Motorola Mobility wants 2.25% of Apple’s sales for standards-essential wireless patents license

“In my previous post (on Motorola’s lawsuits against the German Apple Stores), I said that a statement by Apple’s counsel at yesterday’s Mannheim trial made me aware of a discovery request that Apple filed in the United States in order to strenghten its defenses against Motorola in Germany… Apple’s January 30, 2012 brief opposing MMI’s motion to quash contains some information that a lot of people are wondering about these days when they see what’s going on between Apple and Motorola over FRAND patents: the royalty rate that Motorola demanded when Apple asked for a FRAND offer,” Florian Mueller reports for FOSS Patents.

“The answer is: 2.25%. I assume this relates to Apple’s sales and to all of MMI’s standard-essential patents, though the context is only one patent (the one over which Motorola has already forced Apple, temporarily, to remove certain products from its German online store,” Mueller reports. “Assuming in Motorola’s favor that this was a license to all standard-essential wireless patents, the amount still appears excessive to me given how many companies hold patents on such standards and what royalty rate this would lead to in the aggregate.”

MacDailyNews Take: Gee, ya think? 😉

Mueller reports, ” I found out (by performing some additional searches on electronic court records in the U.S.) that Apple has recently brought a variety of discovery motions in order to obtain information from third parties — other wireless device makers — that could help to convince different German courts that Motorola is asking for too high a royalty rate”

Read more in the full article – recommended as usual – here.

MacDailyNews Take: FRAND: Fair, Reasonable, And Non-Discriminatory.

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

12 Comments

  1. Why would the royalty rate to tied to sales?

    If I sell 100 phones using their patents at $100 they would get $200.
    If I sell 100 phones using their patents at $10 they would get $20.

    In both cases I have sold 100 phones using their patents.
    The price of the phone should be irrelevant to the agreement.

    1. Some royalties are on a unit basis. Others are based on revenue. In this case, MMI realizes that Apple sells premium products, so a royalty on sales could be more valuable, especially if Apple extends 3G to other products such as the MBA and MBP which sell for twice the price of the iPad.

  2. 2.25% is $22.5M per $1B of sales of FRAND-related products (iPhone and iPod w/3G).

    Interestingly, it appears to be roughly equivalent to the royalty that Microsoft is charging the Android handset vendors – $13.50 per $600 handset (I guessed a cost for a premium, fully subsidized handset) would represent 2.25%. It will be fun to watch this work its way through the courts. MMI weakened its cause with the FRAND IP abuse, and I believe that will eventually translate to more favorable terms for Apple.

    Personally, I would be very happy to have a set of industry-wide standards that are fully open – no licensing required.

    1. Meant “iPad w/3G.” The iPod w/3G must have been wishful thinking. BTW, I would like Apple to boost battery capacity in the next generation of iPod touch, even if it means increasing its thickness a bit.

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