Apple in court again, squaring off against Ericsson over LTE patent royalties

Apple in court again, squaring off against Ericsson over LTE patent royalties
Apple has mobilized its legal team in order to sue Ericsson over some LTE patents that Apple claims are not standard essential. According to the iPhone manufacturer, Ericsson's royalty demands are way out of line and are excessive. Apple denies infringing on any of the patents in question, and says that the Swedish company is basing its royalty demand as if this LTE patent was a SEP.

Ericsson is demanding a percentage of the price of each smartphone or tablet that infringes on its wireless LTE technology. Instead, Apple says that any royalty should be based on the value of the processor that includes the patented technology. This method of calculating the royalty owed to Ericsson would result in lower payments due to the company. If the court rules that the patents are standard essential, and that Apple did infringe on them, the latter would like the court to come up with a reasonable royalty rate.

According to Apple's suit, which was filed in a federal court in Northern California, Apple and Ericsson shook hands on a royalty agreement in 2008 after the launch of the OG Apple iPhone. That agreement covers many of Ericsson's standard-essential patents, although the wireless LTE technology that is the focus of this suit apparently is not covered by the earlier licensing pact.

source: Reuters

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29 Comments

1. Settings

Posts: 2943; Member since: Jul 02, 2014

Either way, the consumers will be the ones who will pay it, not Apple itself.

18. engineer-1701d unregistered

true but this is a big shut the hell up apple fans, But we know in america apple always wins no matter what, if apple sued the pope and church saying adam and eve and the apple sinn, apple would say the church is slandering apple the company hahahaha and win

2. sipha

Posts: 440; Member since: May 12, 2012

What apple is saying realy makes sense, don't why I never thought of it like that: "royalty should be based on the value of the processor that includes the patented technology." & I wonder why they didn't bring all that up, when they were the ones suing samsung for the bouncing of the screen. ..

9. TBomb

Posts: 1484; Member since: Dec 28, 2012

Well... you could argue that the reason the product was so successful is because of the processor... which would mean that even though the processor is only worth ___, but the rest of the product works better because of it so in thoery the added value of that processor is ________. idk though I'm not a good debator.

13. bambamboogy02

Posts: 838; Member since: Jun 23, 2012

It's like suing a over a car engine patent, and stating, well it's only as valuable as the gasoline you are running in it. I used 87, not 93 octane, so Your payout should be less. They didn't even deny that they didn't infringe, Apple knows it will lose, but wants to pay less.

24. downphoenix

Posts: 3165; Member since: Jun 19, 2010

no, because Ericcson's reasoning is that for a car engine patent, royalties should be paid on the value of the whole car, so they shoudl be getting paid for the brakes, interior, chassis, exhaust, hood, windshield, etc. instead of just the engine.

19. engineer-1701d unregistered

its simple how many people would still own a iphone if they did not have 4g lte or 3g thanks to samsung and the others they would be nothing, apple being lte is one of the only reason the company still sells the phone if not lte 1/2 if not less wouldn't buy it.

3. dimas

Posts: 3363; Member since: Jul 22, 2014

Nice try Apple. Trying to squeeze more profit out of your new iphones by escaping responsibilities. Respect Ericsson by paying them the royalty they deserve.

11. fzacek

Posts: 2486; Member since: Jan 26, 2014

+1 Good post...

15. elitewolverine

Posts: 5192; Member since: Oct 28, 2013

Samsung is currently doing this too...

4. Cicero

Posts: 1129; Member since: Jan 22, 2014

Boomerang efect.

6. willard12 unregistered

"We deny infringing on any of the patents in question. But if we were, we think the royalty should be based on the value of the processor." Classic.

7. thunderc8

Posts: 98; Member since: Dec 15, 2014

Stop crying like bitches, do some research and invent something instead of taking others inventions and rename them to inovation to fool the buyers with marketing tricks. This way you wont have to pay any fees for others inventions, oh i forgot you invented the rectangular phone... And i bet even if they win and they wont have to pay ericsson, their products wont go down even a cent... all this is hapening for their lust for money.

8. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

"If the court rules that the patents are standard essential, and that Apple did infringe on them, the latter would like the court to come up with a reasonable royalty rate." So basically, Apple wants essential patents for free, but wants to be able to charge an exorbitant amount for their non essential patents. As I've said in the past, Apple could puts the rates on their patents so high that they essentially get others patents for nothing, because apparently Apple doesn't have any patents that fall under SEP or FRAND. Way to rape the system Apple.

21. engineer-1701d unregistered

the problem is samsung did this and the courts said 3g is frand and so the common court person will say well yeah its 2015 all tech should have lte its a frand patent and apple wins all because the courts are payed off by apple. just like the president was.

22. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

You're probably right. Before I used to say they should have a tiered patent system with certain software patents being worth amount x, some worth amount y, some worth amount z, etc. Now I say to hell with it, make all software patents worth the same amount no matter what they are. Do you realize how much more time these courtrooms would have open by doing that? Which is why it'll probably never happen.

25. tedkord

Posts: 17356; Member since: Jun 17, 2009

That's not actually true. The courts didn't declare anything FRAND. Samsung filed to make the patients FRAND. That way they become an industry standard, everyone users them. Guaranteed licensing, but you have to give everyone similar licensing terms that are reasonable. Apple simply doesn't want to pay what everyone else is paying. They think they should get special rates. They were found to be engaging in a reverse holdup of Samsung.

27. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

The problem with the current system though, is that if someone gets a FRAND license, they are at a disadvantage. Sure, they have guaranteed licensing as long as they charge the same rate for everyone. But say a different company has patents not under FRAND that the original company wants to use. They are bound by the FRAND licensing agreement, but the other isn't. So the original company must offer their patent(s) at the same rate as everyone else. But the second company isn't bound by those stipulations, so they could put the rates so high that they could essentially get the original company's patent(s) for free. So while they are guaranteed licensing by making their patent(s) a standard, they have no protection when they enter into an agreement for non FRAND patents. It's similar to the situation between Apple and Samsung when they were trying to negotiate a settlement during one of their court proceedings. Apple refused to pay Samsung 2.25% per device for their FRAND patents (which comes out to around $12 per device) claiming it was too high, but they wanted $30 for phones and $40 for tablets for their patents. How in the hell is that fair to someone who innovates something that experts recognize as something that should be an industry standard, and then they get beat to death when trying to deal with something that in many cases is a design patent, like the rubber banding effect. Check these out to see what I mean: http://fortune.com/2012/05/21/why-samsung-must-negotiate-why-apple-wont-settle/ http://www.wsj.com/articles/SB10001424127887324263404578615822955627726 The article from Fortune contains a quote from Tim Cook that to me is very telling. “I’ve always hated litigation and I continue to hate it,” Cook told analysts in April. “We just want people to invent their own stuff. So if we could get to some arrangement where we could be assured that’s the case and a fair settlement on the stuff that’s occurred, I would highly prefer to settle than to battle. But it — the key thing is that it’s very important that Apple not become the developer for the world. We need people to invent their own stuff.” So he wants others to invent their own stuff, but what about Apple using Samsung's patents? I'm sure Samsung could also say the same thing about Apple. The only way I can see a way out of this other than making a single, universal rate for software patents, is to set a special agreement when their are patent negotiations between a FRAND and a non-FRAND company. In such a case, whatever rate the FRAND patents are figured at, the non-FRAND patents would have to be licensed at the same rate. This eliminates the scenario in my first paragraph. It puts both sides on equal ground, neither has any more or less power than the other. It would also eliminate probably 50-75% of the litigation we're currently seeing now. When a company has FRAND patents, it shouldn't put them in a powerless position when negotiating with other companies.

12. fzacek

Posts: 2486; Member since: Jan 26, 2014

Oh just shut the f**k up and stop your stupid whining, Apple...

23. downphoenix

Posts: 3165; Member since: Jun 19, 2010

Apple has a point, why should Ericson get royalty money from parts of the phone that have nothing to do with the LTE technology (like the screen, ram, casing, etc.)? And even if Ericson is found in the right, the cost of phone should be based on the cost to assemble it rather than the cost it is sold at.

26. tedkord

Posts: 17356; Member since: Jun 17, 2009

Maybe because that's how everyone else is paying. FRAND means you have to give everyone the same deal, which I assume Ericson is doing. Also, because without those patented parts, you'd have a phone that didn't do much.

28. AlikMalix unregistered

I may be in the Apple camp, but I think that anyone should sell anything they own for any price they wish. And if the buyer doesn't think it's worth it - dont buy/licence it. Bottom line I think that Apple should not win this one... If I have an invention that gets rid of your headaches without pills and I want to charge $1000 for it for every use - I probably wont be seeing any customers, so I will lower my price or never see a customer, but I dont think anyone should be able to FORCE me to lower my price thru courts or otherwise - it's my invention and if I want to charge too much it's my choice... you dont like it shop somewhere else or invent your own, build a different/better solution - I dont care. Copying my invention is something else, and in this case I will take you to court.... By same logic above, if Ericsson wants to keep Apple's business they can lower their fees, but it shouldnt be up to Apple (and their lawyers or the courts) but up to Ericsson...

29. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

That'd be fine, but Ericsson is bound by FRAND terms for these patents. They cannot lower the price if that's what they're licensing it to others for, otherwise it would be unfair to people who have previously licensed these patents at that higher rate. I do agree that either they shouldn't put any restrictions on patents, or they should come up with a standard rate for any and all software patents. Otherwise, it puts one party in a higher place of power during negotiations.

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