Linked by Thom Holwerda on Mon 22nd Oct 2012 13:36 UTC
Legal "One of the exhibits Samsung has now made public tells an interesting tale. It's the slide presentation that Apple showed Samsung when it first tried (and failed) to get Samsung to license Apple's patents prior to the start of litigation. While some of the numbers were earlier reported on when the exhibit was used at trial, the slides themselves provide more data - specifically on the difference between what Apple wanted Samsung to pay for Windows phones and for Android phones. The slides punch huge holes in Apple's FRAND arguments. Apple and Microsoft complain to regulators about FRAND rates being excessive and oppressive at approximately $6 per unit, or 2.4%; but the Apple offer was not only at a much higher rate, it targeted Android in a way that seems deliberately designed to destroy its ability to compete in the marketplace." Eagerly awaiting the 45 paragraph comment explaining how this is completely fair and not hypocritical at all. Bonus points if it includes something about Eric Schmidt being on Apple's board, and, double bonus point if it mentions one of the QWERTY Android prototypes. Mega Epic Bonus if it somehow manages to draw a line from Edison, Tesla, to Jobs.
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Apples and oranges
by oskeladden on Mon 22nd Oct 2012 14:45 UTC
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I intensely dislike software patents and Apple's use of them, but the Groklaw comment seems completely off base. There is no general obligation in law to license standards-essential patents on FRAND terms. The obligation to grant FRAND licenses is purely contractual, and comes only to the extent imposed by the bylaws of organisations companies join. Specifically, if a company chooses to join a standard-setting organisation, the organisation's bylaws will impose upon it an obligation to license its patents on FRAND terms to the extent they are relevant to a standard approved by that organisation (and only to that extent). In other words, the obligation to grant FRAND licenses is a voluntarily assumed contractual obligation that companies take upon themselves because of the benefits they derive from (a) reciprocity in terms of licenses for that standard (b) the volume of licenses generated by having a patent form part of a standard. As a result, it only applies to standards the bylaws cover.

As far as Apple's dealings with Samsung go, there is no obligation to grant a license on FRAND terms. As far as I am aware, there is no "touchscreen standard" that has been created by a standard-setting organisation (unlike the GSM standard, or the 802.11n standard). Apple (or, for that matter, Microsoft) is, therefore, legally free to be as money-gouging as it wants - unlike Motorola, which is bound by the fact that it has contractually agreed to grant FRAND licenses to Apple, Microsoft. and anyone else who asks.

That is, in terms purely of patent law. Those slides seem to me to potentially raise antitrust issues (or, in Europe, competition law issues), but it's hard to tell without a broader context and without looking at figures. FRAND licenses, in general, help avoid competition law issues, which is another reason why companies agree to grant them. Apple seems to me to possibly be dancing close to the border of what's permissible, but without a broader sense of what happened in the discussions - and of Apple's corporate practices on licensing generally - it's hard to say.

For the record, I am not a fan of Apple's tactics (or of the ridiculously broad patents that are the rule nowadays). There is a horrible danger that this could end up becoming a zero-sum game. If companies who find themselves unable to retaliate against Apple because they're contractually tied into FRAND terms end up turning against the FRAND system, that will spell disaster for smaller manufacturers worldwide. But that's a different issue, unrelated to the one Groklaw raised.

Reply Score: 5

RE: Apples and oranges
by JAlexoid on Mon 22nd Oct 2012 16:49 in reply to "Apples and oranges"
JAlexoid Member since:

You are missing the point of Groklaw's complaint. It's all about the amount of $$$ to be paid for said patents. While FRAND definitely defines that no one can be excluded from being granted a license, it does not define the price that should be paid.

I totally disagree with companies that use FRAND pledged patents as injunction tools, but arguing about how much who has to pay is quite normal in an industry where most other patent deals have been based on broad cross licensing + monetary terms.
Apple is the company that has issues with "sharing", like a new whiny kid in the sandbox.

Reply Parent Score: 4

RE[2]: Apples and oranges
by oskeladden on Mon 22nd Oct 2012 20:01 in reply to "RE: Apples and oranges"
oskeladden Member since:

You are missing the point of Groklaw's complaint. It's all about the amount of $$$ to be paid for said patents. While FRAND definitely defines that no one can be excluded from being granted a license, it does not define the price that should be paid.

Of course FRAND affects the price that can be charged. The 'R' in FRAND stands for 'reasonable', and imposes a binding legal obligation upon to the patent holder to only charge a reasonable royalty. Or, to put it negatively, it precludes the patent holder from charging an unreasonable royalty.

Absent such an obligation, a patent holder is free to demand as unreasonable an amount as it likes. This is why Groklaw's point is fundamentally flawed - Motorola voluntarily gave up its freedom to charge anything other than a reasonable price for its standards-essential patents when it agreed to contribute them to the relevant standard. Apple hasn't done that, because the patents in question aren't part of a defined standard. The fact that it (and, I add once more, Microsoft) are demanding unreasonable royalties on their patents is therefore absolutely irrelevant to the question of whether or not they can demand that others not charge them unreasonable royalties.

Reply Parent Score: 3