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To Mollify Google on Moto Patents, Apple Proposes $1/Device Fee
An anonymous reader writes "Motorola feels that Apple is infringing on several FRAND patents that have to do with how every smartphone in existence connects to WiFi and cellular networks. Since Apple makes smartphones, and Google is looking to use their newly acquired Motorola as a weapon, the two companies are only a few days away from the courtroom. Apple has conceded that the Moto patents are valid by offering to pay Google/Moto $1 per device, but only going forward. Motorola wants 2.25% per device and for it to cover all Apple devices (back dated). If Motorola pursues the case and the court issues a per device rate that is higher than Apple's offer, Apple promises to pursue all possible appeals to avoid paying more than $1. Motorola could end this quickly, or watch as Apple drags this out for what could be years."
By not negotiating in good faith Apple seems to be setting itself up to lose badly in court. Surely any court will look at Apple's demands as unreasonable, given that they back them up with the threat of a protracted legal process costing tens if not hundreds of millions of dollars.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
This is surely simple; Apple is using Motorolas patents; if they will not accept the FRAND offered by Moto then a Judge will surely be willing to grant a injunction against sales and promotion of all infringing products. As apple themselves have shown, this need not take years.
Or do fanbois think that 'rounded corners' drawn by one of their case designers a few years back represents a more important piece of IP than the detailed algorithms controlling signalling in a congested radio band that took real scientists and engineers years of research and skill to develop?
"Oops, I always forget the purpose of competition is to divide people into winners and losers." - Hobbes
Think about what could be made if, instead of burning all of this money for a Pyrrhic victory against each other, Google and Apple spent all of that money on development. That would be nice. That would be neighborly.
Apple, Google: Listen to Mr. Rogers's ghost. Why won't you be each other's neighbors?
I have no idea if Apple's $1 figure is fair. It's probably a lowball figure to negotiate from.
But I am sure Motorola's counter of a percentage based on device cost is NOT fair. After all, the only difference between a 64GB iPhone and a 32GB iPhone is the amount of RAM, yet Apple would have to pay Motorola more for a license from the more expensive phone! That is ridiculous.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
AFAIK Apple has always agreed the patents are valid, they have however refused to pay UNFAIR fees.
Put it another way,what Motorola is asking for is like a Tyre company charging for a tyre based on what your car is worth, or the exact same tyre.
Apple is asking to pay the same price as everyone else.
Love/Hate Apple as much as you like, but if it was you buying the tyre for your car would you think it is Fair, Reasonable to pay 10 times the price someone else does simply because your car costs more ?
Let's get to the point where no one can make a phone anymore. That seems to be the only way we'll see the patent system get reformed.
Google has yet to bring a product to market that the market really wants.
If I may quote Monty Python's 'Life of Brian': "All right, but apart from the sanitation, medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us? "
Honestly, if you can't find anything that Google has brought to the table that the market "really wants" you just aren't paying attention.
What part of "shall not be infringed" is so hard to understand?
Apple chose to use the "nuclear option," and have no-one to blame but themselves. These things are typically settled reasonably ... compare patent stacks, few pennies go to the one with the taller stack. But no, Apple has shown they don't play nice. Everyone with any sense will be hostile toward Apple. Prisoner's Dilemma, basically, except everyone knows ahead of time that Apple defects.
Apple can't win this way in the long run. They may have a big pile of cash, but if everything they want to do suddenly gets nickel-and-dimed, they'll find that only goes so far.
Don't think of it as a flame---it's more like an argument that does 3d6 fire damage
Apple really seems to have been going out of its way to piss off courts recently. First the event in Britain where they basically thumbed their nose at the Appeals Court and defied their order about posting the apology. Now they're pre-emptively threatening the court in Wisconsin, saying that if they don't get what they want, they are going to go all-out with appeals. While judges know their decisions are subject to appeal, they very much do not like being publicly threatened in such a manner by litigants, especially while the trial is still going on. I think they may have bought themselves a world of pain with this verdict when it finally comes. And appeals courts will be all the more likely to look at Apple's filings with a skeptical eye now that they've already told all the world they are doing it as part of a hardball business strategy.
Two words: Cross-licensing.
Apple refuses to do it. Everyone else does. That's why we're here discussing this at all.
:. Ultimate Control Dedicated/VM Servers
Then we could say ya, we downloaded your songs illegally, and from this day forward, if we do it, we'll pay you $1 per song.
Be seeing you...
Let's see a reliable source. Everyone knows Florian Mueller is a laughable shill.
Hahaha!
Apple want $40 per device! That's about 1/6 of the final retail cost of a mid range Android phone like the ACE. No wonder Samsung told them to fuck off.
Also, Microsoft almost certainly has enough bullshit software patents that any attempt to sue by Apple would surely be MAD. The only option was to cross license.
SJW n. One who posts facts.
The crucial thing to remember is that the other companies that are getting cheaper deals are entering into full reciprocal patent sharing deals with Motorola. Often even one sided (Motorola gets all their patents; they get cheap access to the RAND patents). This is worth plenty and so Apple is completely outrageous to even think they should get a similar price without making a similar offer.
