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Apple Suit Against Motorola Over FRAND Licensing Rates Dismissed

chill writes "A suit by Apple claiming that Motorola Mobility, now owned by Google, is seeking unreasonably high license fees for the use of patents on wireless technology has been thrown out by a judge in Madison, Wisconsin. Last week, Apple told the court it would pay up to $1 per device for a license to Motorola patents covering cellular and Wi-Fi technologies. Motorola Mobility was arguing for a royalty payment of 2.25 percent on each device." From the article: "'At the final pretrial conference, I asked Apple to explain why it believed the court should determine a FRAND rate even though the rate may not resolve the parties' licensing or infringement disputes,' Crabb wrote in an order on Friday. 'I questioned whether it was appropriate for a court to undertake the complex task of determining a FRAND rate if the end result would be simply a suggestion that could be used later as a bargaining chip between the parties.'"

51 of 249 comments (clear)

  1. Apple also said... by sconeu · · Score: 4, Interesting

    Apple also said it would ignore the court's order if it chose more than $1/device.

    --
    General Relativity: Space-time tells matter where to go; Matter tells space-time what shape to be.
    1. Re:Apple also said... by jkrise · · Score: 4, Interesting

      Apple also said it would ignore the court's order

      Steve Jobs should've been alive.... and witnessed the humiliation his so-called thermonuclear war is bringing onto his beloved company.

      --
      If you keep throwing chairs, one day you'll break windows....
    2. Re:Apple also said... by TigerTime · · Score: 5, Interesting

      Wait, and wasn't Apple wanting something like $30/phone from Samsung for rounded corners, the bounce back patents, and a couple other small ones???

      $1 is laughable when compared to the importance of the phone.

    3. Re:Apple also said... by siddesu · · Score: 3, Funny

      Some might argue that the most important feature of the phone from the perspective of the marker is how well it sells. And when it comes to that, the rounded corners and the way the interface looks and behaves may be much more important than the actual tech that is working inside. People base a lot of purchasing decision on recommendations and advertising, not on reading the full specs.

    4. Re:Apple also said... by Tough+Love · · Score: 5, Insightful

      Apple was a thug long before Steve Jobs declared thermonuclear war, but Jobs was a master at concealing that. Tim Cook isn't. This is one of several reasons that it is just wonderful for the rest of us that Tim Cook now runs Apple.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    5. Re:Apple also said... by Tough+Love · · Score: 3, Interesting

      Regarldess of the merit of your speculation on the importance of rounded corners relative to the functionality of a phone, it would seem that the legal world is now coming around to the belated realization that rounded corners are not actually something you can patent.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    6. Re:Apple also said... by mjwx · · Score: 4, Funny

      Apple was a thug long before Steve Jobs declared thermonuclear war, but Jobs was a master at concealing that. Tim Cook isn't. This is one of several reasons that it is just wonderful for the rest of us that Tim Cook now runs Apple.

      Actually, Steve Jobs wasn't very good at concealing the fact he was an arsehole, this we have known since the 80's. Granted Tim Cook is worse at it, but that doesn't make Steve Jobs good at it.

      Think of it this way, I'm a better singer than 99.9999% of all rappers, but that doesn't mean I can hold a note (nor does it stop me wailing 80's power ballads down the highway).

      --
      Calling someone a "hater" only means you can not rationally rebut their argument.
    7. Re:Apple also said... by jrumney · · Score: 4, Funny

      Some might argue that the most important feature of the phone from the perspective of the marker is how well it sells.

      The most important feature of a phone from the perspective of a marker is how absorbent the surfaces are. Gorilla glass - the marker is just going to rub off. Plastic is generally better but you still need to avoid touching it for a while to let it dry. Paper would be better, but not a practical material to make smart phones out of.

    8. Re:Apple also said... by jhoegl · · Score: 4, Funny

      Think of it this way, I'm a better singer than 99.9999% of all rappers, but that doesn't mean I can hold a note (nor does it stop me wailing 80's power ballads down the highway).

      The RIAA may beg to differ. At the rate we are going, our cars will listen to what we are singing, determine how many people are in the car listening to it, and automatically charge you for royalties on each person as well as a surcharge for bad singing.

    9. Re:Apple also said... by viperidaenz · · Score: 3, Insightful

      So making the phone look good is more important than making the phone a phone? Do iPod Touch's outsell iPhones?

    10. Re:Apple also said... by mjwx · · Score: 5, Funny

      Think of it this way, I'm a better singer than 99.9999% of all rappers, but that doesn't mean I can hold a note (nor does it stop me wailing 80's power ballads down the highway).

