8 ms·

Federal judge tosses Apple patent lawsuit against Motorola

117 points by lnguyen 14y ago

debacle 14y ago
Is it time to short AAPL? They've lost some value recently, and the growth proposition doesn't seem to be where it has been. I could see them stay where they are, even with an earnings miss or two, however they are very much a stock traded on public perception.
- wmf 14y ago
  My perception is that Apple could lose every one of these lawsuits and still make crazy profits, but YMMV. Looking at this particular case, it seems extremely arrogant for Apple to offer to pay nothing for the ~100M admittedly-infringing products they've already sold.
  - eridius 14y ago
    Where did this idea of Apple paying nothing for the patents come from? I've never heard anyone suggest that, and it seems completely unrelated to debacle's comment.
    - wmf 14y ago
      Apple proposed to pay Moto at most $1/unit "going forward", which has been interpreted (perhaps wrongly) to mean that they want to pay nothing for past infringement.
- ryanhuff 14y ago
  Their P/E ratio is just 13.26, while Microsoft's is 16.05 and Google is 21.38. While P/E is just one simplistic measure, it does seem to indicate that their stock price already assumes lower future earnings relative to other mature tech companies.
  - MaysonL 14y ago
    And yet they're growing like crazy compare to Microsoft and Google.
  - revelation 14y ago
    Or it indicates that they are a hardware company, which is to say their ability to grow (or sustain) their business depends on any number of factors, not the least being political stability and conditions in China. Factors over which they can exert very little control.
- danielweber 14y ago
  AAPL is not going to have trouble because of lawsuits. It is going to have trouble if/when they lose the magic touch.
  - Shivetya 14y ago
    Not till the day where we see Android based tablets littering nearly every good TV show and movie. These lawsuits and such are meaningless to the coffee shop / college crowd. Apple is as much an image thing as BMW cars were for the previous generation. Far too many think that their phone, tablet, or laptop, confers status. That is going to take a lot of work to overcome that attitude. The marketing and product placement that it took to create that is the real power of Apple
    - tehayj 14y ago
      Apple loses its cool right now... quickly. Wait and see. The problem for Apple is that also the "uninformed crowd" slowly starts to realize that Apple rips them off. That's at least what's happening here in Germany where also mainstream newspapers talk negative about Apple's politics when it comes to marketing and / or lawsuits.
      - taligent 14y ago
        I am so sick of this "Apple users are uninformed" rubbish. If we want to play this game then how about this survey: http://www.androidauthority.com/are-iphone-users-richer-better-educated-than-android-users-105032/ http://www.androidauthority.com/are-iphone-users-richer-bett... Apple iPhone users are generally older, better-educated and earn higher than those using Android. Aren't generalisations fun !
        thechut 14y ago
        > generally older, better-educated and earn higher Could easily be argued that older more "professional" users as you infer are very much less informed than younger more tech savvy android users
- incision 14y ago
  At a glance, yes. I'm not actively trading, but my "system" would have suggested to consider shorting them on 9/20 and again on 10/23. I think you're right about public perception. For that reason, I think heavily about any signals with a technical base. I've had some sense of a perception shift since summer when the price was in this area previously. Though, I haven't taken a real position on AAPL since it was going sideways around $380 almost a year ago.
mtgx 14y ago
So where does this leave FTC who have been looking to accuse Google of the same thing? Do they need to start looking for other "crimes" to accuse Google of anti-trust now?
- wmf 14y ago
  It's possible that Apple and Moto are both being evil here; just because Apple lost doesn't mean Moto's policy is justified.
- calciphus 14y ago
  "In being sued by Apple, Google has obviously become a predatory competitor." "A judge recently threw out the case citing that Apple knowingly violated the patents and it's clear the lawsuit was part of a hostile negotiation." "Does that mean we have to return the iPhones and iPads we were given?"
- taligent 14y ago
  Relax. There are PLENTY of legal problems for Google. You have the FRAND investigation in US, EU, SK. The countless lawsuits over Google News. The recent finding in Australia of defamation against Google because of their search results. How that plays out in the future will be interesting. The privacy violations over DNT and major concerns/lawsuits over the cross-product privacy policy in EU, Canada and elsewhere. Then I expect there to be a wave of lawsuits over Google's intelligent search results e.g. flights, tickets, offers, shopping which are very similar to Microsoft's "embrace and extend" approach. Seems like everyone misses the "do no evil" Google.
  - DannyBee 14y ago
