Submitted by It seems like the first battle in the patent dispute between Nokia and Apple has been in Nokia’s favour. The staff of the US International Trade Commission has sided with Nokia, stating that either the claims in Apple patents were invalid, or they were not infringed upon. All this was detailed in a memo, but for some reason, nobody is actually linking to said memo, making this story a little sparse on details (cookie if you can find the memo).
As is common these days, the patent dispute between Nokia and Apple covers both regular courts as well as the US International Trade Commission. The ITC has the authority to ban imports/sales of infringing products, even though it rarely comes to this; settling is the preferred option.
The ITC staff do not have the final say; they’re basically researchers who deliver the materials upon which an ITC judge, in this case Charles Bullock, can base his decision. Nokia and Apple will be able to plea their case before this judge as well, after which he’ll come to a decision in February 2011. The judge’s ruling will then be subject to review by a six member commission, who will complete their review in June 2011.
“The evidence will not establish a violation” of Apple patent rights, says ITC staff in a pre-hearing memo. The staff states that some of Apple’s patent claims are invalid, while the rest is simply not infringed upon.
It is impossible to enter the mobile phone market without infringing upon Nokia’s patents. Nokia has an immense patent portfolio on everything from GSM technology to 3G, covering client and infrastructure – a logical consequence from the fact that Nokia pretty much developed all this technology, together with Motorola who is the other major patent player in this business. These are hardware patents, and considering the immense investments required to build the mobile phone network as well spreading the mobile phone to every corner of the world, it is only fair that companies like Nokia get a cut. These isn’t vague “putting finger on touchscreen does stuff”-nonsense.
In this industry, it’s quite common to have patent cross-licensing deals, and here, I think, is where things went wrong between Nokia and Apple. Nokia probably offered to license its patents, but only in return for some of Apple’s patents – else, the price of Nokia’s patents would go up. Apple isn’t exactly a sharing company, declined, negotiations broke down, Nokia sued Apple, Apple sued back, and now here we are.
…how, when a company doesn’t build the actual components that perform the tasks covered by another company’s patents, they are infringing. Logically wouldn’t that licensing fall back to the company who manufactures the components, or does (in this case) Nokia get to double-dip? It makes no logical sense at all – it would be like buying bricks to build a house then being charged with stealing because the shonk you bought the bricks from stole them in the first place. At worse you’d be up for receiving stolen goods, but even that would (generally) only be the case if you knew they were stolen.
Logically the only way Nokia’s patent claims should hold water is if a) the accused company themselves built the components and devices those components were used in, or b) the accused company knew that the company manufacturing the components didn’t have a license in place with Nokia to manufacture those components.
But then the law is an absolute ass with no logic to it in many cases, so who knows (or cares really).
I am not quite sure I understand what you mean. Nokia makes and sells phones. So does Apple. While Apple and Nokia may go to a third party to get them manufactured, they are the designers and retailers of the products. Whatever company does make the devices holds neither the patents nor directly sells the devices. Not much point going after them.
EDIT: also note that copyright infringement and patent infringement only really become a crime at distribution. No one is going to jail you for building an ipad in your basement unless you try selling or giving it away.
Edited 2010-11-03 22:50 UTC
OP means: why is Nokia suing Apple for patent infringement, when the patents cover things like the radio chipset, which Apple doesn’t manufacture.
IOW, how can company A be sued for using hardware component X which they bought from company B. Shouldn’t company B be the one being sued, since they are the ones actually infringing on the patent?
B can say that if A uses component X it must take care of patents problems, for example, a chip commonly used for contact-less smart cards, check page 8 of http://www.nxp.com/documents/short_data_sheet/120112.pdf :
This is precisely the point. The manufacturers of the radio chipsets don’t license the GSM patents, they leave that up to the manufacturers that will be using those chipsets.
Anybody manufacturing a GSM phone has to go to each of the companies holding the patents deemed essential to the GSM standard and negotiate terms; there’s no central licensing body as there is with MPEG-LA (as one example) for licensing codecs.
Apple’s complaint is essentially that Nokia is requesting a higher license fee than the other manufacturers, because Apple refused to cross-license some of their own patents (or over-valued them to a price Nokia wasn’t willing to accept), and that this is discriminatory.
