[gareim]

Can you explain how Apple ignored FRAND obligations entirely?

Qualcomm already licensed the patents in its chips that they sold to Apple, but then Samsung wanted more because it was Apple. That itself is violating the "non-discriminatory" part of FRAND. How is this Apple's fault?

[justinschuh]

This kind of misinformation is the problem. Qualcomm never had a license for Samsung's FRAND patents. If they did, there wouldn't be an issue here. What Qualcomm had was a contractual agreement protecting their customers from Samsung pursuing FRAND patent fees, but that contract expired in early 2011. So, now Samsung is using their FRAND patents in defense against Apple's thermonuclear patent war.

[gareim]

Can you provide a source for that? If this is true, that changes quite a lot.

Also, how do you feel about Samsung asking for 2.4% of the chip price for a single patent when there are so, so many patents that go into making a device like the iPhone? Is that fair?

Edit: Forget about the source, I found some very easily (Google "samsung frand qualcomm"). But still, I think it's quite discriminatory to demand from Apple 2.4% for each patent, especially when these patents are seen as standards for cellphones.

[justinschuh]

Let's try that question the other way. Is it fair that Apple is trying to extort $27 per device out of Samsung (many times more than Samsung is asking for on its FRAND patents)? While we're at it, is it fair that non-iPhone users in the US subsidize Apple's huge profit margins? Because, Apple demands such a high subsidy (and competitive pricing on-contract) that the carriers make the difference up on other customers. So, is it fair that I'm forced to pay higher rates on my plan because Apple is intentionally leveraging their size to distort the market?

[josephlord]

Fair, I don't know if the patent is valid Samsung could just work around it. If Apple have a valid patent as I understand it they can license it for any price that they want OR completely refuse to license it provided they haven't made any agreements or commitments to the contrary.

That is the normal case with patents, exclusive rights. When you step into a standards body and offer your technology you give up those rights unless you specifically and clearly declare that you aren't doing so (in which case other options will be chosen by the standards body).

So there are other ways to look at it. Is it fair that Samsung pushed it's technology into a standard and then holds other implementers to ransom or asks them to give up their legal rights to enter the market?

As I say elsewhere I'm not picking sides on the validity of particular patents or what damages or even FRAND license fees should be but I do think it is important that FRAND commitments are given weight and enforced.

For me forced cross licenses and percentages of finished product price are both discriminatory and not FRAND. Even percentage of chip price I have my doubts about as it discourages integration of chips with its hardware and power advantages. This doesn't mean that it must be less than 1c or even $1 but some mechanism to be fair to all patent holders while not pricing the standard out of use needs to be found.

[justinschuh]

Your argument doesn't hold. Samsung has already shown that the rates they're asking of Apple are consistent with other licensees; Apple is just refusing to pay. I think this quote sums it up:

    Companies who like to get patent royalties from competitors,
    like Apple and Microsoft, and who use patents aggressively,
    have noticed that if everyone who was in the mobile phone
    business before they were sues them over their patents, they
    won't be able to make a phone anyone can afford, so they want
    to get the courts to force folks like Samsung and Motorola to
    accept less than a penny per handset for their standards
    patents, while still charging the regular price for their own
    later-issued patents.

And really, the purpose of FRAND patents is to encourage innovation and competition. Every class of product has basic functionality that's essential for viability, and patents on such functionality shouldn't be used to cage your competitors out of a market. So, if you really support the principle of FRAND patents, then logical consistency demands that you acknowledge Apple is violating that principle.

Apple's patents are on such basic and obvious product aspects that it's nearly impossible to bring a viable product to market without running afoul. Would Apple's patents be overturned on reexamination? Almost certainly, but only after a long and protracted legal battle. Meanwhile, all it takes for Apple to kneecap their competitors is one injunction delaying the launch of a flagship product, or caging them out of peak holiday shopping season (which Apple did to Samsung last year).

[josephlord]

If Samsung is asking everyone for the same absolute (not percentage) rate and isn't demanding cross licenses then Apple should have to pay that rate (assuming the patents are valid). I'm not sure that contradicts anything that I said.

I think Samsung can raise invalidity issues in the case before the judge/jury. If Apples patents are deemed invalid then they will get nothing.

The Apple patents that I'm aware of are fairly basic but can be worked around. E.g. by stopping scrolling dead at the end of the range and requiring something other than a swipe to unlock.

FRAND is a commitment made in standardisation to prevent the standards group from being an illegal cartel. That commitment should be kept. But a single company making a patented feature desirable would not trigger antitrust concerns in the general case so they wouldn't have needed to make an FRAND commitment. The potential exception would be for the Microsoft FAT patent because FAR is effectively a standard and while not created by a group of companies Microsoft was a monopolist. This is a rare case when I think FRAND may be appropriate rule for MS to adopt even if not legally require.

Yes the patent system is currently ridiculous and needs to grant far fewer but that is a complaint against the system which I would like to see reformed but you have to play by the rules in force. As I've said in a few posts I don't remember any tech giants (even Google and Samsung) campaigning against the patent system or even software patents. If the rules as they exist are enforced maybe that will change and the big players will want to change the system.

[spiralpolitik]

It is possible to build a viable smartphone without Slide to Unlock or making it look like an iPhone (Palm did it, Nokia did it, even Samsung did it with the Galaxy S3). It isn't possible to build a viable smartphone without the various UMTS patents. That's the key difference here.

Also the rates that Samsung is asking aren't consistent with other licensees as Samsung is tying the rate to the device rather than the baseband processor that uses the patent. Asking for $25 royalty on a $10 component is unreasonable, especially when said component requires a 100 other standards essential patents to function.

Does a patented oil pump cost more if fitted to a BMW verses a Ford Escort ?

[briandear]

Non-US iPhone users aren't subsidizing anything. While the carriers in the US do subsidize phones, carriers don't just absorb that cost, it gets passed along to the end user. These arguments are kind of similar to those presented by people wanting higher corporate taxes without realizing that those costs are ultimately paid by the consumer.

[justinschuh]

Uhm... you misread my comment entirely, and then diverged into politics. I don't know how to respond, because I'm not sure what argument you're making that relates to my point.

[gareim]

It is absolutely fair. Apple's patents aren't FRAND and so they can ask for whatever they want to ask for and Samsung has the option to either use it or not. It's not that simple when it comes to FRAND patents because the whole point of FRAND patents is to ensure that everyone uses it so that fragmentation doesn't occur in necessary standards. 2.4% for a single patent when there are potentially hundreds of patents is ridiculous. There's no way you can argue against that. How many patents go into making a phone? Samsung wants 2.4% for each one.

And yes, it's absolutely fair (about the subsidizing). That's how the market voted and that's how the carriers decided to do business. Majority rules here. If you don't like it, then vote with your wallet. Go to T-Mobile.

As a sidenote, I'm currently using a Samsung Galaxy S III on T-Mobile. But I still think what Samsung is doing with FRAND patents is wrong.

[spiralpolitik]

The agreement didn't just expire, Samsung terminated it with the express purpose of counter-suing Apple. Note that Samsung to date has not gone after any other Qualcomm customers for increased patent license fees they can hardly claim they are being non-discriminatory.

Not sticking to the FRAND terms it agreed to is a pretty bad move on Samsung's part. I believe the EU not happy about this development and is already looking into this so the move could blow up in Samsung's face.

[makomk]

Also, as I recall Apple moved to Qualcomm chips from another chipset provider after they got sued by I think Motorola because neither they nor the chipset provider had come to any kind of licensing or contractual deal over the FRAND patents.