Apple vs Motorola - ITU aims for clarification after 'heated debate'

Apple vs Motorola - ITU aims for clarification after 'heated debate'

Summary: Apple, Motorola and others gathered in Geneva on Wednesday to thrash out some of their differences over standards-essential patents under the auspices of the ITU. The organisers claim some progress was made, but this was only the beginning of a longer process.


Mobile phone firms including Apple and Motorola met with regulators and others on Wednesday in an attempt to resolve the issues around standards-essential patent licensing, but failed to come to any fresh conclusions for now.

Many patents are essential to certain standards, such as 3G, and they tend to come with so-called fair, reasonable and non-discriminatory (FRAND) terms attached — effectively meaning that anyone can license them at a reasonable price. In the mobile patent wars over the last couple of years, FRAND-encumbered patents have sometimes been used as legal weapons, notably by Motorola.

In a meeting held on Wednesday under the auspices of the International Telecommunications Union (ITU), a UN agency, companies, regulators and academics took part in a patent roundtable in Geneva. No resolution came out of the meeting, but the convenors remained upbeat about future developments.

"Today's event has gone a long way to help clarify the positions of various stakeholders in determining the effectiveness of FRAND commitments and the impact of litigations surround standards-essential patents," ITU Telecommunication Standardization Bureau chief Malcolm Johnson said after what he referred to as a "heated debate".

The issues

There are two key issues that remain unresolved: what 'reasonable' means; and whether it should be permissible for a company to use a FRAND-protected patent as a weapon for getting a ban on a rival's product.

"Today's event has gone a long way to help clarify the positions of various stakeholders in determining the effectiveness of FRAND commitments" — Malcolm Johnson, ITU

Google's Motorola subsidiary has tried to use standards-essential patents against Microsoft and Apple in injunction bids, and has argued that a reasonable rate for licensing those patents would be 2.25 percent of the sales price of the full product. Microsoft, Apple and Cisco have banded together in disagreement.

"The average selling price [ASP] approach wrongly permits the patent holder to collect value unassociated with its contribution to the standard," Apple chief intellectual property counsel BJ Watrous argued in a morning session. "Using the ASP of the end user product as the royalty base [is] discriminating against companies like Apple who sell high-value products."

During the same session — the morning talks were open, while those during the afternoon were held under the Chatham House Rule — Motorola senior licensing counsel Ray Warren said Apple was misunderstanding the way FRAND works in the telecoms industry, as it is relatively new to that game.

"For 20 years the [FRAND] licensing commitments made by innovators in the communications industry have been sufficient," Warren said. "Past experience would indicate that [FRAND] has been effective… but that doesn't mean there isn't room for improvement to improve the present situation."

Keep trying

The industry-wide talks will now continue, starting with another, more low-level, meeting on Thursday.

"Any attempt at providing market players with clear, transparent, effective and up-to-date patent policies and guidelines… would work to the benefit of the industry as a whole," Johnson said.

"The ITU will not interfere with bilateral negotiations. However, taking into account the concerns voiced by some participants today regarding the effectiveness of current FRAND commitments and impact on standards-essential patents… I believe clarification in this regard could be a significant contribution from the ITU in addressing the current difficulties."

The various participants' contributions to the debate can be read here.

Topics: Patents, Apple, Google, Legal, Mobility, Telcos

David Meyer

About David Meyer

David Meyer is a freelance technology journalist. He fell into journalism when he realised his musical career wouldn't pay the bills. David's main focus is on communications, as well as internet technologies, regulation and mobile devices.

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  • Motorola is in the wrong and needs to get over it.

    If someone builds a car that has non otional built in 3G and sells it for 30K they should pay Moto 2.25% of 30K? Get real asswipes. The itu should come down and say what fair and reasonable is and let moto start collecting it after they've payed the court costs of everyone else. And from now on no one frand in standards, either the patented tech go in unencumbered, with a known fixed and decreasing over time cost, or it's out.
    Johnny Vegas
    • the only ones with a problem

      are those with over prices glam Apple. If you can't use the patent, you can't sell so your product is worthless.

      Sure, all those who didn't innovate and help develop new technologies are mad...they have no FRAND patents, so they want them given away.

      Come up with something truly new and innovative, not "trade dress" and you can command royalties too. Oh, wait they already do...for things like round corners.

      Ahhhh, the real asswipes.
      • Speaking of asswipes

        I'm curious as to why you seem so determined to take an anti Apple stance despite Motorola using FRAND patents in such a blatantly wrong manner. Then again such a stance is exactly what I'd expect for someone who cannot comprehend that the so-called rounded corners patent is not just solely rounded corners but a list of about 7 different things that together constitute the one patent...
        • And who are you?