Certainly companies like Nokia, Ericsson, Motorola et al. have an advantage here when it comes to negotiating patent fees amongst themselves, since they hold the bulk of the essential patents. But then, they’re also the ones that invested billions over the years developing the GSM standard that every other manufacturer is able to simply license.
Anybody that came late to the party is at a disadvantage when it comes to licensing the patents, since they don’t have any essential patents to leverage. This would include companies like RIM (who tried to acquire Nortel’s patent portfolio with essential patents for LTE that would have put them in a stronger position), Apple, HTC, Dell, Asus etc. The advantage, of course, is that they are able to get away with simply paying a fee without having to make the massive upfront investment to develop the technology in the first place.
I’m actually surprised Apple has taken it this far, these aren’t make-believe fairy-dust software patents that Nokia is asserting infringement of, but I certainly don’t seeing them fighting to the bitter end on this. They have far more to lose than Nokia does, and the epic battle that Nokia and Qualcomm had a few years back is proof enough that Nokia will certainly not back down.
I’m actually surprised Apple has taken it this far, these aren’t make-believe fairy-dust software patents that Nokia is asserting infringement of, but I certainly don’t seeing them fighting to the bitter end on this. They have far more to lose than Nokia does, and the epic battle that Nokia and Qualcomm had a few years back is proof enough that Nokia will certainly not back down.
Indeed. Nokia is one of the super-heavy gorillas of mobile phone manufacturers, and they have a bazillion patents behind them. And what’s even worse (for Apple) is that their patents are mostly about actual hardware, not just software, or color of paint used like Apple’s one.
Of course, if Apple were so stupid to see this whole thing through to the bitter end I atleast can see them suffering way more than Nokia, so they will be trying to settle things out of court sooner or later. Will be interesting to hear the detail of the settlement then. Nokia wants the multitouch patent so I guess that’ll be part of the settlement in one way or another, but what else? And what will Apple want in return?
I really wonder what would happen if a court, in an Apple recognized jurisdiction, issued an injunction against the sale of the iphone due to an obvious ( non trivial patent violation). How much would people freak out, if they were no longer able to buy iphones? Would it lead to any kind of patent reform?
I really wonder what would happen if a court, in an Apple recognized jurisdiction, issued an injunction against the sale of the iphone due to an obvious ( non trivial patent violation). How much would people freak out, if they were no longer able to buy iphones? Would it lead to any kind of patent reform?
Just in theory, if iPhones/iPads/etc were not allowed in the open market anymore Apple would probably start a campaign to “raise citizen awareness of the issue”, ie. to smear certain parties, and try to get a patent reform going.
I doubt it’ll ever get that far, but a patent reform is really needed and it only remains to be seen how many more years it’ll take before something so big happens that it can not be evaded any longer.
I totally disagree. Patent reform isn’t what’s needed. This is a simple contract issue. What’s needed is for companies that need patented technology to license it from those who got there first.
What’s needed is for companies that need patented technology to license it from those who got there first.
If you had paid any attention you’d know that it doesn’t work. Companies with lots of money and lawyers just keep patenting stuff, even stuff they have no plans of ever using themselves, just so they can sue everyone. This keeps small companies out from the market, and individual developers and engineers, and stifles innovation. That’s EXACTLY why patent reform is needed.
Um, how many “small companies” are marketing their own phones? Seriously, get real.
it doesn’t have to be a phone
just think of data-loging with an uplink through gprs/umts
Um, how many “small companies” are marketing their own phones? Seriously, get real.
I wasn’t talking of phones, I was talking of patents in general. Besides, how do you know that there wouldn’t be all kinds of interesting 3G connected devices put out there by smaller developers? It doesn’t even have to be a phone, any 3G connection related system is patented up the wazoo.
I totally disagree. What’s needed is for companies that own some deliberately-vaugely-worded broad scope patent to refrain from trying to sue everyone else on the planet for doing something that, when viewed through a relaity-distotion field, could be construed as infringing. In a certain light. Perhaps. On Tuesday mornings, in leap years, in months where there is a blue moon.