    Google was never "do no evil", only "don't be evil" which is very different.
  - BitMastro 14y ago
    Microsoft's approach is "embrace, extend and extinguish", spread your FUD right.
  - 14y ago
malandrew 14y ago
Can we just agree to always link to the FOSS Patents blog for all these stories in the future? Florian Mueller is always the very first one to report on these and does a much better job at analysis. Here on HN, we should actively replace upvoted articles with the primary source when it is clearly the better source of information. http://news.ycombinator.com/item?id=4745820 http://news.ycombinator.com/item?id=4745820
- fluidcruft 14y ago
  That's a good one. I needed a chuckle.
  - wmf 14y ago
    I also chuckled, but he has a point: we shouldn't let CNet "launder" Mueller's analysis onto HN. Also, it's frustrating to me that I haven't seen any coverage of this issue that's both detailed and "unbiased".
    - blrgeek 14y ago
      You could always read the docs linked from Groklaw, and avoid their commentary.
- georgemcbay 14y ago
  I actually agree on the point about linking to primary sources, but having said that Florian Mueller is a proven shill and his analysis should never be trusted at face value by anyone, particularly when he's analyzing anything to do with Google.
  - malandrew 14y ago
    I never claimed he was unbiased just like no one would claim that Gruber is unbiased. But having posts from source like CNET that just water down the original source make it to the front page adds absolutely nothing of value. Imagine if every John Gruber article worthy of making it to the front-page only ever made it to the front page after being laundered by a site like CNET? I think everyone can agree that we would be worse off without the original voices. One of the biggest losses of not having original voices, even from the most biased of biased bloggers, is that it also dilutes the counter-arguments of those on HN that provide the balance to biased articles. For example, a direct link to Florian Meuller's article may elicit a response from a contributor like yourself where you point out where Florian's analysis may be wrong and shouldn't be trusted. Without Florian's post to rebut, it's more likely that people like yourself would remain silent on the issue.
foxylad 14y ago
I was wondering the same thing a couple of days ago. The iPhone5 hasn't got the buzz previous releases had, and the iPad mini seems to be less and later than comparable android 7" tablets. Apple is also putting increasing energy into patent lawsuits, which is another sign of a company resting on it's laurels. And of course they've lost Jobs. Having said that, although I think it likely that Apple has peaked, I wouldn't short it just yet. I had the same opinion about Microsoft ten years ago during the years bewtween XP and Vista. Linux was surging ahead, Windows was going nowhere, lawsuits started flying and Bill Gates stepped down. Actually, now I commit this to text, the comparison is spookily similar! But my point is that it took about 8 years before there was any effect on their share price. My experience is that what seems obvious to us now takes years to filter through to market sentiment. So if you're going to short Apple, do it 10 years out (if that's possible).
- Tyrannosaurs 14y ago
  Tim Cook may be no Steve Jobs but he's no Steve Ballmer either... (Though on the other hand as cash cows go the iPhone and iPad are no Windows and Office). That said I think the whole Jobs thing is overstated at this point. It's not as if they didn't misstep with Jobs at the helm, and it's not as if they've been turning out bad products since he went (not to mention that everything "post-Jobs" they've done so far was in the pipeline while he was still in charge and would have had his blessing).
  - brudgers 14y ago
    Agreed. Cook is not the second largest shareholder of Apple stock and does not have a thirty year working relationship with the largest shareholder. Thus, unlike Ballmer, Cook serves at the pleasure of Wall Street.
    - Tyrannosaurs 14y ago
      While being beholden to Wall Street is a double edged sword, you need to be a special sort of person to really work without being answerable to anyone in the way Jobs and Gates did. I think Ballmer shows that for lesser mortals, some responsibility is a good thing.
mrich 14y ago
For reference: Apple is willing to pay a maximum of $1 for patents that make their device a functioning phone. Two years ago, they offered Samsung to license some of their less important patents for $30 per phone and $40 per tablet.
- wmf 14y ago
  It's not obvious that "essential" patents are more important. 3G and Wi-Fi are commodity technologies while iOS is less so.
  - mcantelon 14y ago
    A phone without something like multi-touch is more useful than one without 3G/WiFi (or am I missing something in what you're saying)?
- taligent 14y ago
  For reference: Apple's patents were for multi-touch/bounce back scrolling which their research showed was worth $30/$40 to consumers. Samsung's patents are one of the many FRAND patents for core 3G/WiFi.
  - bo1024 14y ago
    I don't understand what you're saying here. Is it that 3G and WiFi are worth < 1/30 as much as bounce-back scrolling?
