Let's try that question the other way. Is it fair that Apple is trying to extort $27 per device out of Samsung (many times more than Samsung is asking for on its FRAND patents)? While we're at it, is it fair that non-iPhone users in the US subsidize Apple's huge profit margins? Because, Apple demands such a high subsidy (and competitive pricing on-contract) that the carriers make the difference up on other customers. So, is it fair that I'm forced to pay higher rates on my plan because Apple is intentionally leveraging their size to distort the market?

Fair, I don't know if the patent is valid Samsung could just work around it. If Apple have a valid patent as I understand it they can license it for any price that they want OR completely refuse to license it provided they haven't made any agreements or commitments to the contrary.

That is the normal case with patents, exclusive rights. When you step into a standards body and offer your technology you give up those rights unless you specifically and clearly declare that you aren't doing so (in which case other options will be chosen by the standards body).

So there are other ways to look at it. Is it fair that Samsung pushed it's technology into a standard and then holds other implementers to ransom or asks them to give up their legal rights to enter the market?

As I say elsewhere I'm not picking sides on the validity of particular patents or what damages or even FRAND license fees should be but I do think it is important that FRAND commitments are given weight and enforced.

For me forced cross licenses and percentages of finished product price are both discriminatory and not FRAND. Even percentage of chip price I have my doubts about as it discourages integration of chips with its hardware and power advantages. This doesn't mean that it must be less than 1c or even $1 but some mechanism to be fair to all patent holders while not pricing the standard out of use needs to be found.

Your argument doesn't hold. Samsung has already shown that the rates they're asking of Apple are consistent with other licensees; Apple is just refusing to pay. I think this quote sums it up:

    Companies who like to get patent royalties from competitors,
    like Apple and Microsoft, and who use patents aggressively,
    have noticed that if everyone who was in the mobile phone
    business before they were sues them over their patents, they
    won't be able to make a phone anyone can afford, so they want
    to get the courts to force folks like Samsung and Motorola to
    accept less than a penny per handset for their standards
    patents, while still charging the regular price for their own
    later-issued patents.

And really, the purpose of FRAND patents is to encourage innovation and competition. Every class of product has basic functionality that's essential for viability, and patents on such functionality shouldn't be used to cage your competitors out of a market. So, if you really support the principle of FRAND patents, then logical consistency demands that you acknowledge Apple is violating that principle.

Apple's patents are on such basic and obvious product aspects that it's nearly impossible to bring a viable product to market without running afoul. Would Apple's patents be overturned on reexamination? Almost certainly, but only after a long and protracted legal battle. Meanwhile, all it takes for Apple to kneecap their competitors is one injunction delaying the launch of a flagship product, or caging them out of peak holiday shopping season (which Apple did to Samsung last year).

If Samsung is asking everyone for the same absolute (not percentage) rate and isn't demanding cross licenses then Apple should have to pay that rate (assuming the patents are valid). I'm not sure that contradicts anything that I said.

I think Samsung can raise invalidity issues in the case before the judge/jury. If Apples patents are deemed invalid then they will get nothing.

The Apple patents that I'm aware of are fairly basic but can be worked around. E.g. by stopping scrolling dead at the end of the range and requiring something other than a swipe to unlock.

FRAND is a commitment made in standardisation to prevent the standards group from being an illegal cartel. That commitment should be kept. But a single company making a patented feature desirable would not trigger antitrust concerns in the general case so they wouldn't have needed to make an FRAND commitment. The potential exception would be for the Microsoft FAT patent because FAR is effectively a standard and while not created by a group of companies Microsoft was a monopolist. This is a rare case when I think FRAND may be appropriate rule for MS to adopt even if not legally require.

Yes the patent system is currently ridiculous and needs to grant far fewer but that is a complaint against the system which I would like to see reformed but you have to play by the rules in force. As I've said in a few posts I don't remember any tech giants (even Google and Samsung) campaigning against the patent system or even software patents. If the rules as they exist are enforced maybe that will change and the big players will want to change the system.

