EC: Apple claimed Motorola demanded ALL ITS PATENTS Motorola Mobility said it would only hand over licences for its standards-essential patents to Apple if the fruity firm licensed all of its patent portfolio in return, Apple apparently revealed to the European Commission. Eagle-eyed Reg readers pointed out that in the European Commission's report [PDF, relevant information is …
This is not quite a case you'd see on an afternoon Judge Judy show!.
Rest assured these testaments presented to the EC are most certainly not just "here say" submissions.
Apple most definitely have the evidence to back these "claims against Motorola" up otherwise they would never have filed the complaint.
I believe that Apple as the plaintiff can provide evidence of the demands made [by both parties] during the negotiations.
I also believe that Motorola has what it needs to defend themselves against this lawsuit, or to justify their "request" to be in exposed to Apple's entire patent collection.
The saga continues and I will be following it with great interest.. via ElReg and not Channel 4 afternoon TV...
"Motorola Mobility said it would only hand over licences for its standards-essential patents to Apple if the fruity firm licensed all of its patent portfolio in return, Apple apparently revealed to the European Commission."
I believe that Apple would be prepared to back that statement up in written documents and affidavits.
If true, it would appear that Motorola didn't offer terms in compliance with FRAND.
Not that I'm an Apple fanboi, but there's a couple smoking guns...
Motorola licensed it's patents to the 3G chip maker who paid Motorola. Motorola then said "oh by the way you cant sell your 3G chips to Apple". You can't get a clearer case of FRAND abuse than that. OK, maybe you can, if Motorola had for example allowed Apple to buy 3G chips for several years, found out it was loosing market share to Apple and then decided to withdraw it FRAND license but only for components sold to Apple and then sue Apple. That's the kind of thing that gets noticed and slapped down by the EU.
It doesn't help Motorola's case that they are charging everyone else around 2% in license fees for all their patents on a $10 chip but they want to charge Apple 2.25% of the retail (non VAT) price of an iPhone for just 1 patent. The EU will never allow Motorola to get away with what it is trying. Not because they give a shit about Apple but because it would destroy FRAND and allow every other patent holder in a FRAND pool to do the same thing. Imagine a $100 million Airbus then ask is their a single component in that plane that relies on a FRAND patent. If the answer is yes then that $2.25 million per patent.
Still i guess Motorola doesn't care, it wont be their shareholders that get to face a '10% of global sales' fine, that will be Google's shareholders. So i guess they do have a clue after all. Nokia should hire Motorola's CEO once the Google deal is done, that guy hasn't a clue how to profitably run a phone manufacturing company but he does understand how to maximize shareholder value. Motorola's not Google's, obviously.
FRAND.
Yo can't license those patents if you don't add yours to the pool.
Otherwise, patent pooling doesn't make sense...
If those patents are smartphone related, then they should have added them to the pool. They have decided that:
A) They were not relevant.
B)Not relevant, but will sue as relevant.
So...
Given that Moto holds at least 1,500 SEPs (according to the ETSI DB) and Apple has, at best when you include Nortel, a low number of hundreds, it would seem unreasonable to expect a straight swap - Moto should rightfully be asking for more from Apple and this just seems like a negotiating offer much as you get in any large transaction.
If they were regular patents, yes. But they're SEPs - you can't build a modern phone without 3G, and that means you *have* to use these patents.
What they're saying here is that moto were asking for *all* apple patents in exchange for 3G. I.e. not just "lets swap standards-essential stuff", but "Hand over all your inventions or you can't make a phone that uses data". That starts to sound less like a swap and more like a mugging, because if motorola withhold 3G patents apple can't make a phone at all.
They were asking for *all* apple patents remember, all the innovation from the iPhone, iPad, mac, and everything else. It'd leave apple with no advantage from all the stuff they've developed because moto could then freely copy everything.
If these were normal patents there would be no issue, but when it's standards-essential (like 3G in phones) they sign agreements saying they'll openly license the patents for a reasonable fee. The EU has said elsewhere that they consider that to mean that moto should be licensing for cash if apple requests that.