    - taligent 14y ago
      Samsung is just one of MANY FRAND patent holders for 3G/WiFi which are commodity technologies today. People just expect it to be on all mobile devices. The bounce back scrolling uniquely differentiated iOS from other platforms. And there are plenty of ways to implement it without needed to duplicate the exact Apple way. In fact HTC, Samsung, Google, Motorola all have different implementations. So yes from a product perspective Samsung's tiny contribution to the FRAND patent pool is worth 1/30 of what Apple's patents are worth.
leeoniya 14y ago
for every one of these lawsuits i wish there were 10 more. we seriously need to get the patent courts so backed up that it should take 17 years to get your case in front of a judge and the same amount of time to secure a patent on an idea.
bobdole2 14y ago
Patents are for gays
mdasen 14y ago
So, this wasn't a trial about Apple using patents against Motorola. It was Apple filing suit against Motorola's use of patents against it. Basically, when a standard is created the standard will likely use patented technology. Think about H.264. It isn't free. However, it is open (anyone is allowed to create hardware and software using the standard, so long as they pay the fee). Also, that fee is the same for everyone. These terms are FRAND (fair, reasonable, and non-discriminatory). It's essential for standards to ensure competition. Then there are things that aren't standards. I'm not saying that you should agree with patents or anything like that, but they do exist and this distinction is made. If you hate patents (and I'm not saying you shouldn't), then they're all bad and we should get rid of them all. Disclaimer aside, let's say that you patented having 3 buttons on a phone (home, back, menu) ala some Android phones. There are many other ways to implement that functionality. Maybe that's the best combination of buttons and users love it. However, even in the Android world, we see phones with on-screen keys and no buttons, ones with 4 buttons, etc. You could even do something cool like a touch area with swipe left for back, touch for home, and swipe right for menu. Nothing there would kill your ability to create a device worthy of people spending money on. Taking a real-world example, let's look at Apple's bounce-back function for over-scrolling. Android 4 now does a highlight on over-scroll rather than the bounce-back. While a user might say, "the bounce-back looks better", it doesn't prevent a party from creating a device worthy of users' money. Now, if you can't send signals using the technology that cell sites use, that does prevent one from making a device worthy of users' money. Those patents are standards essential. Now, when groups set standards, they will work around the patents of any company that doesn't want to license their patents under FRAND terms. However, companies want standards to use their technology because while they might not be able to extort money, they're guaranteed that everyone will use it. There's a big distinction between things you have to license and things you can implement differently with a little creativity and, as such, we treat them differently. In the Apple/Motorola case here, Motorola (along with others like Nokia, Ericsson, Siemens, others) helped develop the wireless standards. They have to license their patents under FRAND terms. However, many of them want Apple to pay more per device than competitors. Part of this is that Apple has sucked up most of the profit in the industry and they want it back. Before Apple, Nokia was doing pretty well. Now? Motorola had been sliding for a bit, but Apple certainly helped that along by creating much better devices than pre-Android Motorolas. Basically, there are patents that you're required to use and since you're required to use them (you can't build a phone without them), they have to be licensed under fair, reasonable, and non-discriminatory terms. The FTC looks like they will recommend that the government file suit against Google/Motorola over what the FTC sees as Motorola abusing these standards essential patents against Apple and Microsoft (http://www.bloomberg.com/news/2012-11-01/ftc-staff-said-to-formally-recommend-google-patent-suit.html http://www.bloomberg.com/news/2012-11-01/ftc-staff-said-to-f...). So, this isn't a suit about Apple pushing UI patents against Motorola that got tossed here. This was Apple trying to get Motorola to license their technology under FRAND terms. It seems that the disagreement is over the percentage model that Motorola wants. Motorola wants 2.25% of the full retail price of the device. So, if you make a dumbphone for $35, you pay 79cents. If you make a 16GB iPhone 5, you pay $14.63. Somewhat ridiculously, if you make a 64GB iPhone 5, you'd pay $19.13. Apple seems to be arguing that FRAND means that you can't discriminate like that. Motorola, still losing money, wants a large portion of those profits while still being able to profit off of cheaper devices. One can make the argument that the percentage model is non-discriminatory, but it doesn't fly well by me. Non-discriminatory isn't with respect to the price of the device or the money you're making off of it.

