Apple Store (World AIDS Day)

Apple is suing Swedish-based Ericsson over LTE wireless technology patents, reports Reuters. Apple claims Ericsson’s patents are not essential to industry cellular standards and that it is demanding excessive royalties for the patents.

Apple claims it’s not infringing on the patents and doesn’t owe any money to Ericsson, however if a California court does decide to rule in Ericsson’s favor, Apple says it wants a fair rate to be assigned.

“We’ve always been willing to pay a fair price to secure the rights to standards essential patents covering technology in our products,” Kristin Huguet, spokeswoman at Apple, told Reuters. “Unfortunately, we have not been able to agree with Ericsson on a fair rate for their patents so, as a last resort, we are asking the courts for help.”

Apple says Ericsson wants royalties based on a percentage price of the entire smartphone or tablet, whereas Apple believes it should just be the value of the chip if deemed essential for the industry.

Apple and Ericsson’s agreement dates back to 2008 after the launch of the original iPhone.

Apple hasn’t shied away from the court room in recent years, but it’s usually Samsung who the Cupertino-based company is after. However in this case, it seems Apple is trying to save itself from paying what it thinks is higher than it should have to pay.

Update: Ericsson has countersued Apple in a Texas court.

Source: Reuters

  • @dongiuj

    IMO I think apple should pay. As for how much, I’m with apple on what they think is fair.

    • Apple will pay they just don’t think they should pay more than the price of the chip (which is fair enough).

      • Domodo

        Does a new iPhone cost the same as the price of the components put together?

      • You can’t compare buying components to buying an assembled product it’s just not the same. When buying components you should only pay the cost of the component and not have to pay them a percentage of every product you sell that uses their component…

      • You do realise components themselves are assembled products, right? An SSD is as much of a component to Desktop/Laptop/Tablet PCs as an LTE chip is a component to a SmartPhone. If they weren’t assembled, then you’ll be buying generic circuit boards and standalone transistors.

      • True. This wasn’t really the point I was trying to make though! The point I was trying to make was the margins between consumer products and components used in consumer products are obviously going to differ massively. The profit margins on components are presumably much lower than the profit margins of say an iPhone. However the main point I was trying to get across is that components usually have a set price, you don’t normally have to pay for components by giving a percentage of the profits of products using said components since this would mean the price differs depending on the product that uses the component.

      • ” The point I was trying to make was the margins between consumer products and components used in consumer products are obviously going to differ massively”

        They’ll only differ as much as the greed factor of the seller demands. OnePlus has made that clear in the SmartPhone market.

        “The profit margins on components are presumably much lower than the profit margins of say an iPhone.”

        Only ’cause Apple is extremely greedy.

        “However the main point I was trying to get across is that components usually have a set price”

        Clearly not the case of the AppStore and IAP components for iOS applications. Whenever the dev uses that component for a commercial gain, they pay 30% to Apple. Same thing is going on here with Ericsson’s LTE chip component. Whenever Apple uses that component for a commercial gain, Ericsson is demanding an X%. If not for commercial gain, they pay only the flat price, like consumers.

        “you don’t normally have to pay for components by giving a percentage of the profits of products using said components since this would mean the price differs depending on the product that uses the component.”

        Just like Apple’s AppStore and IAP components.

      • Rowan09

        Give me a non-greedy publicly traded business? All businesses are greedy so this is a moot point.

      • Greed varies, if you haven’t noticed all these years. You see a product that costs say $200 to build selling for $350, and another $200 product selling for $800 without offering anything to justify the price tag, besides the branding. I wouldn’t call the first a greedy company, that’s simply making a slight profit. The second, now that’s extremely greedy, as is Apple. Turning a blind eye to all of them and thinking “they’re making profit so they’re greedy” is just ignoramus.

      • Rowan09

        Still waiting on that non-greedy company? Guess what you don’t have any so, you dance around the question. All companies including Apple is greedy because the only rule in business is to make money. It also depends on what you call justifying the price. If I buy a Nexus which is about $400 now and try to sell it next year I can get it for about $150-$200 when the new one comes out. I can sell my iPhone for about $500-$600 when the new one comes out after paying $700-$800 for the device. I wouldn’t even try and compare the 2 products because Google makes it money on me from advertising not hardware sales so the Nexus should be given almost free.

