Texas jury: Apple on the hook for half a billion dollars after infringing 4G LTE patents

A jury in Texas yesterday agreed that Apple should cough up $506.2m in FRAND royalties for including 4G LTE capability on the iPhone, iPad, and Apple Watch without buying a licence from a group of IP holders. Apple told The Register it plans to appeal. In the verdict [PDF], the jury said Apple had failed to prove that any of …

[Anonymous Coward]

It really is time that anything included in a standard is royalty free.

If companies don't like that, then they need to sell their IP on their own.

Note that money can still be made from IP that is included within a standard by (for example) implementing it and either selling devices or licensing the designs; the company originating the IP (submitted for standardization) gets a marketing advantage as they have a head-start.

Regulatory bodies should also require that all infrastructure equipment be standardized to prevent dominant players from forcing a de facto standard on to the market.

[iron]

Re: It really is time that anything included in a standard is royalty free.

> the company originating the IP (submitted for standardization) gets a marketing advantage as they have a head-start.

Until Apple co-opt it and tell everyone they invented it.

[genghis_uk]

Re: It really is time that anything included in a standard is royalty free.

Not quite how it works - Standards committees generally have a few very big fish and a lot of smaller ones. If your idea was implemented, the big guys could take the invention and start massive production runs before the smaller company got any income at all. It is not a level playing field.

The problem is that to the likes of Apple 'fair and reasonable' means free and sue us if you think otherwise.

[doublelayer]

Re: It really is time that anything included in a standard is royalty free.

That is concerning, but so is the alternative which is that a standard is made and soon adopted by a government which makes it the suggested or only approved option, meaning the holders of the IP now have a license to print money at the expense of all the other manufacturers and consumers. If some standards organization without any conflict of interest wants to make their own standard with proprietary technology, it doesn't harm people very much. If it's a standard that can be forced on people, not so good. Mobile communications standards usually require regulatory oversight, meaning that if you get a patent into a standard and get that standard approved as the only accepted way for people to use their phones countrywide, you have a lot of money on the way. And since we get a lot of benefits from using similar technologies all over the world, if you can get that standard in use somewhere powerful before other countries adopt their own standards, you have even more chance to get money. With that kind of gift being provided, I don't feel it's too much to require that standards that are part of a governmental requirement be subject to more restrictive requirements on royalty rights. We could work to ensure those restrictions don't allow a small company with a really good idea to be trampled, but if that small company is planning to trample others by charging them ridiculous prices once they get a monopoly on standard compliance, I lose my sympathy.

[tfewster]

Re: It really is time that anything included in a standard is royalty free.

> meaning the holders of the IP now have a license to print money at the expense of all the other manufacturers and consumers

No, that's what FRAND is for - Fair, Reasonable And Non-Discriminatory royalties, if your invention gets adopted into the standard.

[doublelayer]

Re: It really is time that anything included in a standard is royalty free.

Original: "meaning the holders of the IP now have a license to print money at the expense of all the other manufacturers and consumers"

Response: "No, that's what FRAND is for - Fair, Reasonable And Non-Discriminatory royalties, if your invention gets adopted into the standard."

Exactly. I understand that. What I am suggesting is that possibly the FRAND standard allows too much leeway, and in some cases where standards are supported by an external party, it may need strengthening. You'll note that there seem to be many disagreements between IP holders and IP purchasers about whether terms are in fact fair and nondiscriminatory, which are rather important. Legislation may not be able to handle the fair price part, as the more leverage the IP holder has the less likely they are to agree to any price short of their original ask, but legislation might be able to produce better terms that enforce nondiscrimination. Only by investigating where the current FRAND process fails can we figure out what if anything is needed and how we can apply policy that will improve the situation.

[JetSetJim]

Re: It really is time that anything included in a standard is royalty free.

I think you misunderstand how 3gpp works. It is not a governmental organisation and the standards developed by 3gpp are not "approved by government" (beyond bits like Legal Intercept and transmit power levels standards). It is a form of industry cooperation so that phones work everywhere.