117 points by lnguyen 14y ago

Is it time to short AAPL? They've lost some value recently, and the growth proposition doesn't seem to be where it has been. I could see them stay where they are, even with an earnings miss or two, however they are very much a stock traded on public perception.

wmf 14y ago
My perception is that Apple could lose every one of these lawsuits and still make crazy profits, but YMMV. Looking at this particular case, it seems extremely arrogant for Apple to offer to pay nothing for the ~100M admittedly-infringing products they've already sold.
- eridius 14y ago
  Where did this idea of Apple paying nothing for the patents come from? I've never heard anyone suggest that, and it seems completely unrelated to debacle's comment.
  - wmf 14y ago
    Apple proposed to pay Moto at most $1/unit "going forward", which has been interpreted (perhaps wrongly) to mean that they want to pay nothing for past infringement.
ryanhuff 14y ago
Their P/E ratio is just 13.26, while Microsoft's is 16.05 and Google is 21.38. While P/E is just one simplistic measure, it does seem to indicate that their stock price already assumes lower future earnings relative to other mature tech companies.
- MaysonL 14y ago
  And yet they're growing like crazy compare to Microsoft and Google.
- revelation 14y ago
  Or it indicates that they are a hardware company, which is to say their ability to grow (or sustain) their business depends on any number of factors, not the least being political stability and conditions in China. Factors over which they can exert very little control.
danielweber 14y ago
AAPL is not going to have trouble because of lawsuits. It is going to have trouble if/when they lose the magic touch.
- Shivetya 14y ago
  Not till the day where we see Android based tablets littering nearly every good TV show and movie. These lawsuits and such are meaningless to the coffee shop / college crowd. Apple is as much an image thing as BMW cars were for the previous generation. Far too many think that their phone, tablet, or laptop, confers status. That is going to take a lot of work to overcome that attitude. The marketing and product placement that it took to create that is the real power of Apple
  - tehayj 14y ago
    Apple loses its cool right now... quickly. Wait and see. The problem for Apple is that also the "uninformed crowd" slowly starts to realize that Apple rips them off. That's at least what's happening here in Germany where also mainstream newspapers talk negative about Apple's politics when it comes to marketing and / or lawsuits.
    - taligent 14y ago
      I am so sick of this "Apple users are uninformed" rubbish. If we want to play this game then how about this survey: http://www.androidauthority.com/are-iphone-users-richer-better-educated-than-android-users-105032/ http://www.androidauthority.com/are-iphone-users-richer-bett... Apple iPhone users are generally older, better-educated and earn higher than those using Android. Aren't generalisations fun !
      - thechut 14y ago
        > generally older, better-educated and earn higher Could easily be argued that older more "professional" users as you infer are very much less informed than younger more tech savvy android users
incision 14y ago
At a glance, yes. I'm not actively trading, but my "system" would have suggested to consider shorting them on 9/20 and again on 10/23. I think you're right about public perception. For that reason, I think heavily about any signals with a technical base. I've had some sense of a perception shift since summer when the price was in this area previously. Though, I haven't taken a real position on AAPL since it was going sideways around $380 almost a year ago.

mtgx 14y ago

So where does this leave FTC who have been looking to accuse Google of the same thing? Do they need to start looking for other "crimes" to accuse Google of anti-trust now?

wmf 14y ago
It's possible that Apple and Moto are both being evil here; just because Apple lost doesn't mean Moto's policy is justified.
calciphus 14y ago
"In being sued by Apple, Google has obviously become a predatory competitor." "A judge recently threw out the case citing that Apple knowingly violated the patents and it's clear the lawsuit was part of a hostile negotiation." "Does that mean we have to return the iPhones and iPads we were given?"
taligent 14y ago
Relax. There are PLENTY of legal problems for Google. You have the FRAND investigation in US, EU, SK. The countless lawsuits over Google News. The recent finding in Australia of defamation against Google because of their search results. How that plays out in the future will be interesting. The privacy violations over DNT and major concerns/lawsuits over the cross-product privacy policy in EU, Canada and elsewhere. Then I expect there to be a wave of lawsuits over Google's intelligent search results e.g. flights, tickets, offers, shopping which are very similar to Microsoft's "embrace and extend" approach. Seems like everyone misses the "do no evil" Google.
- DannyBee 14y ago
  Google was never "do no evil", only "don't be evil" which is very different.
- BitMastro 14y ago
  Microsoft's approach is "embrace, extend and extinguish", spread your FUD right.
- 14y ago

