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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. |