      The RIAA may beg to differ. At the rate we are going, our cars will listen to what we are singing, determine how many people are in the car listening to it, and automatically charge you for royalties on each person as well as a surcharge for bad singing.

      I'm sure I'm out of tune enough for it to be considered an original work. Especially with the low standards of originality in the music industry.

      --
      Calling someone a "hater" only means you can not rationally rebut their argument.
    11. Re:Apple also said... by Grieviant · · Score: 4, Insightful

      The "some that might argue" that are fools ignorant of the communications technology in cellular phones. Apple abuses their FRAND free ride on the significant communications R&D that has taken place over the last 20 years and tries to gouge everyone else on artsy fartsy design and software patents that wouldn't exist without the complicity of clueless patent examiners.

    12. Re:Apple also said... by beltsbear · · Score: 3, Informative

      Most offers like that are made as an offer of settlement and do not admit infringement. Aren't lawyers amazing?

    13. Re:Apple also said... by viperidaenz · · Score: 3, Informative

      Amazing is not the word I'd use to describe lawyers.

    14. Re:Apple also said... by Solandri · · Score: 5, Informative

      Yes, but a dollar figure sets a minimum bar for the cost of the device. If 100 companies when after Apple, all claiming 2.5% of the cost of the device, the device would have to cost at least 2.5 times what it costs. Percentages are an impossible and unfounded way to demand royalties from another group.

      Actually, Apple Reality Distortion Field notwithstanding, pretty much all patent royalties are based on a percentage.

      This study puts the average royalty rate for a patent in the electronics industry at about 4.5%. The $1/device Apple is requesting would be about 0.2%. As way of comparison, Here are royalty rates other companies are asking for essential LTE patents. They range from 0.8% to 3%. Motorola's 2.25% is a bit on the high end but within the norm. Apple's requested 0.2% OTOH is off the scale at the low end.

      Based on what 5 minutes of googling turned up, Apple is going to lose this, and lose it badly.

    15. Re:Apple also said... by greg1104 · · Score: 5, Funny

      In your case then you'll also be required to license the Autotune patents.

    16. Re:Apple also said... by BitZtream · · Score: 3, Insightful

      Not really, they don't make their own baseband chips, they buy from someone else who makes them and has been part of that R&D effort over the last 20 years.

      I hear what you're trying to say, but its just not true since they mostly use Qualcomm's chips.

      While I don't agree with patents like Apple is using in general, I'm still kind of with Apple on the Samsung thing as it was CLEARLY intended to look like an iDevice in its original form.

      Apple's patent shit does piss me off in that I realize one of the reasons I dislike Android's 'feel' is because Apple patented the bounce back UI feeling thingy at the end of scrolling. When I tried the Nexus 7 I found it extremely frustrating as I was used to the iOS feel of scrolling and thought it was really retarded of Android to not do the same ... until I found out they couldn't.

      --
      Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
    17. Re:Apple also said... by rtfa-troll · · Score: 5, Insightful

      While I don't agree with patents like Apple is using in general, I'm still kind of with Apple on the Samsung thing as it was CLEARLY intended to look like an iDevice in its original form.

      That's not clear at all. It was designed to look like a modern fashion phone. It could equally have been designed to look like an LG Prada, and in fact, given the extra buttons and Samsung logo, the Samsung phones are much closer to that than an iPhone. The iPhone was clearly also designed to look a bit like a Prada. The fact that the two are similar does not have to mean that there is any direct design link whatsoever.

      The key thing to understand is that some level of copying is legitimate here. Car gear shifts all look identical so that you can use them easily. Phones dialpads look similar so you can dial in the same way. Modern monitors mostly have the buttons hidden in the bottom right so they look cool but you can still find them. All of next years clothes will have the set of colours which are currently being shown by the top designers. Part of this is functional and part of this is trying to define expectation through a common look.

      Everyone copies and that's okay. It wouldn't be okay if the products were indistinguishable, but they weren't. Apple had a registered design. They could expect protection of that, and Samsung didn't use it. Apple could expect copyrights to mean Samsung would not to do a literal copy of their design and they did not. Anything more is just sour grapes.

      --
      =~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
    18. Re:Apple also said... by rtfa-troll · · Score: 3, Interesting
      You say

      Typically LTE percentage royalties comes from the cost of the LTE modem in the device. Apple would likely be happy to pay 2.25% of the Modem cost.

      The article says

      It said today it is setting a 1% royalty rate on handsets drawing on its LTE patents in an effort to jump start LTE device development.

      Of course, that 1% rate is subject to terms. “If an LTE chipset gets embedded in a $50,000 Mercedes Benz we won’t charge 1% of $50,000,” said Scott Wickware, Nortel vice president of marketing and strategy for carrier networks.