It does mean that people try to patent something and then squeeze it into a patent that uses the wording "shall" rather than "may", but the FRAND rules are supposed to mitigate the financial implications of that, and they are also a bit more up front in processing IPR laden contributions, now (I think if you make a submission to a standard you have to declare whether there is IPR in it now, whereas this was not the case a long time ago)

[doublelayer]

Re: It really is time that anything included in a standard is royalty free.

"I think you misunderstand how 3gpp works. It is not a governmental organisation and the standards developed by 3gpp are not approved by government"

I'll be the first to admit that I'm not particularly knowledgeable about the IP included in this particular case. My comments were more generic, and if they don't apply here, they still apply elsewhere. Plenty of standards in wireless communication are approved by regulatory bodies and include proprietary technology. For a basic example, digital audio radio broadcasting. It's not exactly the closest match to this situation, but I'm using it as my example because the technology is so simple. There are a few technologies in common use in different countries, but in most cases, each country has one standard which is in use while other standards are not approved outside of experimentation. The most common standards are DAB+ (Europe, Australia), DAB (U.K.), HD (Canada, U.S.). Each one contains different proprietary technology, including which audio compression engine is required, meaning license fees from all radio stations and possibly all radio receivers (some standards require it, some don't seem to). Each is supported by a government-enforced monopoly in those countries in which it is used. This is the kind of situation I am talking about. Perhaps I should have done a better job to indicate the general coverage of my original post, but in my opinion, such monopolies may warrant more expansive FRAND restrictions.

[doublelayer]

Re: It really is time that anything included in a standard is royalty free.

Updating my comment immediately above: I wanted to provide more information on a topic more relevant to this case. My example on radio broadcasting still stands, but since it's not mobile telecoms, let's instead look at OFCOM's regulations on mobile telecoms. On the above page, there are documents describing frequency bands which can be licensed by providers for use in a wireless telecommunications network. Below this is a list of standards documents that have been regulated into use by EU directives, the U.K. government, or both. These include technologies known to us under the headings 3G and LTE. They do not include a do-anything-you-want provision. They also include a requirement to interoperate with international service providers. In my opinion, this counts as government endorsement of specific standards.

This endorsement is a good thing. This allows phones to be in use worldwide, assists the development of better communications technology, etc. I feel that this endorsement also gives governments a good reason to have more control over the standards they are using in such ways, up to and including extra powers to increase requirements for FRAND-style IP regulations. For all I know, the ones in use here are entirely fair; I'm still not knowledgable about this case. In the case that a standard is created and given assistance in a similar way, and the terms are not fair, I view the conditions to which these standards are often put means that there is adequate rationale to restrict what licensing provisions can be applied to the IP.

[DS999]

Re: It really is time that anything included in a standard is royalty free.

That's not how it works. Companies who participate in the standards process are required to license their patents on a FRAND basis. They attempt to avoid using patents owned by those who aren't a part of the standards process, but there's no way they can know about ALL the potentially applicable patents so there are always groups (mostly trolls who obtained the patents via bankruptcy sales rather than designing them themselves and using them in actual products) who come out of the woodwork later to sue. I guess Huawei and Apple are checked off their list, Samsung is probably next on the hit list.

[iron]

Apple told The Register it plans to appeal!

DUCK! There go the flying pigs.

[Phones Sheridan]

Re: Apple told The Register it plans to appeal!

Beat me to it. I came on to say they should frame the response and mount it on the wall!

[Duncan Macdonald]

It is about time

that a failed appeal results in a doubling of the penalty. This might discourage the appeal,appeal again,appeal again tactic that Apple and many others use to delay payouts.

[chivo243]

Re: It is about time

Would be nice, I'm sure Apple has already dumped cash into a high yield account of some sort, and will earn interest. Also, you're right, they may appeal until the cows come home, and by then they will have lots of interest on their initial investment. What about if they do get off the hook? Chaa Ching!

[TomG]

Re: It is about time

Do you really think that Apple has a half billion dollars lying around NOT drawing high interest?

[TomG]

Re: It is about time

Do you think Apple has half a billion dollars lying around NOT drawing interest?

[The_Idiot]

But...

