Part 2- First Imitating Fruits, Now Animals: Apple's a Bunch of Copy-Cats? - The UpStream

Part 2- First Imitating Fruits, Now Animals: Apple's a Bunch of Copy-Cats?

posted Sunday Nov 1, 2009 by Nicholas DiMeo

Part 2- First Imitating Fruits, Now Animals: Apple's a Bunch of Copy-Cats?

The intense debacle between Nokia and Apple has had some new developments. Last week we told you about the claim Nokia made against Apple regarding infringement on patents belonging to Nokia. Your first thought was probably something along the lines of, Nokia isn't able to keep up with the success of the iPhone, so to get revenge on the popular company, Nokia will sue them. A little extra cash from your competitor doesn't hurt right? Wrong.

It seems as if Nokia isn't even after a large amount of money. Although they would most likely be able to milk this lawsuit for billions of dollars, they are just looking to receive royalty rates for licensing patents considered "essential" to GSM, WiFi, and UMTS. In other words, Nokia wants to be credited for their hard work. Basically they believe that because they committed to license the patents in question under "fair, reasonable, and non-discriminatory" terms (FRAND terms), Apple should pay a licensing fee, assuming these patents are actually essential to each standard's operation. And Nokia certainly feels they are.

The system put in place does not seem to be the most effective way to develop standards. Many wireless standards are not created by a single company, but with help from others. We all know about the IEEE, which is credited with contributing to the creation of WiFi standards. Obviously Nokia is not the only company spending billions of dollars in research and development. While a standard is under development, companies investing money on the same project are expected to declare patents they own that they feel are "essential." When stipulating the terms of license agreements, everyone is expected to abide by the rules of FRAND, but there is no actual overseer to enforce this. Those looking to collect on as much as possible, declare as many patents as they can, even if they are not necessarily essential, but if an essential patent is not declared there may be some legal repercussions in the future. The system itself is not at all organized, and pretty much a whole mess of confusion.

Deciding whether a patent is crucial to the standard is a difficult thing to do, requiring a large amount of time, money, and expertise. But in this case, it has been ruled that Nokia has more than twice the amount of patents pertaining to GSM, than any other company. When it comes to WiFi and UMTS, it is not as certain that all the patents are required in this case, but the majority of them are, and since Nokia is only suing over ten patents, they are probably the most thorough and accurate in reference to these standards.

Clearly every aspect of the lawsuit is leaning in favor of Nokia. Since Apple certainly isn't in a shortage of cash, you would think they would just pay the fees and sweep the issue under the rug. The problem is, since most companies both usually own patents regarding the standard in development, they come to an agreement called cross-licensing, which prevents both companies from paying large fees to each other and instead come to fair terms that both sides are happy with. Apple's portfolio is minuscule to say the least, forcing them to show up to the "fight" unprepared. Since the FRAND principles are too vague, Apple does not know how much they will be forced to pay.

So Apple can either just suck it up and pay, whatever the cost may be, which Nokia has made clear that it wont be an egregious amount, or they can try to fight it, proving the patents aren't "essential." But considering Nokia owns over 11,000 patents, and they chose a select ten to sue for, I'm thinking they have the upper hand in this case.

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