updated 11:00 pm EDT, Fri July 26, 2013
Royalty rate demand unsupported by previous deals, discriminatory
Apple has filed a rebuttal arguing against a Motorola Mobility appeal in a case where Apple pursued -- and again won -- a summary judgement victory against the Google-owned subsidiary's "unreasonable" 2.25 percent royalty on Standards-Essential Patents (SEPs). The filing claims that Google's pricing on the SEP license is 12 times higher that the deals it made with non-rivals for the same technology, an illegal offer under the Fair, Reasonable and Non-Dscriminatory (FRAND) rules. Apple has offered a more typical deal proposing about $1 per iPhone in royalties.
The dispute comes over the SEPs, which are essential technologies required by any smartphone maker. Apple has long maintained that Motorola Mobility and Google have broken their FRAND obligations by pursuing a common but "unreasonable" 2.25 percent of all sales royalty blanket license on SEPS, and using litigation as a weapon when licensees won't agree. Judge Barbara Crabb agreed, and dismissed without prejudice a lawsuit brought by Motorola Mobility over the matter.
In its filing to try and block an appeal, Apple said that the 2.25 percent royalty was more than 12 times higher than the amount Google charged other companies for the same license of the same technology. Google's higher royalty rate would amount to $12 for every iPhone, about 12 times more than what Apple already pays Motorola Mobility for use of other SEPs in the iPhone. Apple has countered the offer by saying it would pay up to $1 per iPhone for the SEPs in question, in an effort it said was intended to "buy litigation peace and move on."
Apple also noted in its brief that Google has entered into litigation with other companies over the proposed 2.25 percent royalty a total of eight times, and has yet to succeed in any of those efforts to find a judge or jury that agrees with the Google-owned company's arguments. Should the previous dismissal be overruled, Apple wants Motorola Mobility to offer an actual FRAND-compliant rate, and if it refuses have a judge formulate a rate. The company has been understandably hesitant to risk that outcome, fearing a precedent that may not even equal the rates it is currently getting.
Should the hearings fail to resolve the issue, Motorola Mobility's appeal of its loss will likely be heard sometime in 2014. Another Apple vs. Motorola Mobility case being appealed may actually go to trial first, with both parties asking a court to overturn Judge Richard Posner's dual-dismissal over a patent-infringement case the two companies sued each other over in 2012. In that case, Posner said neither company could show any material harm in their claims against the other, and questioned the entire viability of software patents.