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Motorola added to cellular players pushing Apple for patents swaps

Just as we closed our issue last week Motorola Mobility went and joined the long line of companies intent on suing Apple out of the mobile phone busin

By PETER WHITE

Published: 14 October, 2010

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Just as we closed our issue last week Motorola Mobility went and joined the long line of companies intent on suing Apple out of the mobile phone business. This is because Apple seems to think that it’s okay to have fat profits, and not pay a single penny for the underlying patents behind mobile phones, preferring instead, as a habit, to play a game of bluff with patents.

Nokia was the first to take Apple to task over its complete lack of any royalty payments for underlying mobile phone technologies. On the one hand the cellular community cannot have a blockade against new entries with patent costs being too large a percentage of the total device cost, and on the other, the companies which have spent a lot of money designing this technology should not be at a disadvantage – in fact they should have a small advantage, in bringing products to market cheaper.

Nokia has something like 38% of the patent value in 2G phones and Motorola about 7%, while Nokia has 18% of the patents for UMTS 3G, which has declined as other essential patents have come into play. Motorola has just 3% today while Apple has about 1% of both.

Motorola is probably under-represented in the 3G patent calculations (we took them from ETSI the European standards organization which licenses 3G for about 9 organizations) because it has been so financially troubled, while new organizations have claimed their patents are “essential” to 3G, Motorola has had too much to worry about, just surviving. Also by resting heavily on Android, that has perhaps taken down the overall R&D which Motorola has been able to bring into play.

Handsets use technologies which require something like 170 separate patents in order to build a 3G phone and a smaller, but similar number to build a base station. If you don’t have anything to barter with, such as essential patents of your own, you have to pay significant royalties in order to build a phone. Nokia has long fronted a campaign to bring patents down to 5% of the total price of a handset, as a maximum, something which Qualcomm has fought tooth and claw to prevent, since it licenses its own patents separately from any patent pools and has charged about this much on its own.

The accommodation of Qualcomm into the patent arrangements which exist today on handsets has been immensely painful. First it sued Ericsson successfully when it tried to invade the CDMA market which Qualcomm had created single handed, then Broadcom sued Qualcomm for using its power saving techniques and then Nokia reached an accommodation, which massively lowered the patent royalties it pays to Qualcomm. Currently after ten years of litigation, Qualcomm is close to having a clean bill of health in mobile patent litigation. Does this mean that Apple has to go through the same process?

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