So, this wasn't a trial about Apple using patents against Motorola. It was Apple filing suit against Motorola's use of patents against it.
Basically, when a standard is created the standard will likely use patented technology. Think about H.264. It isn't free. However, it is open (anyone is allowed to create hardware and software using the standard, so long as they pay the fee). Also, that fee is the same for everyone. These terms are FRAND (fair, reasonable, and non-discriminatory). It's essential for standards to ensure competition.
Then there are things that aren't standards. I'm not saying that you should agree with patents or anything like that, but they do exist and this distinction is made. If you hate patents (and I'm not saying you shouldn't), then they're all bad and we should get rid of them all. Disclaimer aside, let's say that you patented having 3 buttons on a phone (home, back, menu) ala some Android phones. There are many other ways to implement that functionality. Maybe that's the best combination of buttons and users love it. However, even in the Android world, we see phones with on-screen keys and no buttons, ones with 4 buttons, etc. You could even do something cool like a touch area with swipe left for back, touch for home, and swipe right for menu. Nothing there would kill your ability to create a device worthy of people spending money on. Taking a real-world example, let's look at Apple's bounce-back function for over-scrolling. Android 4 now does a highlight on over-scroll rather than the bounce-back. While a user might say, "the bounce-back looks better", it doesn't prevent a party from creating a device worthy of users' money.
Now, if you can't send signals using the technology that cell sites use, that does prevent one from making a device worthy of users' money. Those patents are standards essential. Now, when groups set standards, they will work around the patents of any company that doesn't want to license their patents under FRAND terms. However, companies want standards to use their technology because while they might not be able to extort money, they're guaranteed that everyone will use it. There's a big distinction between things you have to license and things you can implement differently with a little creativity and, as such, we treat them differently.
In the Apple/Motorola case here, Motorola (along with others like Nokia, Ericsson, Siemens, others) helped develop the wireless standards. They have to license their patents under FRAND terms. However, many of them want Apple to pay more per device than competitors. Part of this is that Apple has sucked up most of the profit in the industry and they want it back. Before Apple, Nokia was doing pretty well. Now? Motorola had been sliding for a bit, but Apple certainly helped that along by creating much better devices than pre-Android Motorolas.
Basically, there are patents that you're required to use and since you're required to use them (you can't build a phone without them), they have to be licensed under fair, reasonable, and non-discriminatory terms. The FTC looks like they will recommend that the government file suit against Google/Motorola over what the FTC sees as Motorola abusing these standards essential patents against Apple and Microsoft (http://www.bloomberg.com/news/2012-11-01/ftc-staff-said-to-f...).
So, this isn't a suit about Apple pushing UI patents against Motorola that got tossed here. This was Apple trying to get Motorola to license their technology under FRAND terms.
It seems that the disagreement is over the percentage model that Motorola wants. Motorola wants 2.25% of the full retail price of the device. So, if you make a dumbphone for $35, you pay 79cents. If you make a 16GB iPhone 5, you pay $14.63. Somewhat ridiculously, if you make a 64GB iPhone 5, you'd pay $19.13. Apple seems to be arguing that FRAND means that you can't discriminate like that. Motorola, still losing money, wants a large portion of those profits while still being able to profit off of cheaper devices. One can make the argument that the percentage model is non-discriminatory, but it doesn't fly well by me. Non-discriminatory isn't with respect to the price of the device or the money you're making off of it.
"However, many of them want Apple to pay more per device than competitors. Part of this is that Apple has sucked up most of the profit in the industry and they want it back."
Yeah, PART of it is this. Part.
The other part is it that Apple has amassed a war chest of UI patents which it is mobilizing against all of the makers of smart phones. The wireless standard holders are essentially saying "cross-license your stuff OR you pay through the nose for our stuff". And indeed, why should Motorola or Nokia be reasonably with their "intellectual property" if Apple clearly isn't going to be similarly reasonable? Nokia began the patent war, indeed but on the specific basis that Apple wasn't cross licensing its outside-the-standard-but-stilled-needed-for-a-smart-phone-stuff.
It only sounds greedy when you don't give the big picture.
