Optis continues its winning courtroom streak against Apple. After last month's $300M verdict in a Texas retrial, Optis has now obtained a favorable UK ruling: Apple faces a British sales ban unless it takes a license on FRAND terms yet to be determined by the London-based High Court of Justice.
I don't believe in reinventing the wheel, so for a thoughtful summary of the decision let me refer you to this write-up by Simmons & Simmons, which contains a link to the judgment (Word document). I just wanted to add my two cents regarding what's next, and to comment on just one remark by Justice Richard Meade, whose recent contribution to a Chinese conference was really great.
Justice Meade notes in his judgment that Apple doesn't deserve sympathy or strengthen its case by threatening to exit the UK market. In other words, he won't allow his court to be bullied. I actually understand both sides: I can see why Apple's counsel truthfully told the judge what her client might consider doing, but I can also see that a court can't be swayed that way. Some judges react sensitively to what they perceive to be corporate bullying. I remember Judge William Alsup in the Northern District of California noting that his court, unlike the plaintiff in the case before him at the time, was "not a wholly-owned subsidiary of Oracle Corporation."
I doubt that Apple can get this injunction overturned on appeal. The UK courts from the lowest level to the highest have had a consistent position for years, and it amounts to requiring implementers to take a (worldwide!) license "on whatever terms are in fact FRAND." Apple may not like the idea that it has to make a decision now, without knowing what terms will be set next year. But the UK courts are most likely going to continue to tell Apple that it has to trust them.
In July I commented on the possibilities for Apple if it decided to "leave" the UK market, which doesn't mean that no iPhones would be available there at all. Apple would lose some of its UK sales (and margin, as its highly profitable direct sales would end). Further holdout is an option. But what good would it do?
Without naming my sources, what I've heard from people in the IP licensing profession is that Optis is tough but reasonable; they don't leave money on the table, but others than Apple have been able to work out deals with them. Apple has been using those Optis SEPs on a huge scale, which is why the amount of money at stake (billions of dollars) may seem high, yet may simply be FRAND.
Apple can't win this in the UK courts. It can, however, engage in what has become one of Apple's highest priorities: lobbying. Apple apears to consider lobbying a high-ROI activity: they seek to delay the inevitable and indispensable opening of the iOS app distribution market, and they want lawmakers to put a thumb on the scales of patent licensing. Apple wants to have it both ways: it wants politicians to allow Apple to collect up to well over 30% (the UK is one of the countries where Apple effectively charges more) while denying SEP holders royalty rates that are tiny compared to the 30%+ cut Apple charges on in-app purchasing, subscriptions, and app downloads.
There was a time when Apple used to be pretty consistent, apart from seeking $40 or so per Samsung phone over a handful of software patents, arguing that it was a "reasonable" royalty, while giving a totally different meaning to the "reasonable" that is the R in "FRAND." By now, Apple contradicts itself all the time. Its privacy-related hypocrisy is an example, and in that post I also mentioned that Apple opposes state legislation on apps but wants U.S. state lawmakers to tilt the scales on SEPs. Similarly, Apple charges app developers a commission that has no ceiling, but argues that a FRAND SEP royalty rate should not be a percentage of sales (or, simply, the end-product price). I mentioned that in the aforementioned blog post, too.
The reason I wanted to recall all of this is because it means Apple has a conflict of interests here. There's a soft cost involved that may dwarf the operational impact of pulling out of the UK market. Apple actually wants to focus on the maintenance of its (incredibly harmful) app store monopoly. Apple could pay one army of lobbyists to work on one issue and another to deal with the other topic. But it's bound to run into serious credibility issues that way, and credibility is one of those things money can't buy.
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