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back to article US trade body to 'revisit' Motorola's sole patent win over Apple

The US International Trade Commission has said that it will be revisiting an initial ruling made in April that Apple had infringed on one of Motorola Mobility's patents. Moto, now owned by Google, tried to pin four patent infringements on the fruity firm, but the ITC's administrative law judge only agreed on one in his initial …

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Look! Title!

"The ITC also received public interest statements from Apple, the Federal Trade Commission, Nokia, Microsoft, HP and others over the decision."

If Nokia, Microsoft, HP and others "public interest statement" wasn't along the lines of "BWAHAHAHAHAHAHAHAHA!" then I'm gonna be really dissappointed.

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Anonymous Coward

Re: Look! Title!

However this turns out, money will triumph over morality and law.. As usual.

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US International Trade Commission

Must be a problem for it as both parties are now US. Might have to make a real non geographic decision.

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Anonymous Coward

Re: US International Trade Commission

2 US companies trying to stop each other from importing their own products into the US. Both are probably exporting their profit to ireland too.

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Is this a bit like the Manchurian Candidate now?

Has Apple selectively brainwashed certain US politicians to facilitate its own IP arguments?

Or is this being orchestrated by the Lizard People from below Stonehenge, in their secret patent laboratory?

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I'm not a lawyer or anything, but I assume that a standard-based agreement that Company A will license out its patent on FRAND terms to all comers, neither obliges Company B to buy a licence to the patent, nor excuses Company B in the case of not licensing the patent but using the patented invention in their product.

Otherwise, I would offer to pay one penny for licences to all of the FRAND patents, which you wouldn't accept, and then I would do what I liked, since we have merely failed to agree on the price. That can't be right, even if it's accurate.

I mean, just because it is impossible to make a GPS-activated thermonuclear suitcase bomb without using an idea patented by Dr. Strangelove, doesn't mean that I have an inalienable right to manufacture my own GPS-activated thermonuclear suitcase bombs and ignore Dr. Strangelove's patent holder rights. Legally, I simply would be not allowed to make suitcase nukes, and that is that. I think however (I did say I'm not a lawyer) that Dr. Strangelove can only sue me once I -have- started shipping my version of his bomb.

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Anonymous Coward

When it's a standard (which 3G data is), all companies are allowed to build products based on the standard. They also *must* license the patents at FRAND rates, which they negotiate.

In this case maybe apple offered a penny, which is too low, but motorola were demanding 2.25% of the retail price of an iPhone, which is blatantly unreasonable (see my post below!) What happens if moto refuses to accept a reasonable offer, and demands unreasonable amounts? Both apple + MS have told the courts they want a license, and have offered FRAND rates, but moto are refusing to accept it, and there's plenty of evidence that moto is demanding crazy amounts.

They can't be allowed to stop companies from making phones by using the patent as a 'hold-up' device, that would be market abuse (and they ARE under investigation for anti-trust over this already). Hopefully the ITC will see that. What should happen (and this has already happened in apple v. samsung over the same issue in the netherlands) is that the court says apple must pay moto a FRAND rate, apple pays up and that's that.

Thing is, the FRAND rate for a patent like this is actually very low. If moto wins and apple are forced to pay a FRAND rate, moto probably won't get enough money to pay their legal fees, it's that low. So why are they bothering? They want an import ban so they can force apple (and MS) to give them a license to all of their patents - something MS is demanding money for, and apple are refusing to license because they don't want their stuff copied by android.

Basically, it's a tactical move to get them out of a nasty IP hole that they're in - and it's likely to fail, in which case it will backfire and result in large anti-trust fines.

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Anonymous Coward

unreasonable

If they're demand 2.25% from everyone else, then it isn't unreasonable. Some companies ask for a percentage, some ask for a per unit amount, some ask for a flat fee regardless of units produced and a lot of companies mix these choices.

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Chris

Apple licenses its patents at a similar rate (didn't say the same.. similar)

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Anonymous Coward

Re: unreasonable

"If they're demand 2.25% from everyone else, then it isn't unreasonable. Some companies ask for a percentage, some ask for a per unit amount, some ask for a flat fee regardless of units produced and a lot of companies mix these choices."

If they are, they're still breaching their FRAND commitments, because 2.25% is NOT a FRAND rate. Besides, multiple courts have asked them to provide evidence that this is what they normally charge - and the answer is that nobody pays them 2.25% for these patents.

If it wasn't a FRAND patent, you'd be right and they could ask for 2.25% and expect to get it. Or they could simply refuse to let people use their invention.