Your argument falls flat on it's face because these patents have been licensed since day one, so how can they possibly be a response to anything? This is simply the big boys club protecting itself.
FRAND doesn't mean that the fee is the same for everyone. FRAND royalty deals are negotiated on a case-by-case basis - such deals will often include a cross-license for some of the other party's patents, and this will tend to reduce the royalty paid.
The crux of the issue is whether or not Motorola was discriminating against apple. If everyone else that licenses Motorola's patents pays 2.5% why should apple pay less? What gives them that right to special treatment?
Doesn't the non-discriminatory part just mean you have to license these patents to everyone who is willing to pay the fair and reasonable price? I don't see why that term would have any connection to individual products, and setting a different price for each product is reasonable accounting for the volume you expect to be sold of the product and the importance of the patented functionality to the product.
Frankly, it's a cell phone, so you could argue that the technology being licensed here is the core of the product.
While i agree with you on almost everything... Why didn't Apple accept to be bound by the courts (supposed to be fair and reasonable) rate?
Something smells here about this, and it's coming from Apple.
Apple and Microsoft both are trying to make FRAND patents become cheap, so they can just tax Android to hell with their utility patents.
First of all, I think it might be good if the FTC sue Motorola to explicitly nail down how FRAND patents can be used.
Secondly, I'm happy to see Motorola (Google) going after Apple and Microsoft with these patents. They are the two greatest perpetrators of unreasonable software patent abuse and they also both helped shape the system as it currently exists.
To be clear: If Motorola were going after other companies, I would have a problem with that type of behavior. Apple and Microsoft, however, deserve every kind of patent abuse they are getting (and then some).
> To be clear: If Motorola were going after other companies, I would have a problem with that type of behavior. Apple and Microsoft, however, deserve every kind of patent abuse they are getting (and then some).
This isn't patent abuse at all. The patents in question involve sophisticated, complex technologies (Wi-Fi and video compression). It's not the type of thing you accidentally stumble upon--these were technologies created by a consortium, including Motorola, at substantial cost. Licensing the underlying patents, and litigating if those patents are infringed, is how the members of the consortium recoup those costs. The situation presents the classical case of applicability for patents--you want the technology to be openly disseminated, so it can be used as a standard, but don't want people to be able to use it without paying.
As much as people kvetch about standards patents, they're an example of the patent system working well. You have an industry consortium (of specialists in a specific area) which develops complicated technology then standardizes it for everyone to use. Companies who want to be compatible with the standard then license the patents underlying the technology. The patents are just the legal glue that facilitate that transaction. Patent litigation is the mechanism by which the terms of that transaction are enforced--just like litigation is always the mechanism by which the terms of transactions are enforced.
I agree with this - A similar example of patents working in a reasonable manner is the pharmaceutical industry, where the time and money investment of developing a new drug is astronomical, and it can be reasonably argued that this justifies the 20-year monopoly that a patent entails.
The above cannot be said for design patents. Because there are essentially no barriers to entry in getting a design patent, yet they last the same 20 years as the development of a new drug, it's easy to see this getting stupid and destructive for the tech industry.
Just prior to their acquisition by Google, Motorola was planning on suing other Android manufacturers to collect patent royalties [1][2]. Some of the commentary I've read speculated that the Motorola purchase was done partly to avoid civil war among the Android licensees.
Interestingly enough, Sanjay Jha left the company right after the merger was finalized (with a healthy golden parachute to boot!).
Correct me if I'm wrong, but I think everyone who licensed with moto initially was given a 2.25% rate, but they cross-licensed patents to bring that down. Apple doesn't want to cross-license hence they're whining about how they think FRAND(non-discriminatory) terms aren't being followed, when in reality Apple's getting the same negotiation everyone else gets, but Apple doesn't want to play ball and cross-license patents like everyone else.
"It seems that the disagreement is over the percentage model that Motorola wants. Motorola wants 2.25% of the full retail price of the device. So, if you make a dumbphone for $35, you pay 79cents. If you make a 16GB iPhone 5, you pay $14.63. Somewhat ridiculously, if you make a 64GB iPhone 5, you'd pay $19.13."