malandrew 14y ago

Can we just agree to always link to the FOSS Patents blog for all these stories in the future? Florian Mueller is always the very first one to report on these and does a much better job at analysis. Here on HN, we should actively replace upvoted articles with the primary source when it is clearly the better source of information. http://news.ycombinator.com/item?id=4745820 http://news.ycombinator.com/item?id=4745820

fluidcruft 14y ago
That's a good one. I needed a chuckle.
- wmf 14y ago
  I also chuckled, but he has a point: we shouldn't let CNet "launder" Mueller's analysis onto HN. Also, it's frustrating to me that I haven't seen any coverage of this issue that's both detailed and "unbiased".
  - blrgeek 14y ago
    You could always read the docs linked from Groklaw, and avoid their commentary.
georgemcbay 14y ago
I actually agree on the point about linking to primary sources, but having said that Florian Mueller is a proven shill and his analysis should never be trusted at face value by anyone, particularly when he's analyzing anything to do with Google.
- malandrew 14y ago
  I never claimed he was unbiased just like no one would claim that Gruber is unbiased. But having posts from source like CNET that just water down the original source make it to the front page adds absolutely nothing of value. Imagine if every John Gruber article worthy of making it to the front-page only ever made it to the front page after being laundered by a site like CNET? I think everyone can agree that we would be worse off without the original voices. One of the biggest losses of not having original voices, even from the most biased of biased bloggers, is that it also dilutes the counter-arguments of those on HN that provide the balance to biased articles. For example, a direct link to Florian Meuller's article may elicit a response from a contributor like yourself where you point out where Florian's analysis may be wrong and shouldn't be trusted. Without Florian's post to rebut, it's more likely that people like yourself would remain silent on the issue.

foxylad 14y ago

I was wondering the same thing a couple of days ago. The iPhone5 hasn't got the buzz previous releases had, and the iPad mini seems to be less and later than comparable android 7" tablets. Apple is also putting increasing energy into patent lawsuits, which is another sign of a company resting on it's laurels. And of course they've lost Jobs. Having said that, although I think it likely that Apple has peaked, I wouldn't short it just yet. I had the same opinion about Microsoft ten years ago during the years bewtween XP and Vista. Linux was surging ahead, Windows was going nowhere, lawsuits started flying and Bill Gates stepped down. Actually, now I commit this to text, the comparison is spookily similar! But my point is that it took about 8 years before there was any effect on their share price. My experience is that what seems obvious to us now takes years to filter through to market sentiment. So if you're going to short Apple, do it 10 years out (if that's possible).

Tyrannosaurs 14y ago
Tim Cook may be no Steve Jobs but he's no Steve Ballmer either... (Though on the other hand as cash cows go the iPhone and iPad are no Windows and Office). That said I think the whole Jobs thing is overstated at this point. It's not as if they didn't misstep with Jobs at the helm, and it's not as if they've been turning out bad products since he went (not to mention that everything "post-Jobs" they've done so far was in the pipeline while he was still in charge and would have had his blessing).
- brudgers 14y ago
  Agreed. Cook is not the second largest shareholder of Apple stock and does not have a thirty year working relationship with the largest shareholder. Thus, unlike Ballmer, Cook serves at the pleasure of Wall Street.
  - Tyrannosaurs 14y ago
    While being beholden to Wall Street is a double edged sword, you need to be a special sort of person to really work without being answerable to anyone in the way Jobs and Gates did. I think Ballmer shows that for lesser mortals, some responsibility is a good thing.

mrich 14y ago

For reference: Apple is willing to pay a maximum of $1 for patents that make their device a functioning phone. Two years ago, they offered Samsung to license some of their less important patents for $30 per phone and $40 per tablet.