Even if they've just stated that as their position they're likely a fair way wide of the law. I smell another anti-trust investigation brewing nicely :)
I have no idea what size Apple's non-SEP portfolio is - all the story says is that Moto asked (Apple's wording is "insisted"). Nothing unreasonable about asking, is there? Perhaps even being a bit persistent with your request might be seen/spun as "insisting". Also, how much of Apple's portfoloi is for these amazing value software and design patents that have limited enforceability worldwide?
The linked PDF states:
"For instance, according to Apple, Motorola Mobility has insisted that Apple cross-licenses its full non-SEP portfolio in exchange for Motorola Mobility's SEPs. Apple also argues that its refusal to accede to this demand led Motorola Mobility to sue Apple in an attempt to exclude Apple's products from the market. On the terms of Apple's own argument, Motorola Mobility's allegedly anti-competitive behaviour in this regard well precedes the merger at issue in the present decision. See, for instance, the e-mail of 2 February 2012 from Apple to the Commission."
FRAND doesn't mean that if I have just one SEP I get to swap access to this one patent in return for access to the many thousands of other SEPs as a direct swap - otherwise there is almost no incentive to go on inventing. There needs to be a balance in the licensing agreement and the FRAND framework merely states that this balance should be fair, reasonable and non-discriminatory. I imagine the documentation on both sides of the case is the size of a small mountain, so I wouldn't expect to know the whole picture here.
Does the 2500 number include what they bought from BT? Some of the latter include key UI patents for a touchscreen interface.
You cannot make a modern touchphone without infringing on those the same as you cannot make a phone which uses data or plays IPTV MPEG without infringing on Motorola's patents. Granted, there are other ways to communicate with you gadget besides fondling and swiping. Similarly there are other ways to handle media. However, the users do not want any of that at present.
So frankly, asking for that as a part of the negotiation does not strike me as so unreasonable. Apple should have asked an appropriate amount of money for that instead of faking righteous indignation. After all, if they do not start licensing those they will end up being hoisted on the "Competition comission" petard the same way Samsung and Motorola are being hoisted for their "abuse" of SEP.
"I have no idea what size Apple's non-SEP portfolio is..."
According to the US Patent & Trademarks Office site, Apple has a total of 4649 patents awarded and 2945 pending. Unfortunately, they don't separate out SEP patents. The list also, I believe, only lists patents initially assigned to Apple directly and may not include those that Apple received through acquisitions or swaps or patents on which Apple is a co-holder (h.264 through its membership in MPEG LA, I think...?). Further, some number of those listed are design patents (the infamous "rounded rectangle" that so many fume over) and some are technical patents ("Method and apparatus for improved duration modeling of phonemes in a speech synthesis system," to pick one at random). What the split is I don't know.
I think that it may be the design patents that could be the sticking point. If Google owns Motorola and Motorola has access to all of Apple's design patents, this would seem to imply that Motorola could make and sell under their own label a tablet, say, that looks identical with an iPad, with a UI that looks identical with iOS. Now, it seems unlikely that Moto WOULD do that under their own brand, since it would be a tacit acknowledgement that they make "me too" products. OTOH, it appears that there would be nothing stopping them from setting up a new division with a new marque selling to the low end of the market with all that that implies -- resistive screen, bottom-of-the-line processor, cheesy build quality -- running an iOS-skinned Android on an iPad-looking device.
Build it like a Coby Kyros and sell it as "just like an Apple iPad" and I doubt that the fallout would take any gloss off of Motorola's reputation among the general public as much as it would off of Apple's ("If this is just like an iPad, then what's all the fuss about?"). And with the depth of Google's pockets subsidizing this, such a product line could survive to erode Apple's image in the mass market for far longer than a less cash-rich company could manage.
I dunno, but that's what I might be be thinking if I were a cynical sort of individual (...which, of course, I'm not...! ;-) ).
Unless I'm mistaking motorla were asking for this in an attempt to negotate without resorting to legal action for Apples existing infringement. Apple said no so they decided to try the other route. Can't see what point apple are trying to make here other than the fact they felt the "settlement" being asked was too excessive.
