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back to article EU antitrust bods: Motorola, Samsung too dominant to take on poor little Apple

Motorola and Samsung have escaped with a stern finger-wagging from the EU after using standards-essential patents (SEP) to stop the sale of Apple devices in Europe. The European Commission’s antitrust division said that Moto’s attempt to enforce an injunction on Apple gear based on a smartphone SEP was “an abuse of a dominant …

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Angel

Indeed. Apple has less than 20% of the market by device numbers, so they are clearly not the dominant party on the smartphone market.

Who cares that they make all the money anyway.

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And in Germany Motorola has even less. Their complete smartphone portfolio was banned a couple of years ago and the Moto X only started selling here a month or so back...

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g e
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But aren't apple

Still supposed to actually pay something for the SEP IP though...?

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Re: But aren't apple

They were totally willing to do so. The dispute was whether they'd pay 2.3% of the price they paid for the Qualcomm chip that uses Motorola's SEP patents (as everyone else does) or pay 2.3% of the price they sell the iPhone for.

It would be like if the local government singled you out to pay property taxes based on the property value of your whole neighborhood, rather than just your house. You'd be unwilling to go along with that, I'd imagine.

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They had better be careful...

Stoping Apple would mean they would have to design their own stuff, which would be a terrible disaster - as we have seen previously.

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" so long as the potential licensee was signed up to the specified licensing framework."

So, Apple is fair game then, as they have a history of stealing SEPs and then suing the relevant licensing group (which they are not part of, obviously) because Apple)believe they are $deities gift to technology.

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Whenever I see..

Apple/Microsoft arguing the same thing it gives me visions of the old guard fighting for their lives.

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Re: Whenever I see..

Are you suggesting that Motorola are some sort of shiny new upstart?

*mindboggle*

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I always thought that FRAND .....

..... was meant to create a pool of essential tech standards, everyone puts in and everyone gets something out of it with reasonable costs and terms. This ruling to me seems to state that those who put nothing in can now make use of said pool and by the time the EU makes a decision on the complaints, it will be way too late.

IT is the gold rush all over again, if you want to make lots of money in the tech industry, become a lawyer.

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Re: I always thought that FRAND .....

It strikes me that the weakness in FRAND at the moment is that when the Patent Pool is established, the rates at which the various companies who contributed patents will be paid should also be established, including discounts given to the other companies who contributed to the patent pool. Do that and all the rest of the mess goes away. Now maybe that means every time you set a new standard you have to organize an LLC to hold the patents, collect the money, distribute the money, and enforce the patents but if that's what needs to be done from a legal perspective, do it.

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Coat

Re: I always thought that FRAND .....

Maybe Apple can add their square shape with rounded corners to the pool?

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Re: I always thought that FRAND .....

@Tom13: As far as I can see, this happens when a patent pool is set up. The FRAND problem you describe occurs in standardization processes in which the required commitment ends with "will license according to fair and reasonable terms" but the criteria are never established. So I agree, but it is not the patent pools in this scenario that generate these problems (there are other questions) but it is the approach to standardization, typically handeled by the the likes of ITU, ETSI etc.

The commission will likely to have to think this through again. The commission limits the owners of patents used in standards to sue for license fees instead of suing for a cease and desist and damages. This may be fine if the infringer is still around to pay these license fees but I assume we are going to see "hit and run" infringements of standard essential patents. Basically, this gives the patent holder nothing for his patent and his participation in the standard, so the patent holders are being actively discouraged to participate in standardization.

And thus the consumer pays the bill.

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Re: I always thought that FRAND .....

You can get licence fees for FRAND patents, you can argue over the costs, but you can't get products banned just because you can't agree terms - which you can do if they aren't FRAND.

Luckily for Apple all their patents are non-FRAND, so they can throw sueballs around and get products banned, but everybody else is playing with FRAN patents, so they can't touch Apple.

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@ Radbruch1929

Nope. If the rates were established as I've describe, there wouldn't be any question about what rate Apple should be paying for the FRAND patents.

If the LLC were setup, Apple and Sammy wouldn't be the ones at each other's throats. Apple might still be going after Sammy because of that gawd-awful patent they slipped past the USPTO, but it would be the LLC going after Apple for their infringement, and with the rates already established, that would be a lawyer sending Apple an official letter after which Apple writes them the check. Because anything after that would be willful infringement and get a whole lot more expensive.

My second real job was the DTP guy for a corporation that hoped to make money by holding patents they licensed to manufacturers to build smart houses. I've seen the sausage making that is patents, trade secrets, and standards. And in all honesty, even 20 years ago some of the crap that went on would make you want to puke.* The corporation failed, and looking back on it, I'm pretty sure it was designed to fail but look good trying. All the patents wound up in a holding company that was owned by the manufacturers instead of the initial company that did all the work.

*For instance one part of the design integrated 22/24AWG wire with 12/14 AWG in a single duplex power and communication outlet. In order to prevent the thin wires from bending when the plug was inserted, the plug had a ridge that inserted into a slot to ensure only the planned stresses were on the wires. They applied for a patent on the design. The design was turned down as obvious. So they turned around and applied for a design/logo patent because the ridge was in the shape of a house, and the plugs were for smart houses. That patent they got. Now whether or not the original patent was obvious, it was surely the more worthy of the patent applications.

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Re: I always thought that FRAND .....

"[Y]ou can't get products banned just because you can't agree terms". That raises a natural question: What is a patent holder's recourse then when the patent user simply refuses to negotiate or offers a price of $0?

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@big_D "Lucky for Apple all their patents are non-FRAND"

Shows how much you know. They hold a lot of FRAND patents for MPEG2/h.264/h.265, for instance, but that is far from the only standards they've been involved with.

