Intellectual Property, Technology, and the Law
Mobile Madness continues (updated on June 15, 2011)…
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.
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:
(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.