Intellectual Property, Technology, and the Law

Mobile Madness – June 14, 2011

Mobile Madness continues (updated on June 15, 2011)…

Apple Settles with Nokia

Today was a big day. Finally, after almost 2 years, Apple finally settled with Nokia. Nokia had sued Apple back in October 2009 for patent infringement. Nokia cited 10 of its patents, covering technologies such as GSM, UMTS (3G) and WiFi.

At the time, it was an interesting lawsuit because it involved what are called Standards Setting Organizations, or SSO’s. Very generally speaking, SSO’s are organizations that count various industry players as its members. Their general goal is to develop, agree upon and promulgate a set of standards that will, in theory, benefit the entire industry by maximizing interoperability and minimizing risk such that companies know which path certain technologies are heading down and being able to prepare and strategize accordingly.

Typically, SSO members are supposed to declare which patents they own that might “read on,” or cover portions of the standards being developed. In cases in which members have relevant or “essential” patents, these patentee members are required to license their patents on fair, reasonable and non-discriminatory (FRAND) terms. As you can imagine, what constitutes FRAND is frequently the subject of concern.

Sometimes, companies take an arguably shady approach, like Rambus did with the JEDEC SSO (which set standards relating to the semiconductor industry), by (allegedly) refusing to agree to FRAND provisions, dropping out of the SSO, using the information they learned while an SSO members, tailoring and/or modifying patent applications to cover those standards, and then going the settlement/sue route.

Back to the topic at hand, it appeared to me that Apple was clearly practicing portions of the aforementioned standards that Nokia had patents for. Most other players took licenses. But Apple held out. Why? It beats me. Frankly, I don’t know why Apple didn’t save their shareholders and Nokia’s shareholders some serious cash and just settled. Then again, perhaps Apple really felt their patent trove could effectively battle Nokia’s, and in the process get them better settlement terms.

This is a nice read on the Nokia/Apple/SSO issue.

In any event, Nokia ended up adding many more patents to the fight, the parties wound up in court, and today, Apple settled. They agreed to pay an undisclosed up front amount, and continuing royalties. Some have speculated that the settlement for the continuing royalties was around $11.50/iPhone, which would bring in hundreds of millions of dollars in royalties per year. Not bad for Nokia. Not bad at all. Although, despite the clear win for Nokia, some believe they still have a long way to go, and some stupidly characterize Nokia’s strategy as “whining.”

What does this mean for Apple? Well, given that their market cap is more than HP, Dell and Microsoft COMBINED, Apple can surely sustain the hit. In fact, the undisputed heavyweight champion in the smartphone law blogosphere, FOSS Patents, postulated that this might be a good thing for Apple in the long run. The argument is that Android probably infringes on many of the same patents, yet Google might not have the robust patent counter-defenses that Apple has.

One thing we do know — it is not over. The major players in the wireless industry will continue to battle each other. This likely means that while hardware prices for items like smartphones will continue to drop, licensing costs will probably continue to rise.

Apple Chooses Twitter for iOS5

Another major bit of recent news was via Apple’s Worldwide Developer’s Conference (WWDC). Apple announced that Twitter would be fully integrated with their new iOS 5 for the iPhone. The initial reaction from the community was “cool.” But not long after, “cool” turned into wait, Apple just blessed Twitter, making it “the” social network in iOS. Then it turned into Twitter being the “new Facebook.”

While some of this is histrionics, there is definitely cause for concern if you’re Facebook. Why Twitter? Why not Facebook? Today, I stumbled across this excellent article that makes a good case that Facebook was indeed poised to be “the” social network in iOS, but bungled it. Hmm… Zuckerberg can’t be too pleased to miss out on this opportunity.

Update: Yesterday, I saw an article about the troubled startup Color, which is a photo sharing app. On my Twitter account, I opined that I never thought it would take off. Then again, it’s not like I haven’t been wrong on many things before. Like Twitter! Anyway, today, TechCrunch reveals what Facebook is up to with respect to its iOS Facebook app, or perhaps a new app. It incorporates Color-like photo sharing and other features, and will either be a stand-alone app or be integrated with Facebook’s existing iOS app. Who knows, maybe Facebook will get the Twitter-like “deep integration” into iOS as well.


Some other Mobile Madness tidbits:

  • Oracle vs. Google. FOSS Patents has a nice summary on the potential monster settlement/damages that Google might suffer in its fight against Oracle. Update: FOSS Patents does some clever work and provides more details on what Oracle wants. Hint: it’s kinda sorta totally monstrous. And another thing — indications are that Google is getting increasingly serious about the mobile market. Well, duh. But here are some interesting tidbits.
  • Nortel Patent Sale. I don’t know if you were aware, but Nortel is selling off its portfolio of over 6,000 patents as part of its bankruptcy proceedings. Google made a “stalking horse” bid of $900m for the portfolio. HP, Microsoft and others are complaining that this would give Google an unfair advantage. I’m kinda guessing that’s the whole point. But it might turn into an interesting antitrust/unfair competition case, and it’s certainly worth monitoring.
  • Apple vs. Samsung. I’ve written about this battle before, and the latest is that Apple is complaining about being “harassed” by demands to reveal their iPhone 5 and iPad 3. FOSS Patents nicely summarizes some of the nuanced law in this area. Update: as I said in some of the links above, the fact that Samsung and Apple are battling globally and the fact that Samsung is a major supplier is… awkward! Anyway, here’s an interesting article about how Intel might be able to capitalize on this if Apple drops Samsung as a supplier, which they’ve been known to do in the past. Oh, and guess who’s passing Nokia (yes, Nokia!) as the top smartphone company? Apple? Nope, Samsung.
  • Lodsys vs. Apple & Developers. I’ve also written about this before. I said it would be interesting to see how both Apple and Google/Android response. Well, after a rather tepid initial response, Apple filed a motion to intervene on the developers’ behalf. Again, FOSS Patents had a great summary on this whole issue, so I won’t recant it here.

(Disclaimer: I generally don’t like the term “patent troll” and think it’s unfairly used more often than not. But I liked the graphic.)

Stay tuned for more blog posts about the mobile marketplace.

Copyright 2011, Pav S. Athwal. All Rights Reserved.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: