“Apple Inc sued Ericsson alleging that the Swedish company’s LTE wireless technology patents are not essential to industry cellular standards and that it is demanding excessive royalties for these patents,” Supriya Kurane and Dan Levine report for Reuters. “The iPhone maker said it has not infringed on the patents and does not owe royalties for them.”
“If Ericsson’s patents are deemed essential and the court rules Apple has infringed on them, Apple said it wants the court to assign a reasonable royalty rate,” Kurane and Levine report. “‘We’ve always been willing to pay a fair price to secure the rights to standards essential patents covering technology in our products. Unfortunately, we have not been able to agree with Ericsson on a fair rate for their patents so, as a last resort, we are asking the courts for help,’ said Apple spokeswoman Kristin Huguet.”
Read more in the full article here.
Introducing Judge Lucy Koh to give her considered judgment.
Wouldn’t this be, “are essential?”
It’s the non-essential patents that can charge higher fees.
It’s Reuters. Do you really expect them to be accurate?
Oh, I forgot.
So confusing.. So the gist is that Ericsson is saying Apple has violated a patent they own which is not essential (so not FRAND and claimed to be in use by Apple) and asking a particular price based on the percentage of the cost of the device (similar to what Apple asked of Samsung before getting into all their court cases). Apple has countered to sue to have the court deem the patents as essential and also set a ‘fair’ price. I’m curious since Apple wants the price to be based on a percentage of the cost of the chip rather than the device, would they have agreed in their prior cases to base a royalty on a percentage of the patent violating materials (case, glass, etc.) cost.
Apple bought a telecommunications chip that is licensed for this technology. Under the concept of patent exhaustion, that should be it. The maker of the chip PAID Ericsson a license for the technology to be able to make and sell the chip for that purpose. Apple is a customer of that technology. The Patent is exhausted when Ericsson licensed it to the manufacturer of the Telecommunications chip. . . now they want to say that their technology entitles them to a percentage of the entire sales prices of the device that CHIP was installed in. That is akin to saying that the maker of a CD player is entitled to a percentage of the sales price of the automobile his player is installed in. . . simply because his CD player was chosen to play music in the car. . . or better, the patent holder of a $20 brake shoe claims TWO PERCENT of the sales price of a $250,000 car because his brake shoe is part of what makes it stop. . . after he already got $4 bucks from the maker of the brake shoe.
I once read an analysis where if every patent holder of every single patent involved in the making of cellular phone were allowed to assess their royalties based on a percentage of retail price of the final product, an iPhone would have to retail for somewhere in the neighbor hood of $12,000 . . . and that was assuming only a single assessment and not compound assessment, which would actually occur under the theory being put forward. I.E., Every component would be considered a NEW licensable usage for every sub-component existing in that component, initiating a new licensing event as it changed hands. Think compound interest, only at the wholesale, manufacturing level. Every time a component was added to a sub-assembly, then the sub-assembly was added to another, etc., and yet another, and so on, and so on, the patent holder would have been entitled to charge an additional licensing fee. . . I know, totally absurd. Such a model as was being proposed by, I think it was Samsung, would have multiplied licensing costs by four of five times above THAT absurd insanity level!
When lawyers get thinking hypotheticals, they can tie everything in knots. . . Thank God the court threw that idea out on its cauliflowered and very battered ear!