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Wednesday, October 31, 2012, 12:42 pm PT (03:42 pm ET)

Apple tells court it would pay no more than $1 per iPhone to license Motorola patents

Apple has indicated to a Wisconsin court that it is willing to pay Google-owned Motorola Mobility to license standard-essential wireless patents, but it will not pay more than $1 per iPhone sold.

The admission by Apple marks the first time the company has indicated it would license standard-essential patents from Motorola, according to Florian Mueller of FOSS Patents. Apple said that if the court sets a FRAND rate at or below $1, the company will take a license and start paying Motorola immediately.

But if the court sets a royalty rate higher than $1 per iPhone, Apple has signaled that it will appeal the decision and make it more difficult for Motorola and Google to collect.

"Motorola cannot offer evidence at this trial that the rate should be higher than $1 per phone, but to the extent the Court sets the rate higher than $1 per unit, Apple reserves the right to exhaust all appeals," Apple's filing reads, "and needs also to reserve the right available to any party offered a license: the right to refuse and proceed to further infringement litigation. Make no mistake, that is not an outcome Apple desires."

Motorola


The new details come five days ahead of the start of the FRAND contract trial in the Western District of Wisconsin. In that trial, Apple intends to employ expert testimony and "copious real-world evidence — including Motorola's contemporaneous licenses — that establishes a ceiling for the FRAND rate Motorola could charge Apple for Motorola's worldwide portfolio."

The rate Apple has said it is willing to pay is significantly lower than the 2.25 percent of Apple's sales that Motorola seeks for standard-essential patents. Mueller, an intellectual property expert, said he doesn't expect Motorola to "ever" receive a payout that large.

"Apple's '$1 maximum' position may be justified from a FRAND point of view (I guess it is)," Mueller wrote, "but such a deal wouldn't give Google the strategic leverage over Apple that it hoped to get when it paid $12.5 billion for Motorola Mobility."