companies that they can recoup their research costs. Consider the example of someone building computer algorithms for file system interaction. How many man-hours does it take to do that? Sure, there could be a fair number, but probably not man-decades... How many non-human resources are involved? Sure, you do have a few computers/servers/etc, but my guess is MAYBE $10k... Now, consider research into radio protocols for cellphone data. How many man-hours are involved there? Potentially many decades (if you have more 2 or 3 working for any significant amount of time). How many non-human resources? LOTS. FCC licenses, transmitting equipment, diagnostic equipment, potentially hundreds of thousands of dollars (if not millions of dollars). All dedicated (for that particular time at least) to the research. That's why patents exist... To give companies an incentive to do non-trivial innovation... The fact of the mater is (IMHO) for a large number of the software patents that I've seen, the innovation is trivial at best (If not already common knowledge)...

Just my $0.02...

Re:I hope Bilski invalidates them all

[jim_v2000]

"Nokia has already paid off its research costs many times over from the sale of cellphones, so it doesn't make sense to pay anything to Nokia."

Except that whether or not they've made their money back is entirely irrelevant to anything. It's Nokia's patented technology, and if someone wants to use it, they have to pay up.

Re:I hope Bilski invalidates them all

[Kitkoan]

Hopefully the Bilski decision will come out and invalidate software patents. Then these companies can get back to competing on innovation.

Note that the patents Nokia are using against Apple are not Software patents, but real technology patents. The fact that Apple has nothing but software patents to respond with is a signal about how fragile Apple in fact is, with no real "valuable" intellectual property.

Another problem here is it says that when Apple counter sued for the 13 patents, they also admitted they are violating Nokia's patents because they didn't want to pay the royalty rates and cross-patent usage. Just because Apple didn't want to pay the rates and patent usages doesn't give them the legal right to use and profit from Nokia's work for free.

Re:I hope Bilski invalidates them all

[jo_ham]

They want to pay the *fair* rate - which Nokia is obliged to give them. They are claiming that Nokia is attempting to charge them more (in terms of cash and cross licenced patents) than they are allowed to charge.

They want to pay what other people pay. Nokia is not allowed to charge more to whoever it chooses.

Re:I hope Bilski invalidates them all

[jo_ham]

By RAND terms - in exchange for the GSM patents being included in the standard for cellular communication, Nokia agreed to licence them under RAND terms. Otherwise, they would not have been included in the standard: it's a way to ensure that there is still profit in allowing others to use your work, and enable a standard (which is handy for a large radio communication network)

http://en.wikipedia.org/wiki/Reasonable_and_Non_Discriminatory_Licensing

Read the wiki page - it even uses the GSM patents themselves as an example. Bonus.

It has nothing to do with licensing copies of Windows, which are not covered by RAND conditions.

Re:I hope Bilski invalidates them all

[Kitkoan]

In a car analogy, Nokia is selling engines for cars. Everyone who wants to build a car has to buy a Nokia engine, and they all pay $5,000 for it. Since Nokia is the only company that can sell engines, they agreed to sell anyone who makes cars an engine for $5,000 (RAND). Apple comes along, builds the iCar, and wants to buy the Nokia engine. Nokia sees that the iCar has a nifty dashboard widget, and wants that for their cars. So Nokia charges Apple not just $5,000, but $5,000 plus the dashboard widget.

In this case, no one has clean hands nor is completely innocent.

Yes, but it's not just royalty rates involved in this case. Its patents and royalty rates. With your car analogy: Nokia is selling engines for cars, everyone who wants to build a car has to buy a Nokia engine up $5000 and offer up say $10000 worth of patents. Along comes Apple, a new comer to the field and wants to make the iCar with it's nifty dashboard widget. They only want to pay the $5000 everyone else pays but when it comes to the patent end, they only have $5000 worth of patents they can use, leaving a $5000 difference between what they want to pay and what everyone else is paying. (iPhone is only 3 years old so it's possible on that level). Now you have everyone paying a total of $5000 cash + $10000 patents value to make a total value of $15000. Apple offers only $5000 cash (like everyone else) + $5000 in patents = $10000, $5000 less then anyone else. That leaves Apple getting the unfair deal in their favor. Looking only at the cash value, yes that is horribly unfair of Nokia to want that extra $5000 from Apple, but it's only higher cash because the patent options lacked compared to what they normally charge.