      • Dance around the question? I said that question is ignoramus. Here’s real life example, Microsoft is still greedy in other cases, but isn’t being as greedy as Apple when it comes to it’s devices like the Surface Pro. What Apple would sell to you for $2100 ($1000 MacBook + $600 iPad + $500 Wacom Drawing Board), Microsoft is selling for $1000.

        In other words, as stated before, greed varies.You happy now?

      • Rowan09

        Ha ha. You got to be kidding the Surface Pro has the same amount of space as my phone 64GB for $1000+ that’s not cheap. We don’t know how much the Surface Pro costs to build either. All businesses are greedy man some make money in other ways and that’s why it appears to be not greedy and you know that. When you are a publicly traded company it’s your obligation to your shareholders to be greedy or you can get sued like Facebook did.

      • ” the Surface Pro has the same amount of space as my phone 64GB for $1000+ that’s not cheap.”

        Hahahaha, come on man, you really don’t have to act this dumb just for Apple. I know you’re a lot smarter than that. You’re comparing the price of a SmartPhone to that of an Ultrabook by just the size of their storage space, ignoring the performance and their use cases.

        Regarding what it costs to build a Surface Pro, definitely not less than a MacBook Air (bit ly/15llePy), considering it performs on par (bit ly/1y0BAaV), has a better screen that’s also touch-equipped, and is 3 times as versatile.

        “When you are a publicly traded company it’s your obligation to your shareholders to be greedy or you can get sued like Facebook did.”

        Sadly, that could be the case, no arguing about that.

      • Rowan09

        I careless what a Surface Pro can do when it will be limited by the amount of space. There is absolutely no reason for a laptop to have 64GB stock anymore in 2015, so there is no excuse. The Surface Pro is expensive but expense doesn’t mean a product isn’t worth the price at times.

      • The reason for 64GB is only for affordability, and that is $800, not $1000. $1000 is for 128GB. Either way, still expensive, no questioning that. Good thing we have OEMs to give more affordable options (at the cost of performance).

      • BS Detector

        Why would apple (or anyone) build and sell products at a loss? Smh.

      • Why would you expect Ericsson to do that and not Apple? That’s what Domodo is asking.

      • @dongiuj

        Which is what I’m saying.

    • Domodo

      Apple does not get to decide how much others should charge for their own technology! Period.

      • @dongiuj

        I agree.

      • Rowan09

        No they do not but there is a standard. I read an article that Ericsson is trying to charge them more than other companies.

      • Which is hypocritical of them, ’cause they too charge a percent to license and software components (iAP and the AppStore, 30%) to developers. Be it a software or hardware license, in both cases, they’re still affiliated with the license seller after they obtain a license to use the component.

      • The difference here is developers agreed that Apple can take this 30% cut. I can’t imagine Apple has agreed for Ericsson to take a cut (if they had they probably wouldn’t be going to court). Ultimately this lies with the court of course Ericsson could quite easily settle the matter out of court.

      • Apple isn’t agreeing, they’re being hypocritical trying to avoid paying the percentage, whereas they demand devs to pay them an even higher percentage for software (work once, sell it millions). This their act of taking Ericsson to court would be like a wannabe iOS developer suing Apple for such % high percent cut.

      • Rowan09

        This is absolutely different. Are they charging too much of a percentage maybe, but they also give developers the most money. Apple hosts and advertise for developers on the App Store while Ericsson does neither of the above. I see nothing wrong just like Samsung for taking Ericsson for a lesser percentage, but the difference is Ericsson is trying to charge Apple more than other companies because they are Apple (mercurynews dotcom/business/ci_27320946/apple-ericsson-sue-each-other-over-phone-patent). It’s business, so I can understand Ericssons point, but it would be dumb for Apple to pay a company with non-essential patents a % of the full price of each iPhone.

      • “but they also give developers the most money”

        So, ’cause devs get 70% of the money, it’s ok for Apple to be hypocrites?

        “Apple hosts and advertise for developers on the App Store”

        And Ericsson designs, manufactures, and troubleshoots problems in LTE chips, if any. Apple doesn’t have to deal with manufacturing in the AppStore. Different license for different service, similar principle.