      (my emphasis). So in other words, they would still think about the percentage of the cost of the Mercedes, let alone the handset.

      --
      =~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
    19. Re:Apple also said... by Sepodati · · Score: 4, Funny

      Would you pay $600 for a polished slab of solid plastic?

      Does it have an Apple logo on it?

    20. Re:Apple also said... by Stolpskott · · Score: 4, Informative

      Incorrect - Motorola's opening offer is a little on the high side for FRAND patents, but it is certainly within the bounds of acceptable and fair pricing. In most cases, both companies have a suite of patents (FRAND or otherwise) that will be licensed each to the other, and the final licence fee that is paid is the net result of the respective values of those patents being applied (Company A has a patent portfolio whose accepted licence cost would be 22.5% of the cost of Company B's device, and Company B has a patent portfolio whose accepted licence cost would be 21% of the cost of Company A's device. The two parties agree to cross-licence each other's patents, and the difference in value is paid as a licence).
      As Apple has apparently refused to put any of their own patents on the table for licencing during this discussion (citation needed, as I have seen this commented on elsehwhere, but my Google karma is a bit off today), they have nothing with which to offset the FRAND licence cost other than goodwill and the karma that they have built up during the last couple of years of working closely with Samsung.

    21. Re:Apple also said... by Fjandr · · Score: 5, Insightful

      That's the point. It's not a phone, just like the iPhone would not be a phone without the patents that Apple is refusing to pay more than a pittance for.

      They asked massive amounts for patents which are not essential to making a phone. It stands to reason that the patents required to make it a phone are worth at least a tiny bit more.

    22. Re:Apple also said... by Solandri · · Score: 4, Informative

      Sorry, screwed up the html and lost the link to the LTE royalty rates. Here it is (PDF). And to address the anonymous comment claiming it's a percentage of the cost of the LTE radio, the PDF makes it pretty clear that it's a "percent of the sale price of the handset."

  2. I do not understand by Taco+Cowboy · · Score: 4, Insightful

    I do not understand why the same company which sued others over some lousy rounded corners refuses to pay royalties over others' patents?

    If I expect others to pay me over some lousy rounded corners I expect myself to play the same game - and will pay the royalty I owed to others when I use their patents.

    At least, that was been taught to me by my elders.

    Maybe Apple Inc has other kinds of "elders" - one who expect others to pay them while refusing to pay others.

    --
    Muchas Gracias, Señor Edward Snowden !
    1. Re:I do not understand by Anonymous Coward · · Score: 4, Insightful

      Because Apple made it's billions stealing other people's ideas, and it would really cut into their profits if they had to pay to use the ideas they're appropriating.

    2. Re:I do not understand by Anonymous Coward · · Score: 5, Funny

      It's pretty straightforward, actually: Apple are a bunch of cunts. Hope that clears things up.

    3. Re:I do not understand by slew · · Score: 4, Insightful

      Apple: All your ideas are belong to us.

      What more to understand?

    4. Re:I do not understand by alen · · Score: 4, Interesting

      i'll get modded down but the way FRAND works is the rates are usually a few cents per device and you cross license any FRAND patents that you have as well. you don't have to license non-FRAND patents.

      apple doesn't have much FRAND patents but they have a lot of non-FRAND patents that others want. everyone else has lots of FRAND but not much non-FRAND that is wanted now. so its a game that lasts years

      in the end apple will write a huge check for back royalties and come to some kind of agreement on everything else

    5. Re:I do not understand by jkrise · · Score: 3, Insightful

      Apple didn't make "rounded corners" part of a standard

      Apple didn't make rounded corners - period; many others did that way before them. The stupid patent office shouldn't have issued patents on such silly things to Apple. And Apple should've been decent enough not to sue others over such trivial pathetic matters.

      --
      If you keep throwing chairs, one day you'll break windows....
    6. Re:I do not understand by Todd+Knarr · · Score: 5, Insightful

      Motorola did offer to license at a FRAND rate. This is normally followed by a negotiation (based on things like is the licensee offering a license to important patents in return), but Apple declined to negotiate. Note that "FRAND" does not mean "whatever rate the licensee wants to pay".

    7. Re:I do not understand by Anonymous Coward · · Score: 5, Informative

      You sir, are either ill informed or a fanboy.

      Moto offered Apple the same percentage that they offer everyone. Everyone else has goodies that Moto was willing to accept in lieu of the full 2.25%. Moto either A. didn't want what Apple was willing to trade or B. Apple didn't want to trade anything Moto wanted. This means Moto was expecting the full 2.25% that it asks from anyone.