wmf 14y ago
It's not obvious that "essential" patents are more important. 3G and Wi-Fi are commodity technologies while iOS is less so.
- mcantelon 14y ago
  A phone without something like multi-touch is more useful than one without 3G/WiFi (or am I missing something in what you're saying)?
taligent 14y ago
For reference: Apple's patents were for multi-touch/bounce back scrolling which their research showed was worth $30/$40 to consumers. Samsung's patents are one of the many FRAND patents for core 3G/WiFi.
- bo1024 14y ago
  I don't understand what you're saying here. Is it that 3G and WiFi are worth < 1/30 as much as bounce-back scrolling?
  - taligent 14y ago
    Samsung is just one of MANY FRAND patent holders for 3G/WiFi which are commodity technologies today. People just expect it to be on all mobile devices. The bounce back scrolling uniquely differentiated iOS from other platforms. And there are plenty of ways to implement it without needed to duplicate the exact Apple way. In fact HTC, Samsung, Google, Motorola all have different implementations. So yes from a product perspective Samsung's tiny contribution to the FRAND patent pool is worth 1/30 of what Apple's patents are worth.

leeoniya 14y ago

for every one of these lawsuits i wish there were 10 more. we seriously need to get the patent courts so backed up that it should take 17 years to get your case in front of a judge and the same amount of time to secure a patent on an idea.

bobdole2 14y ago

Patents are for gays

mdasen 14y ago

So, this wasn't a trial about Apple using patents against Motorola. It was Apple filing suit against Motorola's use of patents against it. Basically, when a standard is created the standard will likely use patented technology. Think about H.264. It isn't free. However, it is open (anyone is allowed to create hardware and software using the standard, so long as they pay the fee). Also, that fee is the same for everyone. These terms are FRAND (fair, reasonable, and non-discriminatory). It's essential for standards to ensure competition. Then there are things that aren't standards. I'm not saying that you should agree with patents or anything like that, but they do exist and this distinction is made. If you hate patents (and I'm not saying you shouldn't), then they're all bad and we should get rid of them all. Disclaimer aside, let's say that you patented having 3 buttons on a phone (home, back, menu) ala some Android phones. There are many other ways to implement that functionality. Maybe that's the best combination of buttons and users love it. However, even in the Android world, we see phones with on-screen keys and no buttons, ones with 4 buttons, etc. You could even do something cool like a touch area with swipe left for back, touch for home, and swipe right for menu. Nothing there would kill your ability to create a device worthy of people spending money on. Taking a real-world example, let's look at Apple's bounce-back function for over-scrolling. Android 4 now does a highlight on over-scroll rather than the bounce-back. While a user might say, "the bounce-back looks better", it doesn't prevent a party from creating a device worthy of users' money. Now, if you can't send signals using the technology that cell sites use, that does prevent one from making a device worthy of users' money. Those patents are standards essential. Now, when groups set standards, they will work around the patents of any company that doesn't want to license their patents under FRAND terms. However, companies want standards to use their technology because while they might not be able to extort money, they're guaranteed that everyone will use it. There's a big distinction between things you have to license and things you can implement differently with a little creativity and, as such, we treat them differently. In the Apple/Motorola case here, Motorola (along with others like Nokia, Ericsson, Siemens, others) helped develop the wireless standards. They have to license their patents under FRAND terms. However, many of them want Apple to pay more per device than competitors. Part of this is that Apple has sucked up most of the profit in the industry and they want it back. Before Apple, Nokia was doing pretty well. Now? Motorola had been sliding for a bit, but Apple certainly helped that along by creating much better devices than pre-Android Motorolas. Basically, there are patents that you're required to use and since you're required to use them (you can't build a phone without them), they have to be licensed under fair, reasonable, and non-discriminatory terms. The FTC looks like they will recommend that the government file suit against Google/Motorola over what the FTC sees as Motorola abusing these standards essential patents against Apple and Microsoft (http://www.bloomberg.com/news/2012-11-01/ftc-staff-said-to-formally-recommend-google-patent-suit.html http://www.bloomberg.com/news/2012-11-01/ftc-staff-said-to-f...). So, this isn't a suit about Apple pushing UI patents against Motorola that got tossed here. This was Apple trying to get Motorola to license their technology under FRAND terms. It seems that the disagreement is over the percentage model that Motorola wants. Motorola wants 2.25% of the full retail price of the device. So, if you make a dumbphone for $35, you pay 79cents. If you make a 16GB iPhone 5, you pay $14.63. Somewhat ridiculously, if you make a 64GB iPhone 5, you'd pay $19.13. Apple seems to be arguing that FRAND means that you can't discriminate like that. Motorola, still losing money, wants a large portion of those profits while still being able to profit off of cheaper devices. One can make the argument that the percentage model is non-discriminatory, but it doesn't fly well by me. Non-discriminatory isn't with respect to the price of the device or the money you're making off of it.