        “I see nothing wrong just like Samsung for taking Ericsson for a lesser percentag, but the difference is Ericsson is trying to charge Apple more than other companies because they are Applee”

        Where the f*ck did you pull that conclusion out of? The article clearly states:

        “Apple says Ericsson wants royalties based on a percentage price of the entire smartphone or tablet, whereas Apple believes it should just be the value of the chip if deemed essential for the industry.”

        Sounds nothing like Ericsson demanding more from Apple than others just ’cause they’re Apple. Sounds like Apple hypocritically refusing to pay the % fee even though Apple themselves charge others in a similar way.

        “but it would be dumb for Apple to pay a company with non-essential patents a % of the full price of each iPhone.”

        So, ’cause my technology is non-essential, you think you can then change the the way I license it to you? That’s as asinine as saying since Apple’s iPhone isn’t essential to me, I should get a cut on the price tag.

      • Rowan09

        “Under Ericsson’s approach, by incorporating its own unique technologies, Apple is subjecting its products to higher royalty demands than other companies’ products that do not incorporate such features and functionalities,” according to the complaint” this is taken straight from the article in Mercury news. Apple is using the court as a middle man since they couldn’t come to a resolution just like Samsung did and nothing is wrong with it. In regards to to non-essential patent I was simply stating what was said in the article, I’m guessing the royalties for essential patents would cost you more from this statement. Once the LTE chip is in the device Ericsson does no damage control so comparing the App Store model to buying a part is different. If the 30% is so much developers would stop developing forcing them to drop the prices, but I guess it’s not as much as you think to them.

      • “”Under Ericsson’s approach, by incorporating its own unique
        technologies, Apple is subjecting its products to higher royalty demands
        than other companies’ products that do not incorporate such features
        and functionalities,” according to the complaint””

        Hahaha, sounds like you’ll need to improve on those your English comprehension skills. Here’s what that is saying in simple english terms:

        In order to use Ericsson’s unique technology, which no other company currently uses, Apple is required to pay a % fee, which no other company is paying as they don’t use such unique technology

        So, in other words, Apple want unique features in it’s devices, yet doesn’t want to pay the price Ericsson is demanding.

        “Once the LTE chip is in the device Ericsson does no damage control so comparing the App Store model to buying a part is different”

        How’s that different? When you use the AppStore and IAP components, Apple doesn’t do any damage control to your app. So if you create a shitty app, you’re on your own. If the IAP or AppStore component has a problem, you report it to Apple and get them to fix it, just like Apple would report to Ericsson if there’s a problem with the chip.

        ” If the 30% is so much developers would stop developing forcing them to drop the prices, but I guess it’s not as much as you think to them. “

        If the % price Ericsson is asking for is too much, then Apple will just f*ck off and go look for another supplier. Instead, they’re hypocritically doing whatever shit they can to get the price they want on a technology that isn’t theirs.

      • Rowan09

        I must have misunderstood my mistake. If developers feel it’s so unfair they would stop developing and they are not, so stop complaining. Apple and Ericsson has a right to demand what they want or refuse what they want it’s business. According to you Ericsson would be just as greedy. Why should Apple pay a % off each full priced device instead of just what Ericsson provides for them the chip? All businesses are greedy (in some way or the other) and if you are a non-greedy business you’ll go bankrupt real soon. In regards to One Plus do you think if or when they become a solid player they will keep the margins so low (no)? Look at what Google did with the Nexus price even though they should give the phone almost at no profit. I just don’t see how customer service doesn’t get included into Apples products (pricing wise) with you, I can simply bring my phone to a physical store and get a new one instantly with any issues (some times even without paying a dime). I would argue greed with business because all they are hear for is to make money. If people felt so ripped off from Apple they would stop buying and they are not. People buy food from the grocery and restaurants at sometimes 200%-500% markup, so such is life.

      • “If developers feel it’s so unfair they would stop developing and they are not, so stop complaining”

        Who’s complaining about the amount Apple takes? I’m using that as an example of Apple doing the same thing, possibly even worse, yet suing Ericsson, like a typical hypocrite.