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
I would love to see Google block Apple from their search results and all of their services, but we both know that's not going to happen.
And give Bing a foot in the door with a couple of hundred million iOS devices? That'd be like trying to hurt someone by punching yourself in the face.
"The only normal people are the ones you don't know very well."
Given the way M$ are still battling out the browser case, I can only assume that you mean "immediately" in a tectonic time scale and "convicted" in a slap on the back of the wrists and asked politely not to do it again way...
I love stacking my barbecues in the shed at the end of summer - you can't beat a bit of grill on grill action.
That's using one market where Google has dominance and using it to affect another market. Microsoft got into a lot of trouble because of that. Google isn't likely to do that.
I predict Google will let it get dragged out and will make it as painful as possible for Apple.
Meanwhile, Google will continue its assault on Carriers' Customer Expectations by offering great prices on non-subsidized, unlocked devices. Google is changing some games. They won't need to fight too hard to defeat Apple. They just need to wear them out... and they can. There is an Army of Android device makers just WAITING for the opportunity to make the next Google Nexus devices. As we just saw, ASUS was having some trouble until it made the Nexus 7. Will HTC who is on the brink of death receive the next breath of life from Google? Possibly.
The point is that "open" and "free" (as in freedom) devices will quickly win the people over. They KNOW they are being tethered to Apple's way. They will soon lose out.
Apple's a big powerful badass. But Google is like a giant zen buddhist statue. It ain't going anywhere.
You assume that the royalty percentages are cumulative. They are not. If there are two companies with standards essential patents who manufacture and sell the devices, which is typically but not exclusively the case, then Company A could pay Company B 2.25% per device, and Company B could pay Company A 2.25% per device, or Company A and Company B could cross-license. When Company A manufactures a devices per year and Company B manufactures b devices per year, net patent revenue (or expense) for each is:
For A, (b-a)*0.0225
For B, (a-b)*0.0225
If the number of devices manufactured is comparable to equal, these figures trend to 0, not to (b)*0.045 and (a)*0.045 as you suggest.
Why is Company A compelled to charge an extra 4.5% per device? It could, but then again it has little reason to. Supply and demand and other cost factors will principally drive the price, and chopping that price into royalties versus other factors is like debating how many angels can sit on the head of a pin. What matters is your net patent expense, just like your supplier expense, labor expense, etc.
The royalty rate is a cost of entry if you have nothing other than cash to trade. Companies holding standards essential patents are not being altruistic -- they are trading amongst themselves, and a cross-license is in some ways simpler than paying cash.
Apple does not have anything that it wishes to trade, but wants the cost of entry (i.e., the royalty rate) to be really, really low. Yet the cost of entry is based upon obtaining the benefit of each standard-essential patent owner's R&D efforts and IP, which Apple claims, at least with respect to its own efforts and IP, to be worth a very great deal (as reflected in the price premium that consumers pay and Apple's efforts to keep its IP completely proprietary).
A court (or expert) looking to establish a reasonably royalty rate is not merely going to evaluate a percentage per device -- that is the end result. That court is going to have to consider the royalties paid by other companies which have sought royalty-only license agreements (are there any?) and the gross value of what has been traded between standards-essential patent holders in pure cross-licensing or hybrid cross-licensing + royalty deals.
In Apple's case, iSuppli figures suggest that materials + labor represent about 1/3rd the price of their devices. That means Roughly 66% is IP + goodwill. That may "seem rather high," but that is what the market thinks that those properties are worth.
You're linking hack propagandist Florian Mueller? Are you trying to discredit yourself?
Because so far, Apple has been perfecting willing to pay for FRAND related patent use, but not willing to pay way more than other companies who also licence the same technology which is what Motorola has been demanding.
By perfectly willing, you of course mean willing to make a lowball offer in an attempt to avoid being found guilty of willful infringement (or whichever the proper terming would be here). Of course, neither of us have actual numbers to compare either companies offer to, but this does show your eagerness to paint Apple in a favorable light.
The judge has ALREADY realized Motorola has possibly been trying to do exactly that.
Nice phrasing. Attempting to make it appear as if Motorola is already guilty while not technically saying anything incorrect. You should work in politics. Of course you are digging heavily into "maybes", as nothing has been decided in that case, outside of the Judge deciding to look into it.
now now, apple has shown it's more than capable of doing business without Google.
Look at the wonderful maps they came up with!
dreaded scurrilous bit-twiddler from Oklahoma
The F part comes from cross licensing deals to make things fair. Apple has no standards-essential patents that are being requested, so there's no cross licensing for those items.
Apple's patents, since not FRAND-eligible, aren't being offered at reasonable rates. If I have a deal that I can use my neighbour's pool if they can use my trampoline, that's FRAND. But if you want to use my trampoline and tell me I'm not allowed to play in your tree fort because the FRAND deal is only applicable to ground constructs, then fuck you, pay me $10 to use my trampoline.
