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  (Source: Lucasfilm Ltd.)
Cupertino company sees its bid to push its inferior SIM standard for profit hit an obstacle

Apple, Inc. (AAPL) has created quite the controversy in the European phone market, which relies heavily on the GSM 3G communications standard. This in turn requires a small circuit called a "Subscriber Identity Model" (SIM) insider every phone.

I. Protest Delays Apple Takeover

Apple's efforts to "dissolve the Senate" by giving itself more votes on the European Union's phone standard board -- the European Telecommunications Standards Institute (ETSI) -- than all the other players combined has stalled thanks to a protest filed by Canada's Research in Motion, Ltd. (TSE:RIM).

RIM is among the many phonemakers fearful of the Apple takeover and the financially damaging sanctions against its rivals. 

RIM writes:
Over the last few days we have observed a number of representatives from one company changingtheir affiliation over night and registering to the meeting not representing their employer or any of theiraffiliates but representing a completely different company.
As a consequence, we kindly ask that neither shall a person of one company who is appointed to carrythe votes of another company be entitled to cast a vote on behalf of that company, nor shall a personof one company who is registered in the place of a person from another company and appointed tocast a vote on behalf of that other company, be allowed to cast a vote on behalf of that company.

RIM, currently struggling with financial issues, is fearful of Apple's bid to assert control of EU phone standards, both by registering its subsidiaries as independent voting members and by applying financial pressure to EU telecoms to join its quest to consolidate power.

But it's hardly alone.  While RIM took the lead in filing the challenge to Apple's recent moves, it's just one of several top phonemakers who have spoken out against Apple's plans. The move would look to put the American phonemaker in a peachier position financially, while leaving customers with an inferior design, and killing the democratic nature of the EU standards board.

II. Hijacking the Process

The story of the dispute began with Google Inc.'s (GOOG) new subsidiary Motorola Mobility, Nokia Oyj. (HEL:NOK1V) -- the world's largest maker of tradition phones -- and RIM efforts to trim the SIM card to allow for thinner, lighter smartphones.  The trio proposed an ambitious new design that takes on a form factor comparable to a microSD card and is relatively sturdy.

Apple, however, seized on this as an opportunity to hijack the process with its own patented standard, which it would only offer competitors "for free" to Nokia if they scrapped existing royalty agreements for patents Apple currently licenses.

Furthermore, the design Apple put forth did not satisfy the standards committee -- the European Telecommunications Standards Institute (ETSI) -- requirements in terms of form factor.  In addition the gadget maker's design was so crude that it needed a special protective plastic tray to prevent it from snapping -- a design which Apple patented.

SIM Card designs
Apple's design (right) is essentially a current gen. SIM card with the plastic trimmed off.  The rival designs (left) resemble a microSD card, and feature a more robust, brand new form factor.
[Image Sources: The Verge (top, bottom right; bottom left); Inventor Spot (top left)]
(Click image to enlarge.)

Nokia, Motorola, and RIM clearly were not happy with Apple's efforts to push this cruder design for its own financial fortune.  While it might seem that three phonemakers' opinion would trump that of one, Apple -- the world's most profitable technology company -- looked to exploit a loophole in the standards organization's rules, registering six of its subsidiaries as independent companies, in an effort to appoint itself dictator of the board and give itself more votes than the other members combined.

Allegedly several telecoms -- including Bell Mobility, SK Telekom Ltd. (FRA:KMB) and KT Corp. ADR (FRA:KTC) -- also agreed to assist Apple in its power grab.  Potential reasons for their collaboration include an effort to win favor with the phonemaker and retain/win access to its popular iPhone.  Also carriers reportedly liked Apple's less open, more traditional design that closed the route to reprogrammable SIM cards.

Apple in 2008 supported reprogrammable SIM cards, but has since largely dropped its support of the more open standard, which would offer its customers more freedom, but offer it less financial advantages. 

Apple money
Apple is trying to appoint itself ruler of the ETSI board with 270 votes, thanks to its record profits.  Nokia currently has the most votes of anyone -- 92. [Image Source: SomanyMP3s]

Aside from the SIM issue, if Apple succeeds in its goal of taking control of the EU's standards board, it could essentially win a free license to dictate financially destructive standards on its Windows Phone and Android rivals.

Source: RIM [Scribd]

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RE: some bits are missing
By Tony Swash on 3/30/2012 3:00:49 PM , Rating: -1
So let me get this right. Apple offers to make it's patents freely available as long as the other players do thus ensuring there will be no patent or legal wars over the new SIM standard - and that's a bad thing?

RE: some bits are missing
By Solandri on 3/30/2012 3:23:00 PM , Rating: 5
If the patents in question are regarding the technical operation of wireless telecommunications vs. "we shaved the edges off a SIM card", then yes it's a bad thing. It's like saying you let me use your car whenever I like, and in exchange I'll let you chew on my used bubble gum.

Very few people believe patents have no merit. Most people believe good, innovative patents help promote technological progress. What they're upset about is the patenting of seemingly obvious things like rounded corners and bounces, then companies wielding those patents to stonewall competitors, or to extract money from an industry in which they have no plans to compete in themselves.