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Anonymous Coward

Re: Chris

@zippy Maybe they are, but they're not FRAND patents. If apple are charging 2.25% to use slide-to-unlock or whatever, it's not a problem at all - if you don't want to pay you use some other unlock method. Motorola's patent is an essential phone technology, if you use some other method your phone won't connect to the network, and as a result moto agreed to license it at FRAND rates, not 2.25%.

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This is an important one

The patent moto/google won on is an SEP - an essential patent if you want to build a phone, one that must always be licensed under FRAND, and one that should *never* be used to obtain an import ban. This is why there's been a LOT of public interest statements sent to the ITC - although curiously most were sent relating to the moto/google vs. MS case, and not the apple one. They'll likely apply to both anyway as it's the same issue.

The thing with this is: if moto is allowed to win, then any company with SEPs can demand excessive license fees and get products banned if they're not paid. The price of phones, TVs, computers and a whole lot of other stuff will rocket. Moto were demanding 2.25% of the retail price for h264 video. Add the other 100 odd patent holders at 2.25%, and you're looking at over £1000 in h264 license fees alone for a high-end smartphone. Add wifi and 3G and a few other standards and you're likely looking at £10k+ for a smartphone!

Luckily the ITC's review is heavily focused on FRAND issues so it looks like they're setting the bar high.

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Re: This is an important one

I haven't looked at the details on what is allegedly being infringed on this one, but based on your summary, is it really an h264 patent that is being claimed? If so, why on earth is that considered an essential patent for making a phone?

I agree with your points completely, just mystified why it is considered essential that a phone be able to view or record video in a particular format!

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Anonymous Coward

Re: This is an important one

I'm probably mixing things up. The patent at issue in this particular case is for 3G I think (or it's phone-specific anyway, and as part of the standard you have to implement it if you want the phone to actually do phone calls or data).

Moto are also suing MS, possibly apple too, over h264 - that's where that bit comes in. Again, h264 is a standard for video, and patents have to be licensed under FRAND. You can't make a device that plays or records h264 video without it. They're trying to get the xbox, windows and other stuff banned over that one. And again, they were asking for 2.25% of the retail price - in the case of windows, the price of a complete PC. Microsoft claimed that would add up to something like $4bn per year, and their figures were actually on the low side ($500 average cost for a PC).

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Re: This is an important one

To add to that, all other h.264 patent holders have pooled their IP and licensing. It costs something like $0.10-0.20 per unit for hardware that includes ALL of the patents. Motorola want $11.25 for an iPhone including their patent. Fair?

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Facepalm

Re: This is an important one

Motorola are allowed to charge anything they want for their patent, and if Apple don't want to negotiate they are free to not ship an infringing video capability in their device. In the case of 3G moto have agreed to charge all licencees the same per unit fee, and his jobsness has decided that they simply don't need to pay it because fuck you we're Apple.

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FAIL

@ChrisInAStrangeLand

If they've committed their patents as FRAND as part of a standard then they are most certainly NOT allowed to charge what they like. A patent that is part of a standard garantees income, but at the cost of limiting what can be charged. If a patent isn't committed as FRAND then the standards body will find another way of doing things that doesn't infringe.

Motorola were part of the 3G standards setting body and thus committed to reveal and license any relevant patents under FRAND. They've being trying to move the goalpost over what FRAND means, and trying to claim that one of their patents applies to h.264 after the fact.

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Re: This is an important one

Chris.. what if you (as Apple has done) refuse to pay the license fee? Then a ban can and should be enforced.

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Re: This is an important one

Actually, this last argument doesn't wash with me: Apple want 30% of the price (not the profit) of any items sold through their store. There are *no* other store, you are technically not allowed to sell it through another channel, so they basically have a "patent" on selling stuff to iDevices which they "licence" at 30%. Care to tell me how this is FRAND?

30% to allow me to sell stuff through a channel you've artificially made a monopoly? No thanks.

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@ChrisInAStrangeLand

Sorry, you're wrong. Motorola VOLUNTARILY submitted their patents to h.264, 3G, and so on to standards organizations. If you do so, you MUST license your patents under FRAND terms, and must charge everyone the same rate.

What Motorola did was pull a switcheroo designed specifically to screw Apple and Microsoft, and probably others, but these are the two we keep hearing about lately in Motorola lawsuits. Motorola had formerly licensed these patents to chipmakers like Qualcomm who built chips that did 3G. Maybe they got 2.25%, I assume this would be where that 2.25% figure comes from. For a chip that costs a few dollars, that wouldn't be unreasonable. Though most such deals are just flat rates of a few pennies per chip regardless of what the chip costs...obviously if you have 50 patent holders it is mathematically impossible for them to all charge 2.25% of the price of a chip!