      Apple's being a whiny, greedy child and deserves to be punished for infringing on legit IP they NEED to make a smartphone/tablet/etc...

      Moto doesn't need trade dress patents from Apple.

      End of story.

    8. Re:I do not understand by AnfieldSierra · · Score: 5, Informative

      And if Apple doesn't want to enter into negitiations with Motorola over the rate of the license then it is not operating in good faith. Other handset manufacturers have licensed Mototola's standards esdsential patents, probably by being reasonable and negotiating like normal people. Apple have played hardball here by refusing to negotiate up front and going straight to court instead. Groklaw, as usual, have a good summary here: http://www.groklaw.net/article.php?story=20121105153442192

    9. Re:I do not understand by mjwx · · Score: 5, Funny

      It's pretty straightforward, actually: Apple are a bunch of cunts. Hope that clears things up.

      The association of collective vagina's takes offence to this comparison.

      --
      Calling someone a "hater" only means you can not rationally rebut their argument.
    10. Re:I do not understand by Scowler · · Score: 3, Funny

      That's funny, we say the same thing about most anonymous cowards too!

    11. Re:I do not understand by Tough+Love · · Score: 4, Insightful

      apple doesn't have much FRAND patents but they have a lot of non-FRAND patents that others want.

      That is not clearly true at all. It is more accurate to say, Apple says it has a lot of patents that others want. Case in point: the bouncing scroll patent. Invalidated.

      My feeling: Apple has a bunch of junk patents but is skilled at gaming the courts.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    12. Re:I do not understand by Tough+Love · · Score: 3

      Motorola wanted more then 10x the going rate for the FRAND patents.

      Citation please.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    13. Re:I do not understand by kaiser423 · · Score: 5, Informative

      and it matters not a whit if Motorola has made the same demands on other companies.

      That's actually the only relevant part of ND in FRAND -- it matters greatly what other companies were offered and/or accepted in order to prove non-discriminatory pricing.

    14. Re:I do not understand by samion.blanc · · Score: 3, Funny

      yeah well the ACV can S my D

    15. Re:I do not understand by Col.+Klink+(retired) · · Score: 5, Insightful

      Moto offered a price. Apple thought it was too high and refused to negotiate. Then they sued. They asked the court to set the rate. The court was skeptical, thought the bargaining should be between the companies, but was will to go to trial anyways. Then Apple told the court that Moto should be bound by the court's decision, but that if the rate was too high, Apple would NOT be bound to the decision. Oh, and whatever the rate is, Apple only wants it to apply going forward. All the past patent violations should be free. The court dismissed the suit with prejudice.

      Which part was Apple treated unfairly? The initial offer? Apple should go to eBay and sue every seller with a high "Buy it Now" price. Is it unfair to Apple to ask them to pay for years of past violations?

      It is true that Apple uses the Moto-licensed Qualcomm MDM6610 chips in the iPhone 4S (which was explicitly excluded from Moto's suit in Germany), but why would that license apply to other iPhones that aren't using the MDM6610 chips (the iPhones that Moto actually sued over)? Or is that unfair to Apple, too?

      --

      -- Don't Tase me, bro!

    16. Re:I do not understand by shutdown+-p+now · · Score: 3, Interesting

      The whole idea of FRAND is that the price is non-discriminatory. So the price is the same for everyone, but the form of payment may be different. I'm not discriminating if I charge one guy $2.50, and another guy pays $1.50 but also cross-licenses me a patent that would be cost equivalent $1.00.

    17. Re:I do not understand by Xest · · Score: 5, Interesting

      "No, no, no. Where do you get this from?"

      Reality, that's how it works. I'm sorry you don't like that.

      "What is this arbitrary "component" exclusion?"

      It's not arbitrary. An aircraft radio transponder for example is in itself a complete product. Although you'd probably rarely want to you can use it in isolation of any plane so you'd pay the FRAND rates on that particular product rather than whatever plane you plug it into.

      Besides, most of that tech is out of it's 20 year patent term anyway.

      "Any device is going to use more than an handful of those. A percentage of the total cost is absurd."

      The 2.5% rate is not per patent, it's for the full relevant portfolio of patents so said rate may well cover, say 50% of those patents, and another 2.5% to say Samsung, 40%, then say 0.5% to Nokia or whatever for the final 10%. The point being that it probably doesn't amount to much more than 5% to license for usage the entire wireless stack for a mobile phone whether wifi or gsm, 3g or lte. Most companies though mitigate the cost by cross-licensing their patents instead, so using this example, Samsung and Motorola probably just trade enough FRAND patents to not even bother charging each other. Apple's problem is that it wanted the FRAND patents free, but didn't want to give up any of it's useful patents like those related to multitouch in return. The percentage cost is irrelevant to most companies who aren't arrogant when it comes to patent negotiation.

