Apple’s iPhone biz
Motorola is seeking a license fee equal to 2.25% of iPhone sales in exchange for granting Apple the right to use patents Motorola claims Apple infringes.
The license claim came to light in the context of litigation in Germany, where Motorola very briefly succeeded in having online sales of the iPhone 3G, 3GS, 4, and iPad with 3G banned by the court. Within the day, Apple was able to have the ban temporarily suspended, probably by posting a bond estimated to be 120 million Euros ($158 million).
Apple stated that it appealed the ban because
Motorola repeatedly refuses to license this patent to Apple on reasonable terms, despite having declared it an industry standard patent seven years ago.
At issue is whether 2.25% is “reasonable.”
Standard-setting organizations often require that members that participate in the standard-setting process license their proprietary technologies to others on terms that are “far, reasonable, and non-discriminatory.” Such terms are known as “FRAND” terms.
In late January, Apple filed discovery motions in several US federal courts, seeking to have Nokia, HTC, LG Electronics, and Ericsson produce all
documents that grant or granted, or purport or purported to grant, to [other handset maker] any rights, protections, or licenses in or to any Motorola IPR [Intellectual Property Rights]…
Showing that other companies were offered more favorable licensing terms by Motorola would allow Apple to argue to the German court that the 2.25% rate was not FRAND.
Proving that the licensing fees requested were un-FRAND might not only allow Apple to permanently avoid the sales ban, but could also get Motorola in trouble under European antitrust laws. Samsung is already being investigated for potential European antitrust violations because of FRAND issues arising in its own suit against Apple.
A royalty of 2.25% would net Motorola from $15 to $19 per iPhone sold, depending on which models are involved.