Apple’s anti-innovation strategy of devaluing patents is a claim made in a campaign that Apple deliberately pushes.
“[I]nternal Apple documents show[] a clearly articulated plan for ‘Reshaping [Fair Reasonable and Non-Discriminatory]’ licensing obligations imposed by standard setting organizations.”
Consumer device giant Apple has earned trillions of dollars and cornered near monopoly levels of market share by implementing a corporate strategy focused on gaming proceedings in the federal judiciary and administrative agencies with the intent to devalue patent rights. That is the major takeaway from a recently launched campaign raising awareness into the alleged growing chokehold that Apple has gained over the global innovation industry over the past two decades, and the resulting stagnation in the cellular mobile communications ecosystem.
Several Case Studies Outline Apple’s Strategy to Delay Royalties Through Litigation
The awareness campaign, driven by intellectual property holding company PanOptis, which has been embroiled in litigation with Apple for several years, highlights Apple’s reliance on devaluing IP, especially standard essential patent (SEP) rights in the telecommunications sector, to support trillions of dollars in iPhone sales. This campaign underscores that Apple’s patent devaluation strategies hurts many mobile technology developers who, despite being smaller in size, still invest tens of billions of dollars each year in cellular-related innovation.
Supporting the claims made by the iProtectInnovation campaign are a series of case studies based on several cases in U.S. and foreign courts, some of which are still ongoing, that feature aspects of Apple’s patent devaluation strategy. Apple’s willingness for litigation to avoid paying patent royalties is evident in the lawsuits brought by mobile technology developers Ericsson, and Masimo. This is especially true given the dramatic increases in royalty rates Apple agreed to as part of settlements that ended at least Ericsson’s case. Apple’s corporate patent devaluation strategy to manipulate the entire patent licensing market was revealed in related proceedings involving the Federal Trade Commission. Evidence entered into related proceedings involving the Federal Trade Commission clarified the existence of Apple’s corporate patent devaluation strategy to manipulate the entire patent licensing market.
Apple’s Predatory Infringement Model Coming Under Closer Scrutiny
In particular, iProtectInnovation cites one slide from internal Apple documents showing a clearly articulated plan for “Reshaping
” licensing obligations imposed by standard setting organizations. By holding out for SEP royalties that are derived from the smallest priceable component at rates no higher than adjusted pro-rata shares of SEPs, Apple aimed to “build favorable, arms-length ‘comp’ licenses” that prevented SEP owners and others from properly commercializing their mobile tech inventions, leaving Apple free to reap massive revenues from the sale of iPhones and other devices implementing those technologies.[Fair Reasonable and Non-Discriminatory]PanOptis, which has successfully licensed its telecommunications SEPs with major global smartphone makers including Samsung and Lenovo, is currently appealing rulings handed down last February by the UK’s High Court of Justice. PanOptis argues that the UK court’s flawed methodology in determining a $63.7m total for a FRAND license rate for PanOptis’ SEPs was compounded by Apple evidence on comparable licensing rates that reinforced its corporate blueprint of royalty holdout. A hearing will begin on February 25, and five days of briefing will be live streamed. This campaign to raise awareness about Apple’s antiinnovation corporate policies coincides with the European Commission’s decision to scrap draft regulations which would have had significant impacts on the EU licensing market. These regulations were heavily supported by standard implementers such as Apple. Efficient infringement models employed by Apple and other Big Tech stalwarts have also been in greater focus, with IPWatchdog President & CEO Gene Quinn hosting a webinar in early January with other IP experts talking about issues of unwilling licensees in the SEP and FRAND context.
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Steve Brachmann
Steve Brachmann graduated from the University at Buffalo School of Law in May 2022, earning his Juris Doctor. He served as the president of the Intellectual
