Google’s latest 3G royalty demand from Apple: 2.25% of iPhone-iPod touch price differential

“On Saturday, two days before an Apple v. Motorola Mobility may or may not commence, Apple brought a couple of motions to prevent the wholly-owned Google subsidiary from making certain arguments should the trial take place,” Florian Mueller reports for FOSS Patents. “At the very beginning of one of the motions, Apple formally ‘recognizes that the Court has not yet ruled on whether a trial will be held on its claims.'”

“The most interesting revelation is that Motorola apparently took in its sealed trial brief a new position on what should be the FRAND royalty rate for its celullar standard-essential patents (SEPs),” Mueller reports. “According to Apple, “Motorola’s first new theory is that 2.25% should be applied to the difference in price between an iPod Touch and the unsubsidized iPhone (without a carrier contract)”. The filing says that this would mean a royalty base between $400 and $450. As a result, Google’s Motorola Mobility would charge Apple between $9 and $10.13 per iPhone for its wireless SEPs.”

Mueller reports, “Apple rejects the notion that it “receives $400 to $450 in value from cellular functionality” and claims it’s inconsistent with what one of Motorola’s own experts said in a related case.”

Read more in the full article here.

MacDailyNews Take: FRAND abuse.

Related articles:
FTC staff said to formally recommend antitrust lawsuit against Google over FRAND abuse – November 1, 2012
Google U.S. antitrust lawsuit said to be urged by FTC investigators over Internet search, FRAND abuse – October 15, 2012
U.S. FTC investigating Google, Motorola Mobility over FRAND abuse – June 30, 2012
EU launches full-blown investigation of Samsung’s suspected abuse of FRAND-pledged patents; Motorola on notice – January 31, 2012
Apple asked standards body to set rules for essential FRAND patents – February 8, 2012

27 Comments

    1. Android through Google owes Apple 250.00 per device, world wide. And apple can pay Google 2% of the price differential between the iPod touch and the iPhone. That will be 300 for the cheapest iPod touch modern generation and 200 for the iPhone 5, so Google owes Apple another $2 for each iPhone 5 sold, that seems fair.

  1. The amount of the royalty shouldn’t be commensurate to the price of the product because the technology doesn’t change from product price point to product price point. It should be a flat fee of $1 per device sold.

    1. Agree. The value of patent should be fixed per device.
      If it’s percentage of selling price then they try to access share of the products other properties also.

  2. .. and rest of the other old SVPs in bonuses
    i.e a bonus of 150,000 shares or at current price 900 million

    except for the 1 billion buck win with samsung in U.S, legals record has been spotty at best e.g ‘apology in U.K’ and iPad ‘twice paid name in china. ‘ where they had to pay just for the word again 60 million .

    Considering the amount of flames Forstall got for maps, the fact that apple legal has been unable to seriously stem android (now 75% marketshare, samsung alone sells twice as many smart phones as apple now) doesn’t get any flames is strange to me. (I understand apple makes more profit but apple’s profit isn’t from legal and doesn’t excuse legal from not winning many cases from the 200 plus patents Steve Jobs boasted about at iPhone launch).

    Forstall was an architect of OSX which runs macs, won the iOS competition at apple to create iOS (vs an iPod Phone) which now fuels 60% of apple’s profits rising apple stock from 100 to 600 (2007 to 2012) and yet people keep badmouthing him while legal gets off scott free…

    1. “…apple legal has been unable to seriously stem android (now 75% marketshare, samsung alone sells twice as many smart phones as apple now)…”

      How should Apple compete with 2 for 1 offers and $100 gift card rebates? Race to the bottom in a quest for the “Market Share” title? I think not.

      1. I’m saying that if legal could win more: i.e get some REAL bans : not those they’ve been getting like finallly winning bans on phones and tablets which are one or two generations ago (i.e meaningless bans) and without winning damages. Or after long lengthy legal battles winning only to find out that all Samsung has to do as with it’s galaxy tab in Europe is put a thin bezel around it to get the judge to approve (i.e Apple staff spends YEARS and hundreds of millions developing design software fit and finish and a rival can copy wholesale and get away with a thin bezel… ) Worse like in U.K unable to win at all but having to apologize. Also getting stuck or having apple pay large amounts for FRAND patents.

        If you win bans or big damages will you get “2 for 1 offers and $100 gift card rebates? ” Nope because copying rivals – who don’t make a lot of profit in the first place – would be scared sh@tless to try to sell anything.

        Profit is better than marketshare. but letting rivals get a much larger market share and maintain it for long is not good either as eventually they will catch up in areas like app store. So with a small marketshare you will continually have to work very hard to keep your profits, your developers, fight legal battles and look over you shoulder all the time — time which your execs (like Cook) can use better developing the next big thing.

        I’m no lawyer but I in my mind Apple legals record has been like I said ‘spotty’, Samsung’s legal team has outsmarted it in many countries (delaying tactics, manipulating juries, fake photos etc). Out of the many trials the only significant win is in the U.S and that was from my reading due in no small part to the jury foreman , an inventor himself, who swayed the jury (and because of that samsung is appealing the case).

        My theme of my post was: Forstall has contributed so much to apple and he gets attacked viciously for Maps (which many have found for their areas work better than Google’s maps) and yet legal ( with for example it’s China 60 million iPad name loss fiasco– 60 million is several times more than Amazon’s entire worldwide profits for this year) gets a free pass…

        Ive has shown he is head and shoulders above his design competitors in other tech companies but Apple legal to my mind is just on par at best.

  3. Reminds me of cheap ass customers who go into a restaurant and say, if this dinner costs 8.00 and an order of fries costs 3.00, and then I want my dinner without fries to cost 5.00.

  4. Whilst lawyers can argue what is “Fair and reasonable” Non Discriminatory is not up for argument. Subpoena what Motorola charges other smartphone makers for it’s 3G patents, if it’s not the same as they want from Apple then it’s a clear anti-trust matter.

  5. Why do we still talk about this company as Mototola? It’s Google now and it had to be brought to light that its not only Apple that is sueing and fighting in court. Everyone think Apple is the bad one for suing everyone but they are getting sued themselves by Google and Samsung. It’s time people are told the truth.

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  7. AFAIK the difference between the latest generation iPod and the iPhone 5 is more than just cell phone functionality, the iPhone has a better camera and a faster processor, so apple could build an iPod with the exact same specs (with the exception of cell phone functionality) as the IPhone 5 and price it $10 bellow the unsubsidized iPhone 5. Of course no one would buy it but that could serve as a base to calculate the 2.25% that Googlerola demands which would amount to $0.225 per unit sold.

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