[przemelek]

Nope. It works slightly different, first companies like Motorola, Nokia, Samsung and others invested billions of dollars in creating telecommunication standards. Next those companies are forced to license patents for those technologies to Apple. Apple creates phone which base in 95% on technology created by those companies, they are adding several features like "slide to unlock" or "pinch to zoom" and patent it. Samsung, Motorola and others looks on Apple product and says "OK, so it means that customers want other UI, we can give them it too", they are participants in OHA which created very similar to iPhone project of OS for mobile phones (in the same time). So they start to produce and sell such phones. Now Apple goes to court and pretends that theirs big "innovation" is so unique that it should let them to block anything similar to theirs "inventions" (in the same time Apple took notifications system from Android)... what is the most funny part, Motorola and Samsung must license to Apple patents needed to build cell phone, but Apple may do not license theirs patents. This cause that patents for cell phones which costed billions of dollars are cheap for Apple (but its competitors needed to pay billions for those), but patents from Apple which costed only money needed for filling patent applications are impossible to obtain by its competitors.

[brightrhino]

Remember we are talking about only the 3G chip in the iPhone. Just that tiny chip, not the GPS chip, or any other part of the iPhone, and not the whole chip, just one part of Motorola's patents used to make the 3G standard. So a tiny, tiny fraction of the functionality of an iPhone.

The patents Motorola is using are called standards-essential, because many companies got together to create a standard, for example, 3G telephony, they pool their patents together and promise to license them to any manufacturer who wants to create a device that uses that standard, in this example, any cell phone that uses 3G, be that Apple, LG, HTC, RIM, anyone.

Since they have now created what is essentially a monopoly on that technology, they could force any or all of these companies to pay them exorbitant license fees because anyone who makes a 3G phone must use these technologies, and therefore these patents. That does not mean the patents are themselves valuable.

For instance, Motorola may contribute an encryption patent. There are many hundreds of other methods of encryption, so that patent is worth very little by itself, once it is selected for the standard, it is the only method that can be used to interoperate. If an manufacturer wants to use an encryption method they invented, they cannot, because their phones won't work with the cell towers.

Here is where we find the current litigation, Motorola says their patents are worth 2.25% of the entire value of an iPhone. There may be hundreds of patents in the 3G standard, if they are all worth 2.25% and there are 300, then the 3G patents alone represent 300*2.25% of the value of an iPhone, or 675%. So everything else, all the other ideas, innovations, etc are worth nothing.

This makes no sense, and the courts have said that these patents must be licensed on a Fair, Reasonable and Non-Discriminatory basis (FRAND). That means they must license the patents for what they were worth the moment BEFORE they were added to the standard. in the Motorola-Apple case that might be .05% of the value of the iPhone. Motorola and Google are using standards-essential patents as a weapon against Apple to force Apple to either pay exorbitant rates for the patent, or, more likely, force Apple to allow android to violate apple's non-standards-essential patents.

Thus Motorola is using a restricted, standards-essential patent in a manner which is explicitly forbidden by law. Judge Posner is extremely unhappy with Motorola and Google about this behavior. See the FOSS Patents Blog for more detail.

It is entirely unlike apple's use of patents, it has never used a FRAND encumbered patent to sue a competitor.

[saket123]

By the same standards , Apple is saying that all the value of Galaxy Nexus is worth four patent many of whom are contestable and attributable to broken patent system. As far as I can see apple is saying contextual search done from many resources is worth $349 per galaxy nexus..but 3g that makes such a search possible is not worth $12 assuming retail cost of iPhone as $500. The FRAND is such a easy excuse to hide behind, when you use real technology to make stuff work and are unwilling to pay for it. Compare it with slide to unlock or searching multiple databases on a phone. I am pretty sure none of the technology that Apple 'invented' are being used here. Google came out with their own ways of making this system work.Apple are welcome to come up with their own 3G standards if they don't want to pay for it.

[calinet6]

So, the takeaway is, "Damn, Apple is good at this capitalism game."

[przemelek]

Nope ;-) Problem with Apple is that if all players will play using Apple strategy we will not have any innovation at all. Motorola, Nokia, Samsung invested billions in mobile technology without knowing if this will even work, they risked and created cell phones and so on. They had big invest, big risk and at the end big win. Apple didn't take any risk, they simply polished existing products and started to sell it with much higher price tag. This isn't wrong, wrong is this that Apple tries to block another players using courts. Apple didn't make big invest, didn't take big risk, but takes biggest win by using patent system to force all competitors to give to Apple theirs patents (and when Motorola says, OK we want 2.5% of iPhone price as fee for our patents Apple screams that Motorola wants way too much... yeah, it's only essential technology for mobile phone, so who cares?), without letting them to use Apple's patents. If players like Motorola or Nokia would use Apple strategy we would simple still using line phones. Because nobody would invent cell phones, the best strategy would be to patent idea of cell phone and to wait till somebody will build it and to sue him. Patent system was intended to promote innovation, but here it isn't doing it, it is used to block innovation. Google didn't patent notifications, so thanks to this users of iOS5 may use much better notifications. Thanks to this that Google didn't patent it, users of Apple so competitor product may use it. But Apple patents all small things blocking other players. Apple behaves like parasite on innovation tree, and patent system should protect whole tree because this guarantee progress and innovation.

[Terretta]

> Apple didn't take any risk, they simply polished existing products and started to sell it with much higher price tag.

This comment invalidates everything else you wrote.

Apple's investment in R&D for mobile handheld usability and devices predates even the existence of some of these litigants, and predates the "smartphones" by them.

[Gigablah]

> This comment invalidates everything else you wrote.

It doesn't, and it shouldn't.

[calinet6]

Completely agree, the system should be fixed, and the act itself is wrong. But here I'm separating morally wrong from winning the objective game.

You might be mad if your team doesn't win the game, but you can't say the winner wasn't the better player. But I understand your frustration when the field has no rules and the referees are corrupt. Unfortunately, those factors are part of this game.