Maybe Apple consider haggling too common for them.
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While they may have been asking a lot, Apple did have the choice to try to negotiate them down to something more reasonable. The Non-Discriminatory element must also take into consideration the deals that other companies have in regards to those patents...I don't know what those deals are like.
It seems to me that as companies get less and less value from patents that are committed to standards, they will stop committing patents to standards.
> they should be available on a RAND basis
They were. But Apple apparently infringed the patents without a licence.
This isn't about licencing going forward - that's already sorted out. This is about previous infringement. It looks like an attempt by Motorola to get immunity from some of the more bizarre patent threats in return for ignoring that precious infringement.
Vic.
It seems to be that Apple are admitting to this course of events:
1) Designed a 3G mobile phone
2) Started to sell said phone
3) Asked for licence to use technology covered by patents (albeit standards essential)
4) Didn't like the terms offered
5) Continued to sell said phone knowingly in breach of these patents
6) Cried to courts that they had been wronged
You're wrong.
If Motorola didn't offer the SEP patents under FRAND terms then Apple did nothing wrong. What? You're going to be held hostage in terms of product development, delivery, etc... while waiting to negotiate FRAND? The point of FRAND is that these essential patents should be reasonably negotiated.
So if HTC is paying X, then Apple should be paying something along the lines of X not give away its IP.
The point I was making was that they appear to be applying double standards here.
Apple vs HTC / Samsung - you are breaching our patents so cease all sales until this is settled.
Motorola vs Apple - we are in breach of your patents so we will continue sales as normal until it is settled.
"Apple vs HTC / Samsung - you are breaching our patents so cease all sales until this is settled."
These are not SEP patents
"Motorola vs Apple - we are in breach of your patents so we will continue sales as normal until it is settled."
These are, that's the rules are different
Or maybe:
1) Apple designed a 3G phone using licensed chips from a 3rd party
2) Started to sell said phones
3) Motorola withdrew 3rd party license.
4) Apple asked for terms
5) Motorola came back with ludicrous terms
6) Apple went to EU.
Seems like what happened in summary.
Regardless of the naughtiness (or not) of this or any argument about balancing the offer for both sides...
When the EU analyses the anti-competitive complaint, Apples often stated aim of killing Android will be considered. Hard to see how it's not a mitigating factor in Motorola's approach (and Google post merger). FRAND neither forbids this sort of deal or compels Apple to accept it. FRAND simply gives Apple a route to getting a court to impose terms on Motorola and guidance on what those terms are.
Apples real complaint is that their plan to bully an industry isn't as easy to pull off as they'd like. Screw 'em.
"When the EU analyses the anti-competitive complaint, Apples often stated aim of killing Android will be considered. "
Why? It's perfectly normal business practice to try to try to thrash the crap out of the competition. That's the whole point of competition! All businesses in a market are in a race to vacuum up all the profits available, so they tend towards attempting to attain a monopoly. Microsoft damned-near pulled it off, and the legacy of that is still being felt today.
This is why we have "anti-trust" and "anti-competitive" regulations: government's role is to act as moderator, refereeing this game and ensuring fair play. The rules we have that constrain businesses are there precisely to avoid a repetition of the bad old days of Microsoft at their worst.
The problem is: Android's market share is bigger than Apple's in mobile. Microsoft still has a greater market share of the traditional PC market. So Apple are not dominating a damned thing. Yes, they're making most of the profits, but it's not Apple's fault everyone else has chosen to enter a different race that leaves them with wafer-thin margins.
The only market sector Apple can be said to dominate is the tablet market, but that's unlikely to continue for much longer, but not because of Android-based rivals. Windows 8 is far more likely to be the better fit: its split personality design is not an ideal choice for consumers, but it has a lot of benefits for corporate IT buyers. (Imagine an Asus Transformer that can run the full-fat version of Office on the traditional Windows desktop when plugged into a keyboard dock, but which runs the Metro GUI when undocked. Furthermore, it comes with all Microsoft's IT support tools that have made them so successful in the corporate IT field. Microsoft are far more interested in selling to that sector than to consumers. Windows 8 itself might take a while to settle in and catch on, but Microsoft are used to playing the long game.)