It is painfully apparent that this is what is actually happening. No matter how hard producers of goods these days try to evade possible patents, there are an ever-increasing number of lawsuits. It is all about trying to prevent competition, and extract a buck from someone else’s turnover.
Patents are just increasing costs for everyone. There are a very few winners (mainly patent lawyers) and everyone else loses (even patent holders), and everyone’s costs increase for no benefit whatsoever.
The best way to stop all that happening is to remove the patents themselves, which are the cause of the problem. Patents these days are not incentive for innovation, they are used instead as innovation inhibitors.
That gave me a fantastic daydream:
Apple is barred from distributing the Iphone in the US due to patent infringement. Politicians can’t get there Ifondlefone. Government immediately begins aggressive patent reform.
Yeah, that’s pretty much what I was thinking.
I think you’d need to find a judge that just didn’t care about the massive wave of hate that would be chucked in his lap by everyone who couldn’t buy an iphone.
We almost came close to a similar scenario in the RIM -NTP case, but a judge chickened out.
No, more likely, Android takes over the market.
Given the recent developer interest in Android over Iphone, it may very well take over.
My thinking was all the politicians who already have Iphones. This based on what happened with RIM’s potential injunction against doing business in the US which quickly fell through as soon as the politicians realized they’d have to give up there crackberries.
(as also mentioned by the previous responder)
If that truly IS Apple’s complaint, Apple was destined to FAIL on the merits, because patent rights are permissible monopolies and are allowed to be discriminatory. Each patent licensor may have completely different terms.
Not exactly. I haven’t followed this story for a while, so my memory may be sketchy, but the whole point was that Nokia and the other companies holding essential GSM patents had decided to license these patents on FRAND (fair, reasonable and non discriminatory) terms. IANAL, but the ‘non discriminatory’ part means that the licensor can’t make different deals with different licensees.
Now Nokia has obviously licensed these patents to other companies before. They wanted a cross license agreement with Apple, but Apple felt that their patents were more valuable than whatever Nokia asked from the other licensees, which would contradict the ‘non discriminatory’ part.
I would imagine that the manufacturers are in China, and just trying suing a Chinese company in a Chinese court. Apple, on the other hand, is based in the USA, which is home of the lawsuit.
Oh, I’m pretty sure Apple would have some stern feelings about someone building an Ipad in there basement weather they sold it or not. Like the Hackintosh scene, I think the blind eye is more related not knowing what individual to go after rather than not wanting to go after them.
Here is the analogy:
You buy a toaster at Walmart it is defective, catches on fire and burns your house down. Walmart is the one to sue despite the fact they did not manufacture the toaster. Of course the toaster manufacturer could also be sued but its likely to be an obscure Chinese company untouchable from the US. Patent infringement follows the same legal theory.
Bad analogy. In that situation, you would sue the manufacturer for creating a defective product. If you sued Wal-Mart, all they’d do is refund you money on the toaster.
If one of the factories Gap contracts to manufacturer it’s clothes is caught for child labor, the public goes after Gap for that. It’s Gap who has to then deal with the offending factory (pull it’s orders and redirect them to another factory or whatever).
It’s not much different in this case. One company contracted factories to produce a product. It is that company who is responsible for insuring that there design does not infringe others patents. It is not the contracted factory in China (probably location) who is responsible for vetting every manufacturing request for patent and copyright before they stat a line for it.
I posted this once before but perhaps it is worth reposting. There seems to be a great deal of confusion about what patent infringement actually is. Here is the actual US law;
US Code Title 35, Part III, Chapter 28, Section 271,(a) “Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.”
In fact, every person or company who infringes on a patent is liable. That includes everyone in the production/supply chain.
One of the posters in this thread stated that the chip manufacturers do not need to license the GSM patents. According to the law that is not correct, they do need to license the applicable patents. Whether they do or not I have no knowledge.
There is one facet of the law that protects consumers. If you think about the wording of the law it follows that, for example, should Apple be found to infringe on someones patent that is incorporated into the iPhone, that everyone who bought an iPhone would also be infringing that patent. To protect consumers the law provides that the manufacturer of a ‘consumer’ product (as determined by the appropriate US authorities) must indemnify those same end users. To be clear, the end users are infringing and are liable for damages, however the manufacturer must make good on those damages. This part of the reason that the damage awards can be so large.
