Google: We want 2.25% of the iPhone sticker price

Google intends to continue Motorola Mobility’s demands for 2.25-percent of Apple’s iPhone sales in royalties, the search giant has revealed, once its acquisition of the smartphone manufacturer goes through. Although Google’s letter to the IEE standards agency this week ostensibly called for fair patent licensing deals, it also reiterates commitment to maximum 2.25-percent per-unit royalty that Motorola was roundly criticized for, FOSS Patents spotted.

“Following Google’s acquisition of MMI [Motorola Mobility Holdings, Inc.], Google will honor MMI’s existing commitments to license the acquired MMI Essential Patent Claims on RAND [reasonable terms and conditions demonstrable free of any unfair discrimination] terms, as required by IEEE rules and consistent with MMI’s longstanding practice. This letter is irrevocable. Google understand that, pursuant to IEEE rules, MMI is prepared to grant licenses for Essential Patent Claims with a maximum per-unit royalty of 2.25-percent of the net selling price for the relevant end product on a go-forward basis, subject to offsets for the value of any cross-licenses or other consideration received from the licensee” Allen Lo, Deputy General Counsel, Google

Apple has argued that Motorola’s fee demands are excessive, and that its rivals are not following FRAND (fair, reasonable and non-discriminatory) guidelines in a similar way to that which sparked an EC investigation into potential antitrust behavior by Samsung. The Cupertino company’s legal team has also sought disclosure from other smartphone manufacturers as to how much they’ve agreed to pay Motorola in licensing fees, though it’s possible Motorola could argue that the reciprocal licensing means the deals are non-comparable.

Meanwhile, Google’s stance on potential injunctions is apparently unchanged from Motorola Mobility’s existing approach: that is, to apply for an injunction if licensees don’t agree to its royalty terms. If, it’s suggested, the 2.25-percent referred solely to the specific component the patented technology was applied in – for instance, a baseband 3G/UMTS radio chipset – then that might be reasonable, but Motorola is chasing 2.25-percent of the entire end-product, i.e. almost $15 on the unsubsidized price of each entry-level iPhone 4S.

The decision as to whether Google is allowed to acquire Motorola Mobility is expected to be reached on February 13.

[via Fortune]