There is a simple solution: Sell iPhones w/ little memory and sell the memory separately. Of course, then other people can also sell that memory, probably at a cheaper price. If you want to charge a premium on memory, then you should let Motorola charge a premium, too.
Aren't these FRAND patent fees handled through the actual baseband chipset manufacturer? From a logistics point of view, it seems like it would much simpler for Qualcomm to charge each of the licensees a fee for using the licensed tech present in their chip. Otherwise, it's all x FRAND committee members going out and looking for fees from all y manufacturers that use the patents in question.
Software patents that are not that easy to side step as mdasen present it to be. the software patent is a patent over an idea, and as ideas goes, 3 button on a phone can mean anything from 3 physical buttons, 2 buttons + touch area, 3 areas on a touch screen marked by a button icon, to 3 vocal commands as "conceptual button".
Maybe bounce-back function for over-scrolling is easier to bypass, maybe its not. Reading the actually patent gives no clues however, as it easy could cover the highlight on over-scroll implementation that android has.
Basically, when a standard is created the standard will likely use patented technology. Think about H.264. It isn't free. However, it is open (anyone is allowed to create hardware and software using the standard, so long as they pay the fee). Also, that fee is the same for everyone. These terms are FRAND (fair, reasonable, and non-discriminatory). It's essential for standards to ensure competition.
Then there are things that aren't standards. I'm not saying that you should agree with patents or anything like that, but they do exist and this distinction is made. If you hate patents (and I'm not saying you shouldn't), then they're all bad and we should get rid of them all. Disclaimer aside, let's say that you patented having 3 buttons on a phone (home, back, menu) ala some Android phones. There are many other ways to implement that functionality. Maybe that's the best combination of buttons and users love it. However, even in the Android world, we see phones with on-screen keys and no buttons, ones with 4 buttons, etc. You could even do something cool like a touch area with swipe left for back, touch for home, and swipe right for menu. Nothing there would kill your ability to create a device worthy of people spending money on. Taking a real-world example, let's look at Apple's bounce-back function for over-scrolling. Android 4 now does a highlight on over-scroll rather than the bounce-back. While a user might say, "the bounce-back looks better", it doesn't prevent a party from creating a device worthy of users' money.
Now, if you can't send signals using the technology that cell sites use, that does prevent one from making a device worthy of users' money. Those patents are standards essential. Now, when groups set standards, they will work around the patents of any company that doesn't want to license their patents under FRAND terms. However, companies want standards to use their technology because while they might not be able to extort money, they're guaranteed that everyone will use it. There's a big distinction between things you have to license and things you can implement differently with a little creativity and, as such, we treat them differently.
In the Apple/Motorola case here, Motorola (along with others like Nokia, Ericsson, Siemens, others) helped develop the wireless standards. They have to license their patents under FRAND terms. However, many of them want Apple to pay more per device than competitors. Part of this is that Apple has sucked up most of the profit in the industry and they want it back. Before Apple, Nokia was doing pretty well. Now? Motorola had been sliding for a bit, but Apple certainly helped that along by creating much better devices than pre-Android Motorolas.
Basically, there are patents that you're required to use and since you're required to use them (you can't build a phone without them), they have to be licensed under fair, reasonable, and non-discriminatory terms. The FTC looks like they will recommend that the government file suit against Google/Motorola over what the FTC sees as Motorola abusing these standards essential patents against Apple and Microsoft (http://www.bloomberg.com/news/2012-11-01/ftc-staff-said-to-f...).
So, this isn't a suit about Apple pushing UI patents against Motorola that got tossed here. This was Apple trying to get Motorola to license their technology under FRAND terms.
It seems that the disagreement is over the percentage model that Motorola wants. Motorola wants 2.25% of the full retail price of the device. So, if you make a dumbphone for $35, you pay 79cents. If you make a 16GB iPhone 5, you pay $14.63. Somewhat ridiculously, if you make a 64GB iPhone 5, you'd pay $19.13. Apple seems to be arguing that FRAND means that you can't discriminate like that. Motorola, still losing money, wants a large portion of those profits while still being able to profit off of cheaper devices. One can make the argument that the percentage model is non-discriminatory, but it doesn't fly well by me. Non-discriminatory isn't with respect to the price of the device or the money you're making off of it.