updated 02:30 am EST, Wed February 8, 2012
Dogged by legal battles, appeals for standards
Apple approached the European Telecommunications Standards Institute (ETSI) in November seeking clarification on what it says is a lack of "consistent policy" on how manufacturers can license and set royalty rates on patents used by mobile devices. The tech giant, which has been sued and is suing several companies worldwide over patent issues, called for ETSI to develop clear, transparent rules and policy particularly with regards to so-called FRAND licensing, which in several cases is the core of Apple's argument, reports The Wall Street Journal.
Apple has been battling Samsung and Motorola specifically over their efforts to monopolize the standards process by using FRAND (Fair, Reasonable And Non-Discriminatory) patents in lawsuits, often against Apple. The company is asking ETSI to develop a mandatory standardized procedure for setting appropriate royalty rates in the open rather than have industry patent rates negotiated arbitrarily in secret, as is done now.
The current methods often mean that so-called FRAND patents must be determined by a court if they are actually qualified as FRAND-compatible or not if the parties cannot arrive at an agreement, tying up matters for months and years and risking billions of dollars. The company also put in a request that patents deemed "standards essential" to the telecom industry not be used to seek injunctions on sales -- a tool that has been used against Apple -- since doing so gives the patent holder leverage over a potential licensee, driving up the royalty rate and generally hurting the industry.
A ruling in favor of this request would, at least in the short term, benefit Apple by knocking the wind out of the sales of a number of Samsung and Motorola requests. Apple has prevailed in similar cases against HTC and Samsung, but was forced to temporarily remove 3G-using devices like the iPhone and iPad from its German website after a local court enforced an injunction won by Motorola that barred Apple importing devices that allegedly infringed on a FRAND patent (the injunction was overturned hours later).
ETSI might be inclined to go along with Apple's arguments, as the European Commission is said to be looking into the possibility that Motorola and Samsung are abusing FRAND terms to go after Apple, the industry leader, as well as other companies. Apple lays the blame on the endless, world-wide patent-infringement cases squarely on the lack of clear definitions of FRAND licensing and the lack of consistency in setting royalties.
Motorola, for example, has been said by Apple's attorneys in a patent case in California to be demanding a 2.25 percent royalty for a license of one of its patents that would normally be considered industry-essential. Based on iPhone sales, the 3G patent in question would earn Motorola a billion dollars a year or more under those royalty terms. "It is apparent," wrote Apple's head of intellectual property Bruce Watrous, "that our industry suffers from a lack of consistent adherence to FRAND principles in the cellular standards arena."
Google, which is seeking to acquire Motorola, is expected to soon send letters out to ETSI and other regulatory bodies, seeking to assure them that it will fairly license Motorola's industry-essential patents, but the company was not clear that they disagree with Motorola's current stance and thus may not make any changes in using FRAND-eligible patents as a weapon against competitors like Apple and Microsoft. The EC is expected to issue a decision on Google's takeover bid on Monday. [via The Wall Street Journal]