In response to Apple taking Ericsson to court over wireless patent licensing, the Swedish telecommunications company has filed a lawsuit in Texas that seeks the court to determine whether its licensing offer to Apple is fair. Ericsson told the court that it has been attempting to reach a new licensing agreement with Apple for over two years, but negotiations have failed to result in a deal. The patents in question are related to wireless LTE technologies that Apple uses in products like the iPhone and iPad.
Apple’s initial lawsuit against Ericsson in a Northern California district court calls for the LTE-related patents to be considered non-essential, allowing for the iPhone maker to continue using the wireless technologies in its products without further payment. If the court finds the patents to be essential, Apple requests that Ericsson only collect royalties based on the cost of the processors using the licensed technology, not the full price of the product being sold.
“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,” Apple spokeswoman Kristin Huguet told Reuters on Tuesday.
Ericsson, the world’s largest provider of mobile network equipment, makes a significant portion of its revenues through licensing its exhaustive patent portfolio to companies like Apple. The company holds over 35,000 patents related to 2G, 3G and 4G wireless technologies. Last year, Samsung struck a deal with Ericsson that saw it pay $650 million and agree to further royalties for years to follow ending a similar licensing dispute.
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If it’s non-essential, then Apple would have just taken it out. It’s obviously important for the product so Apple needs to pay up. Additionally, the component adds value to the phone itself, not just the processor so should have to pay based on what the product costs.
You didn’t read the story.
“The iPhone maker said it has not infringed on the patents and does not owe royalties for them.”
They’re arguing that the patents, which they don’t infringe, are not essential to implementing LTE. They’re asking the court to make a ruling to clarify that position. If the courts rule instead that the patents are essential to LTE *and* that Apple are violating them (that’s likely another case) then Apple says they’re willing to license at a fair price.
If the patents are ruled essential to LTE, that means they’re STANDARDS-ESSENTIAL, which also means they’ll fall under RAND/FRAND and Ericsson won’t be able to try and extort exorbitant royalties.
IMO, Ericsson is screwed here either way. Maybe they’ll get nothing or maybe they’ll get something – but that something will never be what they were originally looking for. Smart move on Apple’s part, they’ve got Ericsson cornered now.
If they used the patents and didn’t pay then they infringed. If they’re not using those patents then what’s the lawsuit about? They ARE using them but are arguing that they’re non-essential, which is dumb because if it were truly non-essential then they’d just take them out!
> If it’s non-essential, then Apple would have just taken it out. It’s obviously important for the product so Apple needs to pay up.
In case you might not know this, the component itself may have already been licensed by the company who made it (not Apple, the supplier who made the component and let Apple buy it). In this case, Apple does not have to pay for licensing because it has been paid. The laws are very vague about this but in many cases, component customers do not have to pay. Imagine you as a customer having to pay the licensing for each component in each device you have in your home after you already paid for the device completely.
If Apple is wrong about the licensed component not being Essential, then Ericsson must offer fair and reasonable royalties rate to Apple. It simply cannot demand high rates just because it can and it should be based on the component, not the device.
Think about a pencil, if you contracted a supplier to make you a batch of pencils and both of you agreed on a price. They have a license from the company for the eraser and paid for it. Now imagine a year later, the eraser company comes after you and said you own them money for each pencil you bought because it contained the eraser component that is infringing on their patent. You now have to pay a royalty based on what you paid for each pencil, not for the eraser component itself. Do you honestly agree with that?
Apple is probably saying that they’re not infringing on the patent because it was already been paid and whatever Ericsson is asking would be too much compared to how much the component cost.
> Additionally, the component adds value to the phone itself, not just the processor so should have to pay based on what the product costs.
First of all, beside the component that includes the patented technology, Ericsson has ZERO to do with the overall phone itself. Why should they get paid based on the total cost of the device instead of the component that includes the technology?
You do realize in many cases, the patent owner could get paid twice, one by the company making the component and one by the company who bought the component, is that fair?
Can you imagine thousands of companies involved in the overall phone that is licensing based on the total device? Nobody will get anywhere because it would be too expensive to even try. Apple would never be able to produce iPhone in the first place because the licensing would pretty much be larger than the material costs alone.
Secondly, who’s to decide how much value it adds?
I agree with you there. If the component maker is paying a royalty then that should be it. They shouldn’t double charge just because its Apple on the other end.
It might be important to note that Samsung got into a fight with Ericsson as well: http://www.fosspatents.com/2014/01/ericsson-receives-nine-figure-royalties.html
Try reading the article next time.