Well, that brightens an otherwise miserable morning
The expiry of patent licences from Ericsson means that Apple has been selling phones it should not have been, according to Ericsson, and the Swedish commtech firm has now asked Apple to pay up or stop doing it. Ericsson has filed suits in Germany, the United Kingdom and the Netherlands against Apple's products. The whole area …
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... Apple is just arguing the toss on price, it's what Apple does, I'm assuming the lower FRAND license cost means bigger profit margin per unit regardless of whether they have to throw a few millions at it in court to get that price. In the long term they would make those court case costs back on unit sales.
FRAND means that you can't charge one company double or tripple what you charge another for the same thing.
If a FRAND Patent holder decides that their Licensee can pay a whole lot more because their use of their patent is bringing home lots of $$$$ then the Licensee is right to say nope. That is what the F (FAIR) stands for.
At the moment we don't know (and may never know) what the sticking points of the negociations were in this case. We shall just have to wait while the shysters (aka Lawyers) on both sides get in the ring and try to beat the hell out of the other side.
Also, it would not be unknown for a patent holder to jack up the license fees on a patent that is about to expire.
It is also interesting that ther case is here in the EU and not in East Texas. It sounds to me that they really don''t want victory in court but a settlement.
They have already sued them in East Texas:
"On February 26, Ericsson (NASDAQ: ERIC) filed two complaints with the International Trade Commission (ITC) and seven complaints in the United States District Court for the Eastern District of Texas against Apple asserting 41 patents covering many aspects of Apple's iPhones and iPads. The patents include standard essential patents related to the 2G and 4G/LTE standards as well as other patents that are critical to features and functionality of Apple devices such as the design of semiconductor components, user interface software, location services and applications, as well as the iOS operating system. Ericsson seeks exclusion orders in the ITC proceedings and damages and injunctions in the District Court actions."
How does that stand if the patent holder says, "okay we are going to charge everyone 0.001% of the purchase price of the completed device" Company A, B and C say yeah sure, that is fair and pay. Then premium company D comes in, and says "wow, that is way too much".
If they (the patent holder) charge a different percentage to company D, then it isn't fair on A,B and C.
Indeed that wouldn't be fair, however when A, B & C each have a big (differently sized) pile of patents that the holder of the patents in question wanted to use, then the percentage is going to be different for each company anyway, having been hammered out by patent attorneys considering the relative worth of each patent in the respective owners warchest against the perceived worth of the patents being licensed.
It sounds like the original deal was struck when Ericsson was making phones - now that they don't, leverage has changed as there is no incentive to license any IP from A, B & C, let alone D. It would be interesting to see what happens when agreements with Nokia, Samsung, HTC and any other company making phones expire - although perhaps they were made with a longer timeframe in mind.
The big point is, we don't know who is being unreasonable. Apple could just be being arrogant in their stance, or Ericsson could be being greedy - those details will come out in court (if it doesn't get redacted for commercial sensitivity reasons), or will be hidden behind closed doors when they reach a settlement.
I think the whole idea of FRAND was born when all the phone companies were holding part of the jigsaw, when it came to the patent pool.
Then along came Apple who didn't hold any useful telecoms or radio patents and gate crashed the party. To make matters worse Apple started to get tough about non technical patents, such as round corners (before the usual culprit says that's a design patent, I know but don't see why the hell you think that makes the slightest difference to the argument), bouncing menu or whether the third pixel on the 2nd row is allowed to be blue on Tuesdays.
I can't see any of the companies agreeing to FRAND their patents in future.
"I can't see any of the companies agreeing to FRAND their patents in future."
I think a patented technology is only included in a (3GPP) standard if the patent owner agrees to FRAND licensing. Given the potential amount of money that you can raise due to the sheer volumes involved then I believe most companies will want to license FRAND; it's a cash cow. The alternative is having an obscure patent sat in your back pocket that is likely never to be used. Or even worse - it is used a lot without your knowledge and recompense. At least if your patent is included in a standard then you know that anyone claiming to adhere to that specification owes you money.
> I think a patented technology is only included in a (3GPP) standard if the patent owner agrees to FRAND licensing. Given the potential amount of money that you can raise due to the sheer volumes involved then I believe most companies will want to license FRAND; it's a cash cow.
Just blindly say "FRAND" is what I think will go away, they'll want legally binding definitions as part of the standard. Since the standard is probably written by the current players I guess it will be in their interest to set these values high enough to keep out the new comers who aren't contributing to the patent pool.
The real problem here is Apple being hounded for IP that is in parts they have bought from someone else. Surely the maker of a chip or module is responsible for the patents used in their product. A manufacturer assembling product from bought-in components shouldn't have to worry about this nonsense. It should be included in the component price.
Or is the IP in question in one of the components that Apple have fabricated especially for themselves?
Seems to me this is the main problem with current patent issues, the patent holders seem to want paid by every member of the supply chain. Only a matter of time before we see cases suing end users. Like SCO did.
Apple designs the A9 etc. SoC from the ground up, they have a foundry such as TSMC (A8) or Samsung (A7 and rumored for A9) stamp them out by the millions.
The 2G/LTE functionality is not in that SoC, however, it is in the Qualcomm modem chip. In the past, Qualcomm licensed the patents so Apple, Samsung and others who use their modem chips didn't have to deal with that. But a few years ago certain licensees decided to not license to the chipmakers for 2% (or whatever) of the chip's price and try to move up the chain and extort for 2% of the phone's retail price (giving them about 50x increase in licensing revenue)
I have no idea if that's what the dispute with Erisson is, but that is what Motorola tried to do to Apple and Microsoft and got slapped down by courts in the US and EU.
Saw another article that confirms Ericsson is trying to charge based on the price of the whole phone, rather than the chip they buy from Qualcomm that implements Ericsson's FRAND patents.
On that basis, I guess if Airbus built LTE into an A380, Ericsson would expect to be paid 2% of $100 million or whatever an A380 sells for?
It would be interesting to see an org-chart at Apple and see how many people are doing actual productive engineering over there. One of Ericsson's technologies is the software architecture formed around iOS - if Apple really wants to go to war over this, they'd better be prepared to do some actual engineering and come up with their own architecture.
Apple is mainly a system integrator, for them to be attacked by the company that builds one of those systems is a big concern, and it's an open question how much damage this could do. It's obvious Ericsson has been trying for a long time to get this resolved like adults, but sometimes American companies only understand legal attacks - like we see with Google, Facebook, etc, they live in a river of money and eventually they become deluded that they are the source of all their success, when measured against a real company like Ericsson, they might just be a flash in the pan, their revenua a byproduct of Wall Street economics more than their own merit.
Which "architecture formed around iOS" would that be? It is based on OS X, which Apple released over 14 years ago which is based on NeXT's kernel which is around 25 years old which is itself based on CMU's Mach microkernel and BSD which are even older. If Ericsson has a patent that covers the basic architecture of iOS, it is invalid either due to age or prior art.