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Posted by cabbie on stockhouse (WI-LAN)
cabbieJBJ2
2/22/2012 1:35:46 PM | | 133 reads | Post #30705046

A good explanation of Apple's position on FRAND for 3G

http://arstechnica.com/apple/news/2012/02/apple-takes-frand-issue-to-etsi-asks-for-common-frand-royalty-standards.ars

Apple hoping to secure standardized royalties for 3G wireless patentsBy Chris Foresman | Published 13 days agoLast updated 13 days ago

Apple is attempting to stop the use of "standards essential" patents on 3G technology as legal bludgeons against smartphone competitors. To make its case, the company has gone directly to the standards body behind 3G wireless networking, the European Telecommunications Standards Institute (ETSI). In a letter to ETSI dated last November (but only recently uncovered by the Wall Street Journal) Apple suggested that patents offered as part of wireless networking standards should be governed by standardized royalty rates and barred from being used as the basis for legal injunctions.

As the war over smartphone supremacy has spilled over into the courtroom, some players—including Samsung and Motorola—have taken to leveraging patents essential to 3G wireless networking standards in lawsuits largely aimed at Apple. Those patents were offered up to the ETSI to help create 3G standards on the condition that they be licensed on fair, reasonable, and non-discriminatory (FRAND) terms.

In the letter to the ETSI, however, Apple's chief IP counsel Bruce Watrous asserted, "it is apparent that our industry suffers from a lack of consistence adherence to FRAND principles in the cellular standards arena."

In particular, Samsung has asked for a 2.4 percent royalty on the full retail price of every iPhone or iPad sold to cover its 3G-related patents, while Motorola has asked for 2.25 percent. Apple has apparently rejected these offers as unfair and unreasonable, leading both Samsung and Motorola to sue Apple for infringement.

So far, courts in the European Union haven't taken too kindly to using FRAND-encumbered patents to block competitors with injunctions. Samsung lost injunction requests based on 3G patents in France, Germany, Italy, and the Netherlands. Motorola won an injunction in Germany, but was later overturned on appeal.

The European Commission also objects to using FRAND-encumbered patents against competitors. It began a formal investigation in late January "to assess whether Samsung Electronics has abusively, and in contravention of a commitment it gave to the European Telecommunications Standards Institute, used certain of its standard essential patent rights to distort competition in European mobile device markets, in breach of EU antitrust rules."

Apple sent a letter to the ETSI in November 2011, before the courts ruled on the injunctions and the European Commission began its investigation. The letter requested that the standards body develop common rules for setting royalties. In particular, royalty rates should be based on the percentage of standards-essential patents a company owns out of the overall pool of patents.

Furthermore, Apple argued that royalty payments should not be based on the variable price of products that leverage 3G networking, but rather on a common value determined by the industry standard pricing for basic 3G communications hardware. What Apple is arguing here is that the royalties should not apply to an entire iPhone or iPad, but rather to the basic hardware for 3G wireless radios.

Finally, Apple believes that standards-essential patent owners should be barred from using such patents to seek injunctions. "Seeking an injunction would be a violation of the party's commitment to FRAND licensing," Watrous wrote.

In the letter, Apple noted that it holds 140 patents and applications of its own that could be essential to 3G standards. While some were filed by Apple itself, others were acquired from third parties, likely including a pool acquired from Nortel in 2011.

Watrous noted the disclosure "reflects [Apple's] good faith commitment" to FRAND principles. "We encourage ETSI and its members to abide by the forgoing FRAND licensing framework," he wrote.
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