Motorola demanded 2.25% of Apple sales for 3G patent use

Feb 4, 2012
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Motorola demanded 2.25-percent of Apple's sales in royalty fees, in return for licensing the FRAND 3G/UMTS patent at the heart of a 2011 German infringement suit, court documentation has revealed. The offer, which Motorola was obliged to make "fair, reasonable and non-discriminatory", could amount to almost $15 on the unsubsidized price of each entry-level iPhone 4S, FOSS Patents' digging has shown, though full terms of the 2.25-percent deal are unclear.

It's assumed it refers to Apple's sales and covers all Motorola Mobility patented technologies the Cupertino company uses. Even so, the figure appears excessive.

Apple has argued that it is covered by a cross-licensing agreement between Motorola and Qualcomm around 3G standards, since it uses Qualcomm radio chipsets in its more recent products. However, Motorola has made several attempts to block Apple's request to bring that licensing agreement in front of the German courts, only eventually succeeding to have it discussed in a closed hearing.

One tidbit that was revealed in a late January 2012 Apple brief opposing a Motorola attempt to keep the agreement out of the courtroom is the FRAND licensing offer Motorola made. The figure is mentioned in a letter sent by the Bardehle Pagenberg firm representing Apple, to Dr. Marcus Grosch of Quinn Emanuel, Motorola's German lead counsel.

Apple has argued that Motorola's demands for licensing fees are excessive, and that the company has not adhered to FRAND rules that insist upon a reasonable rate.

To try to prove that, Apple is seeking information on how much other smartphone companies pay Motorola for the same patents, filing discovery motions in late January for details from Nokia, HTC, LG Electronics and Ericsson (though the latter was subsequently voluntarily dismissed). Motorola's defense, it's suggested, is likely to be that its deals with other manufacturers also include licensing agreements that work in the opposite direction, and that the royalty figures could be lower because of that.

Nonetheless, if Apple can prove Motorola has been unfair in its request then it could not only escape the injunction issued by the German courts last December, but land Motorola in hot water with the European Commission. The EC is already investigating Samsung over potential antitrust behavior in licensing FRAND patents, in part because of the Korean company's suit against Apple.


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