Motorola's screwjob was to change their deal with Qualcomm to specifically exempt Qualcomm from paying royalties for chips that are sold to Apple. This meant Apple was now receiving chips that didn't have the royalty already paid, then they went to Apple and demanded 2.25% of the retail price of an iPhone. FRAND patent holders who charge x cents each for use of their patent wouldn't be able to do this, but if Motorola got away with charging Apple 2.25% then every owner of a FRAND patent who charges by percentage of sales price on a small portion of a device would do the same thing.

So if an owner of the patent of the industry standard diagnostic port (OBD) every car has was collecting 1% on the cost of the chip to interface the ODB port to the car's electronics, they could pull the chip license and suddenly start collecting 1% of the sales price of EVERY AUTOMOBILE ON EARTH. Now imagine there are a dozen patent owners in the ODB pool with similar deals, and look forward to spending an extra $5000 on each car you buy for the diagnostic port which you don' t even care whether it's industry standard or not!

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FAIL

@Neoc

You appear to have failed to understand the difference between a retail mark-up and patent fees. There are a known set of mark-ups between the factory gate and a retail shelf. You pay them every day and they can add up to 2/3rds of the retail price of an electronic device.

Modern electronic devices embody 100's if not 1000's of patented technologies. If each patent holder were to demand 1% of the RETAIL price of a device in royalties then not only would they be asking for part of the shippers, wholesalers and retailers margin, they'd also be asking for a total in excess of the retail price of the device.

Its for this reason that most patent fees are fixed amounts so they can be included in the factory gate price.

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Anonymous Coward

Re: This is an important one

@zippy: in the court documents, apple (and MS) have confirmed that they want to license the patent, will pay FRAND rates, and have made multiple offers to pay the license fee. Motorola wanted 2.25% and declined the offer. This is all there in the court documents.

Really, considering that the FRAND fees are pocket change for these companies they'd be utterly stupid to refuse to pay up. They'd be equally stupid to pay 2.25% of the retail price for FRAND patents. So it ends up in court :)

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Facepalm

You'd think that by now the right people would realise most of these patents are jusr a PITA that serve no purpose but ti line lawyers pockets with cash.

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WTF?

"a patent for eliminating noise and interference during voice and data transmissions", surely this isn't NEEDED to make a phone, so why should they have to license it under FRAND terms?

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@chipxtreme - - Noise cancelling is pretty essential.

Noise cancelling of this kind is pretty essential. Those of us who've used mobile phones with 'simple noise cancelling' (sidetalk cancelling which forces the speaker to talk louder etc.) knows that this doesn't work very well (by comparison to the patent in question).

Watching cell phone users use their mobiles says it all. Once, phones had a mouthpiece/acoustic coupler/shield that coupled audio directly into the mic and keep out external background noise. Now, most users talk many inches from the mic as the phone is usually wrapped around their ear. The mic is so far away one wonders how the person listening at the other end can hear anything except background noise!

Well, the reason one can are the very snazzy FFT algorithms and such and special silicon dedicated to the job--it makes a remarkable difference by cancelling out everything except the 'wanted' audio.

Now that users are used to it, if this technology were no longer incorporated into phones then there'd be outrage.

Anyone know when this patent runs out? (It must be soon, as I first recall using the technology at least 10-15 years ago or more but I've not previously bothered with the legals.)

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Is a noise cancelling patent standards essential?

Is this one, one of the FRAND patents?

On the general case with the 3G essential patents, the system was really setup for "the old boys club" the idea was that all the phone companies pooled their patents and the costing were based on the idea that everyone had chipped into the pool in the first place.

Apple then came along and hadn't contributed anything and for a long time weren't even prepared to talk about the idea of having to pay anyone else anything at all.

The whole crowd should be locked into a room together and not allowed out till they grown up beyond the stage of throwing their toys out of the pram every few minutes.

The lawyers must love all this.

More cases like the Oracle one where they fight for years and end up with a settlement of $0 and the chance of costs going against them would be good for the industry. Perhaps then they'd all concentrate on trying to win by making better products rather than sulking petulantly at any potential rival.

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...including whether patents that are supposed to be licensed under fair, reasonable and non-discriminatory (FRAND) terms can ever be used to ban imports.

Surely they can. Otherwise what's the point of even bothering to get a license, even on FRAND terms.

On the public interest angle, all the products in question are very popular. I'd be suprised if they found it to be within public interest to ban either of them.

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