          To determine that Motorola is using the patent wrong? What does that even mean- do they hold it the wrong way?
          • So you think that

            FRAND patents CAN be used the way Motorola has used them? Motorola is using those patents in a Fair, Reasonable, And Non Dscriminatory manner i.e.

            "Google's Motorola subsidiary has tried to use standards-essential patents against Microsoft and Apple in injunction bids, and has argued that a reasonable rate for licensing those patents would be 2.25 percent of the sales price of the full product. Microsoft, Apple and Cisco have banded together in disagreement."

            But let me guess it's perfectly fine for Motorola or any other Android OEM to use FRAND patents in that manner but if Apple or Microsoft used them in that way you'd scream bloody murder. Cue the double standards kirovs.
      • This is what I saw when I scrolled and did not read.. Was this intended??

        Ahhhh, the real asswipes.

  • "Apple misunderstood"?

    If so, then both USA's and European antitrust agencies, too -- they investigate both Motorola and Samsung for potential FRAND patents abuse.

    Apple itself hold hundreds of FRAND-bind patents, but it does not use any of them in courts. Competitors have no other choice since they have nothing else to fight back Apple's non-FRAND patents that are brought to courts around the world.
  • Let it be

    Let them battle it out in court. When at war you use everything you have. Why fight over something and give it your all.

    Why does Apple keep saying they have high-end products. It is like saying that the REST of the world cannot make equal or superior products. If history repeats itself they are just going to struggle just like when GOOD OLD BLUE ‘IBM’ stepped into the PC market. I WISH IBM would step into the cell, tablet or dumb tablet market and see if Apple would keep calling their products high-end.

  • Fair, Reasonable and Non-Discriminatory

    Look at it this way: Two different companies make the same kind of product. They both buy a radio unit from a third-party manufacturer that is identical in all ways important. They both pay a set price for that radio and that price is identical with both. However, one of those companies sells the end product for $200 while the other sells their end product for $400.

    Please explain to me why, if they're both using the same radio component, why the one with the higher priced end product should pay more for that radio than the other one? That is neither fair, reasonable nor non-discriminatory.
    • Did they ever

      Came with a counteroffer? No? Ooops.
      Also there is no rule that the price is fixed. It should be fair and reasonable, but not fixed. No such requirement.
      • Are you sure about that?

        I've read of many, many attempts by Apple to work out a reasonable deal, but when somebody like Motorola says "We want 2.5% of your retail sales", well, I'm sorry, no deal. Everybody was doing fine before Apple's iPhone took off. The price of a G3 (and now LTE) radio was a fixed price pretty much across the board. Now that Apple is making huge profits while everybody else is just squeaking by, they want in on the party without doing anything to earn it.
  • Apple has redefined value of patents

    If Apple can get $1.2B from Samsung for rounded corners, a rectangle, 3 X 4 lay-out of icons, and a few other things then the value of essential patents has just gone up in the world. Fair and reasonable used to mean one thing. Apple has moved the yardsticks. Here is an imperfect analogy. Your neighbour just rented his house for 10 times what you were thinking of renting your nicer house for. This will change the rental price of your house.
    • Get off the rounded corners thing!

      That is not what the jury said Samsung infringed--not completely, anyway. There were several other patents that were quite obvious infringements that had to do with how iOS treated certain displays that had nothing to do with the shape of the phone or icons.
  • FRAND at 2.4% is any thing but reasonable.

    This is an old conversation with all sides already bringing prejudgement to the table. In other words a troll fest. Not sure why I have to say this but, here goes... The 2.4% rate is unreasonable because if that standard was applied to just 5% of standards essential patents then the cost of the phone would go up 72 times. I am assuming there are 6000 patents of this type in any phone. That is the definition of unreasonable.

    You can hate Apple all you want, but they are in the right here. Microsoft is not in love with Apple right now and they hold plenty of patents of all types, just like Apple and they agree with Apple.

    If Motorola was being even a little bit more intelligent and less disingenuous, they would ask for twice the going rate for these patents and move on. Apple would not have as nearly as good of a case, but there you have it, they want all of Apple's IP for their devices because Apple has more non FRAND patents that are essential to build a modern smart phone. Just because you innovated for 20 years, and got caught flatfooted by a new phone doesn't give you the right to demand IP from anyone. There is a reason that Motorola was bought out by Google. The Motorola executives knew that this was not going to work in court. They wanted the money and left Google to fight for it's own IP destroying business plan. There is not such thing as Free software, any more than there is a tooth fairy. Someone has to do the work to make software functional and they want to be paid for that work. You can accept free malware riddled software, adware, or you can pay for what you get upfront. For me when the price is $1 rather than $50 it is not hard to make that decision.
  • If I Own A Patent, Is It My Property Or Not?

    And can I not do with my own property as I see fit, or not?