Re:I hope Bilski invalidates them all

[Ironhandx]

Incorrect. Apple CLAIMS that Nokia has demanded unfair rates.

Since the only thing I've seen amounts to 1-2% royalties(and thats from the apple camp) and Nokias patents covers the vast majority of the tech thats actually used to make the the iPhone a, you know, phone, I don't think its too outrageous, do you?

From what I can gather the truth to the story is that Nokia, going about business as usual, decided to up their royalty rates by .5%(approximately). Certainly this decision could have been hurried because Apple was about to enter negotiations, but thats also business as usual for any company. Once it was in place with Apple they likely were going to institute it in their other agreements elsewhere once those agreements expired. Where the big problem seems to come in is the actual dollar figure of $6-$12 per every iPhone.

To make a long story short, for the most part, it seems to me that Apple is getting nailed by their own Apple tax and they're not fans of the feeling.

Re:I hope Bilski invalidates them all

[masmullin]

His DNA is NDA

Re:I hope Bilski invalidates them all

[mjwx]

And Apple want to pay up - they just don;t want to pay more than other cellphone companies to use the GSM patents.

This is a myth.

Nokia is obliged (not by Apple) to licence those patents equally to anyone who wants them,

Only specific patents. Those patents were offered at the same cost as everyone else. However Apple feels entitled to Nokia's entire patent catalouge which is not covered by agreements like RAND and have openly admitted to using these patents without paying fees.

Other manufacturers pay less because they have their own patent portfolio's which are of equal value, these are traded to Nokia for use of their patent portfolio in lieu of cash, Apple has no such patent portfolio so they have to pay cash like manufacturers that do not maintain heavy patent portfolio's like HTC.

Whoops, I said HTC. Apple is now using it's dubious software patents to sue HTC. This is being done entirely as a response to Nokia suing Apple over patents not covered by RAND in an attempt to artificially increase the value of it's own patent portfolio, which is far weaker then Nokia's.

Apple isn't trying to *not* pay - it just wants to pay what other cellphone makers pay.

And that is exactly what Nokia is suing for. Nokia spend years and millions developing this technology, Apple has no technology of equal value so why should Apple get a free ride.

Isn't licence pricing usually kept quiet?

[Colin Smith]

But Nokia wanted more from Apple for these patents than they did from anyone else.

Really? So, exactly how much did Nokia want from Apple?

And exactly how much did the other licensees pay?

 

Re:RAND

[kylant]

Have you ever considered that both sides of the story might be true?

Apple has a rather unusual model to sell its phone: From what we've heard Apple demands not only a one-time sales price from the operators (as most other mobile manufacturers do) but also a part of the monthly fee paid by iphone-customers. If Nokia licenses its patents for a percentage of the sales price (a common practice) they could also have asked for a percentage of the monthly fee (and justly so, if you ask me, as Apple just spreads out the sales price over a longer period of time). Apple on the other side might object to being the only GSM-manufacturer that has to pay a monthly fee.

Re:RAND - *IF* you developed it...

[GuyFawkes]

RAND terms only applied IF you developed and contributed to the standard.

RAND terms SPECIFICALLY EXCLUDED everyone who came along afterwards and wanted to use / licence GSM.

Apple DID NOT help develop GSM.

Apple REFUSED to accept non-RAND GSM licencing terms.

These are the facts. These are ALL the facts.

Obligatory Jefferson quote :

[unity100]

jefferson as in thomas jefferson

It has been pretended by some that inventors have a natural and exclusive right to their inventions, and not merely for their own lives, but inheritable to their heirs. But while it is a moot question whether the origin of any kind of property is derived from nature at all, it would be singular to admit a natural and even an hereditary right to inventors. It is agreed by those who have seriously considered the subject, that no individual has, of natural right, a separate property in an acre of land, for instance. By an universal law, indeed, whatever, whether fixed or movable, belongs to all men equally and in common, is the property for the moment of him who occupies it, but when he relinquishes the occupation, the property goes with it. Stable ownership is the gift of social law, and is given late in the progress of society. It would be curious then, if an idea, the fugitive fermentation of an individual brain, could, of natural right, be claimed in exclusive and stable property. If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property. Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.

he basically says patents are bullshit.