Keep on knockin'
https://robbiecrash.me
Seriously?
You don't see the difference between Apple's abuse of the patent system by attempting to prove someone copied trivial things that already existed like rounded corners, and Google's FRAND patents that *every* manufacturer *including* Apple agrees are valid? Patents that actually cover meaningful technologies that "have to do with how every smartphone in existence connects to WiFi and cellular networks"?
Are you kidding me?
As for the doing or not doing evil, whatever, maybe. But to equate Apple and Google's patent activity is just absurdly wrong.
-Lod
So Motorola is trying to charge Apple what they were charging Microsoft? How is that "way more than other companies who also license the same technology"?
The big difference is that MotoGoog is suing for hardware patents and not some worthless software UI patents that should have never existed in the first place. Hardware takes tens of millions of man hours and just as many dollars to develop over the course of many years. Software UI takes 1 guy about 1 day and doesn't even rise to the level of something that should be patented. The only reason software UI gets patents is because of very, very stupid patent clerks (where's Einstein when we need him!?). Furthermore, Apple brought this on themselves for trying to block their competition through the courts. If it was any other company I would say shame on Google. But because it's Apple I say beat them until the candy comes out.
Apropos Apples misuse of FRAND hardware started before Google acquired Motorola. Apple offered to trade its (now proven) worthless UI patents for licensing of the FRAND hardware and was turned down by Motorola, who wanted licensing fees. Of course they refused to give a dime to Motorola and used the patented hardware anyway. IMO Apple should be charged at the going rate for these FRAND patent licences but with a puinitive muliplier of *5-*10 retoroactivly for beliveing that they are above the law. Above the very law they attempted to use to squash their comitition in court. In this case, Google is "Do[ing] No Evil". It's more like The Hulk beating the shit out of Loki. Totally justified and righteous.
Actually, apple is now screwed.
Their entire case on the west coast was predicated on "we were harmed by their unreasonable terms" Apple quite literally just gave the judge evidence of the exact opposite of their claims in court, by now making a FRand offer. House of cards -> fallen apart.
Google doesn't need to block apple, nor will they. They also don't have to accept this offer from Apple. This also won't resolve any of apple's past infringement, should that part of this process move forward. However, this shows one thing right away: apple is now fucked, and no longer the aggressor in the situation. Not that it's much of a surprise considering they're losing in every court on the planet.
I didn't really see any fanboyism in the parent post. More like realism.
IIRC, 2.25% has been the ongoing rate. The only reason why other companies haven't paid as much is because they've cross-licensed their patents to Moto instead, and that is not exactly a free service. Apple is unwilling to cross-license (or rather they claim that their patents are worth a ridiculous amount that Moto disagrees with), and so Moto wants to charge them the baseline 2.25% fee. Seems perfectly fair to me.
..I'm guessing that 'The rise and fall of Apple' will make for a compelling Harvard Business Review case study.
"..One hosts to look them up, one DNS to find them, and in the darkness BIND them."
Well, Apple could always do what EVERY OTHER MANUFACTURER DOES and cross-license their patents in order to get a lower royalty rate.
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You *NEED* FRAND patents to make a smart phone.
Then perhaps they are worth more than a dollar, to the maker of a $500+ phone that incorporates them and can't exist without them.
A lot of people seem wrongheaded about FRAND patents and I think it is because they are trying to justify pre-existing beliefs born of like or dislike of one of the litigants involved in this case. So lets just talk about FRAND in general terms using current developments in the auto industry.
Electric cars, the next big thing and they need to be able to charge the batteries. So, having many different connectors is inefficient and a standard for plugs is needed if we're ever going to build out infrastructure. But wait there are many ways to do it and many companies that already have patents on lots of potential solutions. Should we:
Generally, because it is industry players, we go with the second option, but does that mean auto-makers that were not making electric cars at the time the standard was made and who don't have patents involved in the standard should be forever frozen out of the market? Does that mean no new car companies will ever be allowed into the market? Because to make a new charging standard there are likely hundreds of patents and even if each one only demands .5% of the sale price of a vehicle, that quickly adds up to 100% for all companies that don't have patents in the pool. Does anyone here think that is reasonable for a standard or in any way good for innovation or society as a whole?
Standards are supposed to be about collaboration and reducing just this kind of bullshit and FRAND licensing is a necessary part of that, which is why you aren't allowed to price things discriminatorily in the first place. Google/Motorola is free to license or not license any non-FRAND patents to Apple or anyone else and charge any rate they damn well please. Apple is likewise free to license or not license any non-FRAND patents they damn well please. People conflating the two issues are missing the point and are cheering on abuse of the standard creation process and the end of the ability of any upstart company to engage in using standards. It's cheering on forcing the industry into stagnation and preventing the competitive marketplace and consumers from determining what is the best device... but maybe that's secretly what some people want. They don't want competition to result in the best product. They just want their "team" to win so they feel better about their purchase. Shame.