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For reference: Apple is willing to pay a maximum of $1 for patents that make their device a functioning phone. Two years ago, they offered Samsung to license some of their less important patents for $30 per phone and $40 per tablet.



It's not obvious that "essential" patents are more important. 3G and Wi-Fi are commodity technologies while iOS is less so.


A phone without something like multi-touch is more useful than one without 3G/WiFi (or am I missing something in what you're saying)?


For reference: Apple's patents were for multi-touch/bounce back scrolling which their research showed was worth $30/$40 to consumers. Samsung's patents are one of the many FRAND patents for core 3G/WiFi.


I don't understand what you're saying here. Is it that 3G and WiFi are worth < 1/30 as much as bounce-back scrolling?


Samsung is just one of MANY FRAND patent holders for 3G/WiFi which are commodity technologies today. People just expect it to be on all mobile devices.

The bounce back scrolling uniquely differentiated iOS from other platforms. And there are plenty of ways to implement it without needed to duplicate the exact Apple way. In fact HTC, Samsung, Google, Motorola all have different implementations.

So yes from a product perspective Samsung's tiny contribution to the FRAND patent pool is worth 1/30 of what Apple's patents are worth.


People just expect it to be on all mobile devices.

This actually argues that the patents on such technologies are worth more - after all, a mobile device lacking mobile connectivity is worth virtually nothing, regardless of how nice it's scrolling implementation is.

That nicely encapsulates why it's so hard to determine a fair price for a standards-essential patent. In terms of the bounce-back scrolling thing, it's easy: if $30 is more than it's worth to consumers, then Samsung will implement a work-around instead; if not, then they'll license it. The price will tend to the value. For standards-essential patents, the apparent value is very high - but it may have only acquired that value by virtue of being included in the standard in the first place, so charging a price commensurate with its value would not be "fair".

It's not surprising that negotiations over such a price are difficult, particularly when the relationship between the companies involved is already acrimonious. Apple needs a license to these patents for its devices, but would rather pay as close to zero as possible for that; Motorola is required to license the patents for a fair royalty, but would like that license to be as lucrative as possible. Essentially we have a negotiation over price which neither party is permitted to abandon - what is most surprising is that this ever works!


The key to it working smoothly in the past is that all the manufacturers had standards-essential patents. So then if other manufacturers ask a lot for their patents, you ask a lot from them for yours and one way another you come to a cross-licensing agreement (because otherwise neither of you can sell any phones).

The problem with Apple is that they refuse to license their own patents for any reasonable amount, so the other manufacturers come in and ask them to pay the full ticket price for the standards essential patents, and Apple starts crying about how expensive it is when they refuse to offset the cost by cross-licensing their own patents like everybody else.


Apple basically came into the phone industry, built upon the innovations of all others of the past decades, added their innovative ideas, a highly-polished UI and then flat-out refused that others ever could use these improvements of theirs.

Apple shocked many of the incumbents who believed they had a stable oligopoly and could now be lazy. This is the positive effect Apple had, and they have earned handsome profits for it so they really have no need to exploit the patent system for the last penny. I hope they realize this gradually.


First, this is a discussion about Motorola not Samsung. But basically you have no idea what you are talking about.


Sorry I mean Motorola. But thanks for addressing my point with that truly insightful comment.




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