They're even in the top 15 LTE patent holders, though they didn't invent the technology themselves like they did with the video stuff, these LTE patents were acquired from Nortel.

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Facepalm

"The so-called smartphone patent wars should not occur at the expense of consumers,”

Who else is it going to be at the expense of?

A good start would be ensuring that patents were only issued in the right circumstances.

Personally I believe all software patents to be illegal, but who cares what I think.

Patents should only be awarded where they are truly innovative, adding the words smart phone to the application to cover techniques that are already well know and used in the wider world shouldn't be allowed. In fact implementing anything in software which is well known in the real world shouldn't be allowed at all. Like slide to unlock, there are non SW based implementations which date back thousands of years, how can doing it on a smart phone suddenly become innovative? Neat? sure if you like that sort of thing, innovative? no 'fraid not. Copyright protection maybe, patent? nope.

Patent offices around the world are allowing this shit and the losers are us customers. If a company suddenly find that it needs to employ twice as many lawyers as developers then costs increase. It ain't the companies or the shareholders who lose out, its us, the punters.

If you want to protect consumers do something about the state sponsored abuse the IP laws.

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Re: all software patents to be illegal

I'd be more inclined to issue a software patent than a copyright. But whatever you call it, the point is it is supposed to be to protect real IP for a limited time and then release it into the public domain.

Now you can argue that at least some of the stuff coming through is original on the first bit even if there's a lot of dross as well. But whether patent or copyright, it seems pretty damn obvious to me that nothing* is making it into the public domain in a useful manner. So it seems to me the solution is to look at the original purpose of copyrights and patents, pick one term or the other but not both, and re-write the laws so the purpose is once again being fulfilled. In the world of software, that means whichever term is chosen, the life of the protection must be much shorter. Maybe 4 years with an option to extend for 3 or 4 more, or maybe 7 with an extension. After that, it's all public. And we fold all existing software into the new regime with a start date of when the new law is enacted unless the old protection would have expired sooner (and I doubt any of it would).

*Even Linux isn't public domain as Stallman et al are wont to point out.

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Anonymous Coward

So let me get this straight

A patent that describes something essential, so essential in fact it can't really be worked around, recreated, or copied with alterations and still work. Something that has a purpose, was innovative, probably cost a fair chunk to develop, and probably wasn't all that novel, has less power than a patent on the shape and colouring of an icon (on a mobile device).

I don't want to live on this planet anymore.

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Anonymous Coward

Re: So let me get this straight

The important bit is that they are essential to implement part of an international standard.

It should be possible to use an international standard without having to pay a license fee determined at the whim of a third-party.

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Re: So let me get this straight

@AC:

> It should be possible to use an international standard without having to pay a license fee

> determined at the whim of a third-party.

It is not at the "whim". The outsider of the standardization may even sue for lower rates if the rates determined are not "fair and reasonable". As someone above already pointed out, the irony is that you are allowed to enforce a design right regarding the shape of a phone (mistakenly called a "patent") with a cease and desist. But you are not allowed to enforce a "hard" technical patent that happens to be standard essential even though you offered to license and were refused.

There were different approaches to the problem, I liked the one best where the infringer had to submit an offer for a license agreement and to deposit the license fees with a court in order to evade the cease and desist. In case of non-infringement, the money was returned. If there was and infringement and the license proposal was fair and reasonable, the infringer was licensed. Otherwise, the infringer ran the risk of a cease and desist and damages.

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@ Radbruch1929

I like that idea for the settlement engagement. With no money at risk right now it's too easy for the combatants to just keep the issue in court without resolution.

I see some problems and risks with it. You only have alleged infringement until the case actually goes to court and you're presumed innocent before that. And I could see really big players using the deposit pool as a way to deny small players the money they need to stay to stay operational. But maybe some people who are smarter than me can figure out a way to mitigate those issues. And it's certainly an improvement over what we've got. So I'd be willing to risk those problems while solutions are sought.

And maybe I see a way through to the problem of the rounded corners patents too. Riffing off my earlier post about the purpose of IP protection, re-write the law so that ALL patents must be available for license at fair and reasonable rates, not just the ones covered by standards organizations.

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Anonymous Coward

Re: So let me get this straight

> A patent that describes something essential, so essential in fact it can't really be worked around, recreated, or copied with alterations and still work.

I have sat on several different standardization committees in my career; I sit on one currently.

Some technology included in a standard is pretty revolutionary, but much technology included in a standard can, in fact, be easily worked around up until the moment that the standard mandates one approach and excludes all other approaches.

Standardization is a form of sanctioned collusion. Members of standardization committees work for regular companies, most of which compete with each other in the market in question. The FRAND pledge is what allows regulators to sanction this collusion.

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Re: @ Radbruch1929

@Tom 13: Thank you, very good point. I did not think this through.

One idea (not fully thought through again) might be to include an interim phase in the process that has to happen quite early in any proceedings. In this phase, it would be determined whether there is a case to answer for the defendant and if there is, the deposit mechanism applies. Otherwise, the deposit is not needed.

The idea does not really solve the issue though as it only serves to mitigate the risk of abuse of the deposit pool by the plaintiff (he may lose the case later) and the risk of the defendant to do a hit and run (he might run just before the "case to answer" verdict).

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This is the same EU court...

...which permit music companies to ban sales of downloadable music based on which country the credit card used for paying for the music has been issued.

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h3
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Re: This is the same EU court...

Even for countries that are all in the EU ? (I thought that was the whole point that you cannot do that. What does the EU do again ?)

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