        “According to you Ericsson would be just as greedy. Why should Apple pay a % off each full priced device instead of just what Ericsson provides for them the chip?”

        We don’t even know what X is in X%, could be the same 2.25% Motorola was demanding (http://aol it/1IOc64F) for it’s cellular technology, that’s nowhere near as greedy as 30%. Again, greed varies, and you thinking “they’re demanding a % too, so they’re just-as greedy” just keeps making you look asinine. As for why Apple should pay the license fee, that’s Ericsson’s price for it’s own technology, the same way the 30% is Apple’s fee for the AppStore and IAP technology. If Apple doesn’t want to pay that, then they should simply f*ck off instead of being hypocrites.

        “All businesses are greedy (in some way or the other) and if you are a non-greedy business you’ll go bankrupt real soon”

        Sounding like a capitalist pig there. Tell that to OnePlus and it’s continuously growing sales of The One. They clearly don’t need to be extremely greedy like Apple to sell their devices and make profit.

        “In regards to One Plus do you think if or when they become a solid player they will keep the margins so low (no)?”

        There’s no guarantee of that. Only time will tell if they’ll “NEVER SETTLE” for extreme greed.

        “Look at what Google did with the Nexus price even though they should give the phone almost at no profit”

        What happened with Google’s nexus is that they were offering years ago specs at a lower price, although still a rip-off in my book. Now they put current top specs in the Nexus 6, and are selling it at around the rip-off SmartPhone market price. What OnePlus is doing is selling a top of the line SmartPhone, at a reasonable price. SmartPhones are pocket PCs, and are not worth the price tag of a Surface Pro based on what they currently offer. Once we get to the point where SmartPhones are capable of converting to Tablets like the Surface Pro, then I can justify the current market price. Until we get there, SmartPhones like the iPhone are not worth more than $400, IMO.

        “I just don’t see how customer service doesn’t get included into Apples products (pricing wise) with you”

        You think customer service is what justifies being priced similar to a Surface Pro? I get the same quality customer service from Microsoft yet their Surface Pro isn’t selling at a rip-off price. As for OnePlus, their customer service response is improving, and going through an RMA process isn’t so bad (http://bit ly/15lgeui) compared to big guys like Samsung.

  • Fanboy 

    I think Apple has a valid point. Apple wants to pay a flat rate (lets say $3 a chip, regardless of what device it goes into) versus Ericsson wants a % of the total price (ex. if they are getting say 2%, they would gain more profit off a $900 phone vs a $400 tablet).

  • kled23

    bad decision, Ericsson is a giant in networking and owns patents to major technology for the running of mobile device itself, it would be best to negotiate this case outside, last time it got in court with samsung, samsung had to pay a hefty price, defintely bad for business.

    • Rowan09

      People go to court for settlements sometimes like Samsung did in the past with Ericsson. Apple would be stupid to pay them a % of the total price of the iPhone instead of a flat rate like everyone else does. Ericsson is just trying to abuse their patents, but hey that’s business.

      • kled23

        well the last time they reached an agreement was in 2008 when apple wasn’t even a minor player, and now its the biggest mobile company in the world, if u think they are going to be charged the same, it would be a joke, i don’t think everyone pays same flat rate, it definitely depends on the size of the company, australia technology alliance which owns patents of wifi was able to win cases for negotiating higher flat rates from bigger conglomerates, don’t see why ericsson cant do the same, but i do agree percentage per devices would be an exaggeration, although Nokia did it when it was taken to court by apple, and backfired in a bad way, apple had to pay more than half a billion, and % for some devices of that time.

  • “Apple claims Ericsson’s patents are not essential to industry cellular
    standards and that it is demanding excessive royalties for the patents.”

    Such hypocrites. Charging high royalties (30%) to iOS developers for IAP and AppStore compoennts, and charging ripoff prices for the end product, yet suing others for charging them high prices for the end-product components.

  • “Apple claims Ericsson’s patents are not essential to industry cellular
    standards and that it is demanding excessive royalties for the patents.”

    Typical hypocrites (http://bit ly/1si5DVX). Charging high royalties (30%) to iOS developers for licensing IAP and AppStore components, and charging ripoff prices for the end product, yet suing others for charging them high prices for the end-product components.