Apple offers up to $1 per device for Motorola Mobility patents

IDG News Service - Apple has offered to pay Google's Motorola Mobility unit up to one dollar per device for a license to its patents covering cellular and Wi-Fi technologies.

Apple's offer, disclosed in a filing to the U.S. District Court for the Western District of Wisconsin in Madison, comes five days before a trial is due to begin that centers on the issue of patent licensing.

During the trial, the two companies are expected to argue over licensing rates.

The patents in question are considered vital to the UMTS, GPRS, GSM and 802.11 standards in which they are used, so Motorola Mobility is required to license them to competitors on "fair, reasonable, and non-discriminatory terms," often referred to by the acronym FRAND.

Motorola Mobility is arguing for a royalty payment of 2.25 percent on each device.

"Apple would be willing to pay a Court-ordered FRAND rate of less than or equal to $1 per covered product on the going-forward basis," it said in the filing. "This is the rate that Apple believes is appropriate in these circumstances for Motorola's portfolio of cellular and WiFi essential patents."

Apple said that if the court orders it to pay a rate higher than $1 per device, it would pursue all possible appeals.

"Make no mistake, that is not an outcome Apple desires," it said of the possibility of an appeal and further litigation. "But if the Court were to set, for example, the rate Motorola is seeking, that would amount to billions of dollars per year. That is orders of magnitude more than Apple is paying for even substantially larger standards-essential patent portfolios."

Apple said if it had to pay the Motorola Mobility rate, the total cost over several years would be larger than the $12.5 billion acquisition cost paid by Google, which bought Motorola Mobility in May.

"In such circumstances, Apple may need Motorola to demonstrate that its declared essential patents are in fact essential patents and worth that amount of money, a hurdle Motorola has thus far been unable to clear with what are presumably its best patents," it said.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com