Wrong

[Too Much Noise]

You keep posting these 'facts' about cross-licensing. You're basically wrong. RTF Filing. From Statement of facts, p 4-5

In late 2007, Apple and Nokia began negotiating a potential license agreement for Nokia's patents essential to the ETSI standards (id. 86). Apple admits that, at the start of the negotiations, and again in September 2009, Nokia offered license terms to Nokia's essential patents that did not require Apple to grant any license back to Apple's non-essential patents (id. 86, 91).3 Apple acknowledges its rejection of Nokia's "standard" license terms (id. 85, 91, 92). Apple's unhappiness about these offers seems only to be that Nokia was asking for what Apple considered too much money for Nokia's essential patents (see id. 91).

Apple also admits that "Nokia defined both a portfolio rate and an average per patent royalty rate" that did not require any
license-back of non-essential patents (id. Answer to 44). Once again, Apple's only problem with these offers is the amount of money involved (id. 91).

Again, according to Nokia's filing, there was an offer to cross-license, but it was Apple that first made it.

Apple further admits that it was willing to grant Nokia a cross-license to certain Apple patents that are not claimed to be essential to any of the standards listed above (id. 87). Apple avers that, in Spring 2008, Nokia made another license offer, proposing Apple expand its prior offer to give Nokia the right to pick a limited number of Apple non-essential patents that would be licensed (id. 89). Apple states that it rejected the proposal (id.).

But hey, don't let facts get in the way of righteous anger.

Re:RAND - *IF* you developed it...

[diamondsw]

RAND terms only applied IF you developed and contributed to the standard.

Um, wrong much?

From everyone's favorite source:
"companies agree that if they receive any patents on technologies which become essential to the standard then they agree to allow other groups attempting to implement the standard to use those patents and they agree that the charges for those patents shall be reasonable"

There is absolutely nothing involved in being part of the standards body to receive RAND terms. If you're part of the standards body you have to extend RAND terms.

Re:RAND

[X.25]

Now, someone else may have more recent information that contradicts this, but...

My understanding was that Apple tried to license these patents from Nokia. They are part of the GSM specification, which no GSM phone can function without. Because they are part of the standard, they must be licensed under Reasonable And Non-Discriminatory terms.

But Nokia wanted more from Apple for these patents than they did from anyone else.

What, exactly? I don't know. Either the articles I've read didn't say, or I've since forgotten. I think it was cross-licensing with some of the specific patents on the iPhone, but as I say, I'm not sure.

Either way, if Nokia isn't licensing the original patents under RAND terms to Apple, then they should be burned to hell and back for this. They knew the price when they put patents of theirs into the GSM spec, and now they have to live with it.

So, let me see if I got this right:

You don't know WHAT Nokia wanted from Apple, but you KNOW that Nokia didn't license the original patents under RAND terms?

I am sorry - could you try to explain this to me again? You know that Nokia wouldn't give Apple the patents under RAND terms, but you don't know what Nokia was asking for?

I am at the point where I am annoyed more by Apple appologists than by biggest Microsoft fans.

And that is really really hard to achieve...

Re:RAND - *IF* you developed it...

[shutdown -p now]

You linked to the general definition of RAND. There's nothing in the definition that precludes some form of "limited RAND", where the terms are only applied to a members of a specific group, and not outside of it.

In any case, every time this Nokia vs Apple topic is raised on Slashdot, I see this very same exchange about RAND. However, neither the side that claims GSM is RAND-licensed to everyone, nor the side which claims some kind of "limited RAND", have offered any definite sources. I've tried to find it on GSM Association website on my own, but wasn't successful.

Until then, both yours and GP's claims are just speculation, and the actual licensing terms for GSM specs, and how they apply to this situation, are unclear.

Re:Wow, troll mod for mere information...

[mjwx]

Where's the trolling in my post?

Your post may not be trolling but it is definitely incorrect.

RAND only covers specific patents, Apple is trying to use RAND to get access to Nokia's entire patent portfolio including those covered by RAND. RAND exists to prevent one patent holder from prohibiting entry into the market by refusing to license patents relating to the GSM standards, this does not cover all of Nokia's patents.

Apple is only being asked to pay what other manufactures are paying, it is just that Apple has not got a large enough or valuable enough patent portfolio to make cross licensing an attractive or even fair deal for Nokia. Apple is not the only manufacturer that has been asked to pay cash to use Nokia's patents, they are just the only one who thinks they don't have to.

I guess there's someone with a serious axe to grind against Apple with mod points. Shame.

However your reply is a troll, you were incorrect and that does not constitute an anti-Apple conspiracy.