... rounded corners are _real_ IP and inviolable - just ask Apple!

[Sanctimonious Prick]

Re: But...

MY buttons, the ones I made, look like a three pointed star (don't call it a triangle, coz it's not, it's a three pointed star that I designed in Paint Shop Pro v7)! (see icon)

/tic

Seriously, that just freaks me out about Apple and rounded corners on software defined buttons! FKCU!

[Sanctimonious Prick]

Re: But...

Damnit, I forgot to mention the _multiple_ Apple Corps (read, The Beatles) vs Apple Computer lawsuits.

https://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer

[Anonymous Coward]

Oh it's Eastern Texas and Judge Gilstrap, a court that can be virtually relied upon to find infringement.

As for the UK setting global FRAND rates, they can certainly try but whether others will go along it is another matter.

[chivo243]

Eastern Texas! Lots of companies have teeny tiny offices there! Just like Ireland and Netherlands... I wonder how many companies have offices in all three?

[martinusher]

Its actually been a bit quiet that part of the world -- lawsuits related to patent trolls are pretty much the primary industry in that part of Texas and there's been few of note.

Apple will need some support here. Even though its barely the coffee fund for Apple this kind of patent trolling needs to be made uneconomic. Its really unlikely that Apple have actually infringed any real patents because the process of setting up standards like 4G LTE involves carefully organized patent pools (they've been carefully organized ever since a troll wormed their way into a dynamic memory standard some years back). This is actually one of the problems with 5G -- there's this Chinese company that owns many of the patents needed to implement it but its currently "the company we may speak its name -- in the US, at least" so I have absolutely no idea how the industry is working around that one.

[Anonymous Coward]

Not "carefully organized patent pools" but FRAND commitments required by all participants. There would have been no dispute that these patents were covered by these commitments (even if you sell your patents, the FRAND commitment has to go along with them). You can read the ETSI rules on these here:

https://www.etsi.org/intellectual-property-rights/

With most patents you can ask a judge for an injunction to stop someone else using your invention. However, the FRAND commitment makes that much harder (but not quite impossible). So the court basically gives you damages instead.

"Its really unlikely that Apple have actually infringed any real patents" - not sure how you reach that conclusion. Unless by 'real patents' you mean something different from 'patents'?

[Falmari]

Apple will need some support here

"Apple will need some support here. Even though its barely the coffee fund for Apple this kind of patent trolling needs to be made uneconomic."

What uneconomic to defend valid patents. Just because a company buys another for their IP and then tries to defend their patents, does not make them a Patent troll. Plenty of companies do this including Google and Apple. Also in this case they are FRAND patents and seem valid as other companies pay the FRAND and article the makes reference to a UK court case that was won.

Seems to me this is more the case of Apple using others IP and refusing to pay for it. Believing they are big enough to get away with it.

BTW I am not saying what was patented should have been given a patent. The US patent office seems to give out patents for everything. But ridiculous patents is something Apple are past masters at.

[Anonymous Coward]

I'd imagine several have something they call an office, I wonder what the odds are they're actually staffed. At least as far Apple goes, last year they closed two stores in the district trying avoid the jurisdiction and it's notorious rocket docket.

[(m)any]

Patent registration fees

Perhaps we should start looking at registration fee structures to clear up this patent mess. For example, registration cost could double every year: a fee that starts at $1,000/yr in year one will be $512,000/yr in year ten. This way companies will be able to recover their initial investment, but will not be able to hold on to them indefinitely. Upon registration expiry they should automatically flow into the public domain.

[TomG]

Re: Patent registration fees

The registration cost would easily be recovered by increasing the franchise fees.

[Whitter]

Eastern Texas

I wonder if any company has ever set out Terms and Conditions stating thier product was not for use in Eastern Texas, in an attempt to avoid ever being pulled into court there.

[jonathan keith]

My dilemma

Who to support here? Apple? Patent Trolls? This is a genuinely painful quandry! Is there any way for them to both lose?

[Anonymous Coward]

Re: My dilemma

It's a bit like having to admit you agree with Piers Morgan on something!