      "Nobody pays FRAND royalties like that."

      Again, everyone does, and again, really, I'm sorry reality upsets you, but being upset about it doesn't change it. I'm also sorry you've clearly got no first hand experience of this topic, but ignorance of it doesn't make you right, it just makes you ignorant.

  3. Think of Apple as a cat. by Anonymous Coward · · Score: 5, Insightful

    Apple has the same understanding of property as a cat - once they pee on it, it's theirs. It doesn't matter where an idea came from, once they pee on it/put in a iThing, it's forever Apple's property. It's unreasonable to them to pay anyone for anything they own/peed on, so the only possible value that would constitute FRAND to them is free.

  4. Smart judge. by Areyoukiddingme · · Score: 5, Insightful

    How many judges would have spotted that suit for the Trojan horse it is? This one did, and we are all grateful for it. No, she's not going to get famous for holding The Next Apple Trial, and that's great. For once, we have a judge who just wants to do her job. And she's a judge who knows that her job isn't to generate bargaining chips in commercial contracts negotiations.

    Thank you Judge Barbara Crabb for telling Apple that asking Mommy for permission after Daddy already said no isn't going to work.

    1. Re:Smart judge. by Tough+Love · · Score: 5, Funny

      For once, we have a judge who just wants to do her job.

      Lucy Koh is another judge who apparently just wants to do her job, but as an Apple employee.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    2. Re:Smart judge. by Tough+Love · · Score: 3, Funny

      For once, we have a judge who just wants to do her job.

      Lucy Koh is another judge who apparently just wants to do her job, but as an Apple employee.

      Ooh, some Apple spinmod did not like that post, oh dear.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
  5. Re:Tim Cook is presiding over the demise of Apple. by tuppe666 · · Score: 4, Informative

    Last I checked, sales at Apple are still increasing, year-to-year.

    I generally associate a company that is increasing its revenues with "success". Perhaps your standards differ.

    Absolutely they differ. Lets start Apple is losing share in the smartphone market [23% to 14.9%] and the tablet market [50.4%]. Apple is growing but slower than the opposition, and more importantly less than the market. That is a worrying trend.

    As for your measure of company being large revenues as a measure of success. Apple is incredibly successful but large revenues is only part of the reason why.

    Apple have a real problem, but you don't understand the issues.

  6. A way to satisfy both companies.... by frohro · · Score: 5, Funny

    Well if Apple really only wants to pay $1.00 per phone, and Motorola says 2.25%, why not sell the phones for $44.44? Both companies would be happy, and so I suppose would the consumer.

  7. Dismissed with prejudice by Solandri · · Score: 4, Interesting

    That means Apple cannot re-file the case again.

  8. Not only that by pem · · Score: 4, Interesting
    But Apple's response to Motorola opening a negotiation was a lawsuit.

    It's disingenuous for them to say that they will do something without the court ordering it, when the entire reason the court is involved is that they refused to even make an initial offer, choosing instead to pick what they thought would be the best venue to sue in. Obviously, that didn't work out so well for them after the judge figured out what was going on.

    1. Re:Not only that by The1stImmortal · · Score: 3, Interesting

      Indeed. However it's even more disingenuous (or perhaps even downright arrogant) to ask the court to set a price, but suggest that they don't wish to be bound by it, and only wish Motorola to be bound by it as a maximum. In fact, this inability of the court to set a binding judgement based on Apple's case seems to have been a big part of why the case was dismissed.

  9. Well... America is doomed by SmallFurryCreature · · Score: 4, Insightful

    And this people is why America is doomed. On a tech site, filled supposedly with nerds, someone actually claims that in a piece of high tech equipment, design is more important for usefulness then the tech inside that allows it to do what it is supposed to do. Yes, rounded corners are more important for a phone then the tech that makes it able to make phone calls...

    Oh, I am fully willing to accept that siddesu is just a moron who doesn't know anything about the patents in question but still, this is supposed to be a tech site. Claiming $30 bucks for design vs $1 for vital tech... it is clearly insane. Only managers who spend more on advertising then on development think that. Don't worry if it works, we just sell it with more advertising. It is actually lethal and has been proven so before, the first rise of the Japanese car industry happened over Detroit just adding more fins rather then innovating.

    People don't read the full specs...

    Yeah because when you are buying a phone, being able to make phone calls with it, that is just details. It is the styling! You might not be able to use it but damn, does it look good!

    --

    MMO Quests are like orgasms:

    You may solo them, I prefer them in a group.