Apple’s grand Frand demands

Apple has asked European officials to make changes that could reduce the number of lawsuits in the mobile tech industry. But while the changes are arguably valid, it’s notable that they are largely beneficial to Apple itself.

The call comes in a letter to the European Telecommunications Standard Institute, sent last November but only just made public. It specifically covers patents that relate to telecommunications standards such as 3G. Firms that work together to develop such standards agree to the principle that any resulting patents should be made available for other firms to license on a “fair, reasonable and non-discriminatory” (Frand) basis. The logic is that this gives greater incentive to work on standards, which in turn helps the market grow and benefits all concerned.

As we noted recently, the European Union is formally investigating whether Samsung has not only breached these principles but is unfairly attempting to enforce the patents as part of the ongoing barrage of lawsuits back and forth between Apple and Android manufacturers.

A similar lawsuit saw Motorola get an injunction this week that banned Apple from selling 3G-enabled devices in Germany, only for Apple to persuade a court to almost immediately put the ban on hold pending legal arguments about whether Motorola had breached FRAND principles. The two sides each claim the other failed to negotiate a licensing deal in good faith.

Apple’s letter to the ETSI says the Frand system needs more consistent and transparent rules. It’s suggesting three formal additions to the principles:

• Royalty rates should take into account the relative scale and importance of the company’s patents in question compared to those across the entire industry.
• Royalty payments should be calculated by applying the percentage figure to the cost of the relevant components, not the total value of the device.
• Patent owners should agree not to seek injunctions for patents that are covered by Frand principles.

The big problem with the call is that although Apple has formally signed up to follow Frand principles, it has very little involvement in developing communications standards (or standards generally, as those attempting to develop a standard charger socket for cellphones in Europe discovered.) That means that however reasonable its suggestions may be, they all work in Apple’s favor while being a mixed bag for its rivals.