To clarify, it wasn’t stated that the chip manufacturers do not need to license, just that they don’t bother in most cases when selling in volume to manufacturers, rather than as a ready-to-use product.
It’s correct that everyone in the supply chain would be infringing the patent if it isn’t licensed, but by the same token the patent holders are limited in their ability to charge a fee for licensing at each step. In general terms, if Nokia licenses the GSM patents to the chip manufacturer, they are limited in their ability to further charge licensing fees downstream (patent exhaustion). Doctrine of first sale can be applied by the courts to patents, which could (and has) prevent a patent holder from seeking additional fees from further uses of an already licensed product.
In a case like this, it is generally more advantageous for the patent holder to charge the license fee to the manufacturer using the chipset rather than the manufacturer making it (although the manufacturer may have to license separate patents related to the actual manufacture of the chip etc.)
So technically the chipset makers are infringing, but the patent holders are not asserting their rights at that level in the chain.
Good points of clarification.
You may find this comic strip instructive:
It still amazes me just how insightful Berkeley Breathed has continued to be, even now decades after the end of Bloom County…
–bornagainpenguin
Patent infringement means that someone is using patented functionality, or bought components and assembled the product from components that allow them to use the functionality in question, not that they made a component of the final product. What this means is that if you have an iPhone and it is an infringing product you are liable for patent infringement just as much as Apple is.
In practice end users are not prosecuted because they don’t have the cash reserves or other resources to make it worth suing over.
As to who makes the components: The components themselves, such as a GSM encoder chip that feeds a radio transmitter or a multi-touch capable screen, may not actually implement the patented functionality. Especially if there are 144,000 exact copies of the same component in a carton that is being shipped to a phone manufacturer to use to build phones with. Those particular components don’t implement the functionality until they are combined with the other components needed to actually do GSM sending and receiving or multi-touch interaction with the phone OS. Without the interconnection, the power supply/battery, etc., it’s just a component. Or a thousand, hundred thousand, million, etc., components [in a carton]. It only functions infringingly (o; as part of an assemblage.
Of course it’s possible to make a device that wouldn’t need assembly/further manufacturing that would infringe, but economies of scale and the need for specialization in manufacturing work against that being practical as well as it being a direct and obvious infringement of the patent’s claims. In short, manufacturers would lose twice if they did it that way. Nokia makes phones, but even they use off-the-shelf components rather than manufacture every single element of the device.
So, if you’ve got an iPhone, don’t worry about Nokia coming after you. They aren’t that dumb, and even if they were their lawyers would probably point out that it’s worse than pointless to try (unless you maybe have $50 beeeeeeelyun in the bank.) But if you have the aforementioned cash in the bank and start manufacturing and distributing the product, even for free, you could be held liable for infringement damages awards to the patent holder.
I probably could have explained this more simply and clearly, but do you see what I’m saying here? If I hold the patent on the Taj Mahal I can’t sue you for making the bricks an infringing copy of it was made from. But I could if you built one.
In a practical sense, all that it will mean is that Apple and possibly other mobile companies will be forced to license Nokia’s patents (and possibly pay some amount of damages for past infringement).
Don’t feel sorry for Apple. They walked away from patent licensing talks with Nokia after calculating that Nokia was asking too much. Which is classic Apple behavior. When they essentially appropriated the “iPhone” trademark from Cisco, they were sued for infringing. But they did it, anyway, and had to settle the lawsuit with Cisco later on.
In my opinion, Apple deserves to be spanked HARD for this kind of behavior. A lot of people criticize Nokia for not being competitive enough against the iPhone but, frankly, Apple stole a lot of the basic technology that Nokia invented. Ergo, Apple stood on the shoulders of giants, and reaped the benefits without paying a price for Nokia’s innovation. Nokia deserves to be compensated handsomely. That may well rebalance the mobile phone market.
I think you missed the fact that everyone else are already paying Nokia. Apple is to best of my knowledge the only one who refuses.
For what it’s worth, Apple already pays $$$ for the Ericsson portfolio and probably also for the LG ones too.