To be honest, I'm not sure what point you're even making here. You seem to be redefining the parameters to what's strictly legal in a system you agree is seriously flawed. But that's not where the thread of this conversation started. I never claimed what Apple was doing was illegal. Someone accused Samsung of behaving "unfairly," so I pointed to Apple's unfairness. As far as the law is concerned both parties are still behaving entirely legally (as no one's been found guilty of anything yet). Accepting that, I do consider the ethics of the issue a different story.

I know this is an old thread but I think I do want to respond.

Legally the court will decide but that doesn't mean that we can't have views or that either company is necessarily behaving legally (if you steal something you aren't behaving legally until convicted). For my perspective I am assuming all patents valid (if they are invalidated the license fees are no problem as they will be zero).

Samsung is in my view breaching promises made to the world including me and threatening the whole standardisation process. At the very least everyone needs to understand just how weak FRAND commitments are and adjust their behaviour accordingly. If allowed to stand Samsung's view of FRAND could do massive global harm as it will mean even more desperate fights to keep patented technologies out of standards where the patents are owned by companies not trusted to 'do the right thing' which could lead towards standardisation deadlock. It could also lead to all sorts of other companies all trying to extract all the value of standards making them unaffordable in many use cases.

Compared to this I really can't see anything unfair at all in what Apple is doing. Saying if you want to use this unnecessary feature you have to pay us a lot of money sounds fair to me, you can freely choose not to use it (damages/back licenses before the patents are confirmed by a court should probably be lower). The damages claims are just claims I don't expect to be fully granted but that is just the system isn't it, claim the moon on a stick expecting to get half a stick at the end.

It is possible to build a viable smartphone without Slide to Unlock or making it look like an iPhone (Palm did it, Nokia did it, even Samsung did it with the Galaxy S3). It isn't possible to build a viable smartphone without the various UMTS patents. That's the key difference here.

Also the rates that Samsung is asking aren't consistent with other licensees as Samsung is tying the rate to the device rather than the baseband processor that uses the patent. Asking for $25 royalty on a $10 component is unreasonable, especially when said component requires a 100 other standards essential patents to function.

Does a patented oil pump cost more if fitted to a BMW verses a Ford Escort ?

Yes, straw men do make for easy targets, particularly when you make up random numbers to support your point.

"Samsung is known to have demanded 2.4% of Apple's sales as a royalty for its wireless SEPs. That figure showed up in an Italian court ruling and was mentioned in open court in The Hague, Netherlands, by Apple's Dutch counsel."

2.4% of $650-$850 (Retail range of Unlocked iPhone 4S) is around $16-$20 per device. Quad-band 3G UMTS modems retail as low as $13 in lots of 1000. That's a full modem not just the UMTS chipset. And trust me Apple is not buying chipsets retail or in lots of 1000.

sources: http://www.fosspatents.com/2012/07/apple-seeks-25-billion-in...

http://www.alibaba.com/product-gs/571149685/Low_peice_OEM_7_...

Non-US iPhone users aren't subsidizing anything. While the carriers in the US do subsidize phones, carriers don't just absorb that cost, it gets passed along to the end user. These arguments are kind of similar to those presented by people wanting higher corporate taxes without realizing that those costs are ultimately paid by the consumer.

Uhm... you misread my comment entirely, and then diverged into politics. I don't know how to respond, because I'm not sure what argument you're making that relates to my point.

It is absolutely fair. Apple's patents aren't FRAND and so they can ask for whatever they want to ask for and Samsung has the option to either use it or not. It's not that simple when it comes to FRAND patents because the whole point of FRAND patents is to ensure that everyone uses it so that fragmentation doesn't occur in necessary standards. 2.4% for a single patent when there are potentially hundreds of patents is ridiculous. There's no way you can argue against that. How many patents go into making a phone? Samsung wants 2.4% for each one.

And yes, it's absolutely fair (about the subsidizing). That's how the market voted and that's how the carriers decided to do business. Majority rules here. If you don't like it, then vote with your wallet. Go to T-Mobile.

As a sidenote, I'm currently using a Samsung Galaxy S III on T-Mobile. But I still think what Samsung is doing with FRAND patents is wrong.