RE: some bits are missing
By Tony Swash on 3/30/12, Rating: -1
RE: some bits are missing
By Solandri on 3/30/2012 9:34:33 PM , Rating: 5
In this particular case, yes. Apple entered the mobile telecommunications market with no prior background. They held no patents, had no expertise. So they made a bunch of (flimsy IMHO) design and look-and-feel patents, and started bashing long-established players in the market over the head with them, as a way of fending off the inevitable patent infringement suits against their successful product.

I'm hardly one to bash Apple. I've stated numerous times that they do user interfaces and capture people's imagination better than anyone. I correctly predicted here that the iPad at a sub-$500 price point would sell like hotcakes. But I believe that those things (along with software) should not be patentable. Copyright is a more appropriate protection. With a copyright you can protect your version of rounded corners, but you cannot prohibit everyone from using rounded corners like you could with a patent.

Patents should be reserved for truly innovative inventions, ones which did not exist in any working form prior to the patent. The technical wireless communications patents mostly meet that standard. Apple's design and UI patents do not. A mouse for pointer data input should be patentable (hopefully Apple or Xerox patented it). The shape of the mouse or the fact that there are buttons on it should not.

RE: some bits are missing
By Decom on 3/30/2012 3:34:18 PM , Rating: 2
So let me get this right. Apple offers to make it's patents freely available as long as the other players do thus ensuring there will be no patent or legal wars over the new SIM standard - and that's a bad thing?

No, that's not quite right there Tony.

Apple offering to give up royalties on an inferior design, which they have shaved a few milimetres of plastic off, which violates the ETSI parameters and then in an effort to usurp the process install subsidiaries and then trying to use this as a bargaining chip only if they can have Nokia's patents for free IS a "bad thing"


RE: some bits are missing
By elleehswon on 3/30/2012 6:10:12 PM , Rating: 2
Tony, why not comment on Apple trying to stack the deck in their favor with attempting to buy out the ESTI? Lets get your thoughts on that.

RE: some bits are missing
By JasonMick on 3/30/2012 10:54:32 PM , Rating: 5
So let me get this right. Apple offers to make it's patents freely available as long as the other players do
You "don't got this right".

Apple is offering one patent on a shoddy implementation it has, which it's trying to push through by essentially hijacking the standards board and appointing itself dictator.

In exchange for this one crappy patent that no one wants, which it's forcing on every, it wants ALL of its competitors' standards patents for free.

Oh, how generous Tony. I see Apple is a really bleeding heart.

To quote the Simpsons, "You think I got this rich writing checks?"

thus ensuring there will be no patent or legal wars over the new SIM standard - and that's a bad thing?

AHAHAHAHA oh how rich Tony. Are you forgetting who started the current legal war by bullying patent poor HTC?

You honestly think Apple won't sue people?

Oh, man you really offer me some free entertainment.

That is too funny. :)

NOWHERE has Apple offered mass licensing of the rest of its portfolio to rivals. It's simply offering them one measly patent (which they don't want!), in exchange for their entire hard-researched standards portfolio. Meanwhile it will almost certainly continue to attempt to abuse them in court with junk litigation and questionable patents.

RE: some bits are missing
By Tony Swash on 3/31/12, Rating: -1
RE: some bits are missing
By DeluxeTea on 4/2/2012 3:35:08 AM , Rating: 1
Just because Nokia and RIM are the "biggest failures" does not mean that their protests against Apple's actions are wrong.

Success in business doesn't automatically confer sainthood. In fact, it is more likely success came about due to ruthless tactics against the competition, which we see now in this SIM issue.

Sorry Tony, but Apple has more pointy tails, horns and pitchforks than harps and halos.

RE: some bits are missing
By DrChemist on 4/2/2012 11:17:22 AM , Rating: 2
I find Tony's comments useless and pedantic but wildly entertaining. If you agree +1.

RE: some bits are missing
By bug77 on 3/31/2012 9:43:47 AM , Rating: 2
So let me get this right. Apple gives away one patent and wants the others to give away all their 3G patents. And you think this is perfectly fine, no one should object?

RE: some bits are missing
By Tony Swash on 3/31/2012 1:54:29 PM , Rating: 1
So let me get this right. Apple gives away one patent and wants the others to give away all their 3G patents.

Where did you get that from?

RE: some bits are missing
By mmaenpaa on 4/1/2012 8:58:25 AM , Rating: 2

As english is not my native language I have trouble understanding the following (quote from the FOSS patents blog)

"But Apple's letter has removed this roadblock, if it ever was any, through an unequivocal commitment to grant royalty-free licenses to any Apple patents essential to nano-SIM, provided that Apple's proposal is adopted as a standard and that all other patent holders accept the same terms in accordance with the principle of reciprocity."

Does it mean that if Apple's nano sim is accepted as standard Apple will let others use nano sim license freely only if other patent holders who have patents regarding nano sim? or "old" sim give also those patents freely (not even FRAND license)? For example is Nokia currently getting FRAND licensing money from patents regardin SIM technology?


RE: some bits are missing
By Tony Swash on 4/1/2012 3:31:57 PM , Rating: 2
My reading of this is that Apple is saying "if you are worried that we have patents in relation to the new SIM standard then we will make a binding commitment to not use it to chase for royalties as long you do the same for the patents you hold relating to the new SIM".

Seems OK to me.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007

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