This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Behind the Apple-Samsung War Lies Google

NEW YORK ( TheStreet) -- Behind the Obama Administration's decision to give Apple (AAPL - Get Report) relief in its patent battle with Samsung, reported by our Chris Ciaccia, lies the use and abuse of what are called "Standards-Essential Patents."

And behind that is Google (GOOG - Get Report).

A "Standards-Essential Patent" or SEP is just what it sounds like. It's a patent that is basic to a technology. How cell phones make calls, how they move data around -- all these things are standardized. Some of those standards include technologies on which patents are granted.

When patents are made part of a standard, the patent-holder is supposed to be willing to license that patent to whoever wants it, under what are called "Fair, Reasonable and Non Discrimatory" terms, FRAND for short.

Trouble is, a lot of companies with SEPs have lately been filing suit over those patents in violation of FRAND principles.

Which brings us to Google.

When Google bought Motorola two years ago, it had a relatively small arsenal of patents. Motorola brought with it a host of SEP patents, licensed under FRAND, which Google has since been using in court in an effort to defend itself against suits over other patents.

Last year, Judge Richard Posner, who is a name to reckon with, heard a case streaming from all this, with Apple and Motorola suing one another. He dismissed both cases "with prejudice," which means they couldn't be re-filed.

While much of the chatter after that decision involved Posner's refusal to hold Motorola, and therefore Google, liable for using four patents that described key features of the iPhone, more important was what he said about FRAND:
How could it [Motorola] be permitted to enjoin Apple from using an invention that it contends Apple must use if it wants to make a cell phone with UMTS telecommunications capability -- without which it would not be a cell phone.

Not everyone agrees with Posner, of course. The International Trade Commission, which is a U.S. agency, had agreed with Samsung to stop Apple's imports of various, older iPhones and iPads over patents which are subject to FRAND.

That's what U.S. Trade Representative Michael Froman has now stopped, essentially agreeing with Posner. You can fight in court over money when it comes to SEP patents, but in the end, they must be subject to FRAND, and you can't stop trade over standards.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.19 -1.04%
GOOG $695.70 0.48%
FB $118.06 0.54%
TSLA $222.56 -4.20%
YHOO $36.00 -0.03%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs