Apple has been ordered to pay Optis $502M for the use of standards-essential 4G patents in both iPhones and cellular iPads.
The court ruled in favor of the patent troll, despite an unconvincing attempt by Apple’s lawyer to claim that the company might withdraw the iPhone from sale in the UK if it was forced to pay …
Optis is what is politely known as a patent assertion entity, or less politely as a patent troll. These companies don’t invent anything but instead buy up patents with the specific intent to file lawsuits against companies they allege to be infringing them.
In this case, Optis bought a number of what are known as standards-essential ones, meaning that it’s impossible to make an LTE device without incorporating the patented technology.
This means that licenses should be sold on FRAND terms: Fair, Reasonable, And Non-Discriminatory. The problem with this, however, is that there is no legal definition of what FRAND means, resulting in court battles when a patent owner considers their terms to be FRAND and a licensee doesn’t.
Optis won a lawsuit against Apple in the US (though with the award subsequently reduced), and in the UK. However Optis argued the $56M sum awarded in the UK wasn’t enough, and that the royalty should be based on global use, not just use in UK products.
Apple’s lawyer said at the time that if that happened, it might choose to withdraw from the UK market.
Apple’s position is it should indeed be able to reflect on the terms and decide whether commercially it is right to accept them or to leave the UK market. There may be terms that are set by the court which are just commercially unacceptable.
Sadly for Apple, the judge didn’t take that any more seriously than I did, and Reuters reports that the court has accepted the argument from Optis and awarded $502M for a global license.
The Court of Appeal said in a partially-redacted written ruling that Apple should pay a lump sum of $502 million, not including interest, for the period from 2013 to 2027. The lump sum relates to a global licence to use Optis’ patents […]
An Apple spokesperson said they were “disappointed by this decision and plan to appeal”.
9to5Mac’s Take
As odious as Optic’s business model is, it was inevitable that Apple would have to pay somewhere in this ballpark, whether that was awarded in individual countries or en-mass. The troll does own the patents for tech Apple has to use.
What is urgently needed is global patent reform to:
- Stop companies claiming patents for obvious or overly-broad ‘inventions’
- Provide legally-binding guidance on what is meant by FRAND terms
- Outlaw the practice of buying patents with the specific purpose of suing companies for their use
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