"I see the Android Fans and Apple haters are out in force lol"
Well I hate Apple too but Motorola's actions here violate the entire meaning of FRAND. As a Motorola lawyer put it, "it only takes one bullet to kill" meaning that should Apple be denied even a single FRAND/SEP patent, the product can be removed from market. Having agreed to forego higher royalty rates by in essence "donating" it SEPs to be used by anyone who wants and thereby accepting a lower royalty rate but from a larger pool of users, Motorola is now attempting to use those same SEPs to extort money from Apple in direct violation of their legal obligations: obligations which they undertook voluntarily.
Here is how Florian Mueller puts it:
"Patent litigation is full of surprises, but what I learned this afternoon is beyond belief. Based on what was said in open court today in Mannheim, Germany, a wholly-owned subsidiary of Motorola Mobility submitted an expert report on patent royalties according to which a single patent that is essential to an industry standard is pretty much as valuable as a large number of patents on the same standard because, in the context of a bank robbery, "it only takes one bullet to kill", reducing the importance of any additional bullets in the same gun."
( from http://fosspatents.blogspot.com/2012/02/motorola-likens-its-enforcement-of.html )
(for an additional piece regarding a recently-failed FRAND-based attack by Samsung against Apple, see http://fosspatents.blogspot.com/2012/03/samsung-suffers-second-and-even-more.html )
Further down from your link:
"He didn't personally use the one-bullet-to-kill analogy."
With respect to Florian's point debating why MMI chooses to action 2 out of a bunch of patents, there are at least 3 reasons that spring to mind:
a) demonstration of infringement. An integral part in the value of a patent is the ability to detect an infringing product. These two might be particularly easy to demonstrate whereas on the others it's conceivable that there is wriggle room (e.g. MS is not hugely known for full standards compliance in the past)
b) Reducing trial costs
c) Establishing precedent
"Apple as ALWAY REFUSED to licence is (NON DESERVED) patents (Magsafe anyone?). THe judge hould force apple to put all it;s patents in the public domain."
Oh that's just Mectron. No one is as stupid or as deluded as Mectron. He is a vehement freetard and lives in a world where the only things that have value are material things, and where courts exist to only to expropriate anyone whose product falls under the heading of intellectual property - and the reason he wants the courts to do that is because governments have been remiss in their obligation to abolish all laws protecting intellectual property, thereby hindering trash like Mectron from getting ever more stuff for free; or as close to free as can possibly be arranged.
Note please that the reason that he types so badly is not that he does not know how to type properly, but that the very idea of intellectual property as an impediment to him getting and having whatever he wants, simply makes him foam at the mouth, and dribble all over his keyboard!
... then they'd have patents on every slight innovation and we'd see the same levels of legal action between motor manufacturers. The only winners from Apple's patent battles are the lawyers, for us mug consumers it increases the price of product, reduces choice and slows innovation.
Any good designer of any product or service will look at what the opposition have done and if they think it's good will not copy but "take inspiration from" and improve on the original. Apple are often patenting the result/effect not the method/technical mechanism and that's the problem.
Patents, copyright, and trade marks are all "good things" but the balance between protecting the creator and being good for the economy, stimulating invention and enterprise is skewed. We've seen so many cases of abuse by large corporations "iAnything" or "anythingPad" being examples, EasyJet seem to think they own the word Easy, and Richard Branson's empire consider they own the word Virgin (can't wait for the court battle with anyone who brings out a product called EasyVirgin). Then the heavyweights just scare small biz out of their IP rights - "yes it's your patent/copyright/trade mark, yes we're using it and not compensating you, write a $100,000 cheque to your lawyer and lets see who wins".
The guy who invented the wheel infringed the patent of the guy who designed the log-roller because the patent was for "a mechanism to make it easier to move a heavy object over a distance".
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