Apple to Samsung: Give Us $40 for Every Android Device You Sell

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The patent licensing fees Apple wants from Samsung for every Android-based smartphone and tablet it sells is US$40. That works out to about $8 per patent, and makes for a figure that's substantially higher than the numbers Apple balked at when Samsung demanded 2.4 percent of every iPhone sold.

Apple thinks Samsung should pay $40 per device for mobile patent licensingApple thinks Samsung should pay $40 per device for mobile patent licensing

The figure Apple is asking was included in court transcripts related to the upcoming patent infringement trial the two companies will deal with at the end of March.

The trial will be the second for both in U.S. Federal Court. The original trial, which included devices that aren't part of the upcoming case, gave Apple a big win in 2012 when a Jury found that it wasn't infringing on Samsung's patents, while awarding the iPhone and iPad maker over $1 billion in damages for Samsung's infringement.

One big point of contention for Apple during the first trial was Samsung's demand for what it saw as a ridiculously high per-device licensing fee. Apple said at the time, "Samsung's royalty demands are multiple times more than Apple has paid any other patentees for licenses to their declared-essential patent portfolios."

What Apple is asking from Samsung is even higher, and Florian Mueller from FOSS Patents thinks that demand is way out of line. "Apple's damages theory for the trial that will begin in less than three weeks is an objective insanity, and I say so even though Judge Koh allowed Apple to present it to the jury," he said.

He added, "$40 per unit. For five software patents. Give me a break. Reality distortion would be a total understatement for this."

For comparison, if Apple did pay Samsung 2.4 percent per iPhone 5S, at unsubsidized prices, that would cost between $15.57 and $20.37, depending on capacity. At most, Apple would be paying about half what it's asking from Samsung.

The $40 figure came up during the pre-trial negotiations between Apple and Samsung where Judge Lucy Koh had hoped would lead to a settlement. Both sides walked away without reaching an agreement, which isn't surprising considering how much money Apple wanted in patent licensing fees.

Demanding such a high per-device fee may have been a tactic on Apple's part to help drive negotiations to a more agreeable number, or a move to create an irreconcilable point that would force the talks to fail. Alternately, Apple may have genuinely felt that's what it deserved to license the five patents in question for Samsung's use despite the fact that the value is far above the rates it pays to other companies for patent licensing fees.

Samsung agreed to drop its standard-essential patents from the case and in exchange Apple dropped its SEP and FRAND counter complaints. Agreeing to drop parts of their cases will help reduce the overall complexity during the trial, but leaves the door open for Samsung to start yet another complaint that includes the patents it cut from this case.

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Comments

geoduck

but it doesn’t hurt to ask.

skipaq

That is a rediculous demand. It shows that Apple was not interested in a settlement and really was not negotiating. It leads to the conclusion they want a ban. It is past the time for this to end without resorting to banning products.

ibuck

With our own (US) Justice Dept trying to beat back Apple at every opportunity in favor of ethically-challenged companies like Samsung and Amazon, it’s not that surprising that Apple starts with high license fees. With the law and precedent being no hindrance to “Judge” Koh, she will probably slash those fees before trial or otherwise prejudice the jury.

Terrin

No offense Jeff, but you shouldn’t offer takes on what seems reasonable without understanding patent law. First, one has to make a distinction between standard essential patents and non-standard essential patents. You seem to just gloss over this distinction. Apple balked at 2.4 percent of its retail sale price for Samsung’s standard essential patents. Samsung voluntarily submitted those patents to the applicable patent body to be included as part of the standard. This means Samsung is entitled to a patent licensing fee from everybody who uses the standard, and can focus on things other then coming up with competing technologies to the standard. In exchange it has to license the patents under Fair Reasonable and Non-Discriminatory terms. So, Samsung is significantly restricted in what it can ask for, and it has to offer a license.

If you look at the Microsoft case where Motorola was suing Microsoft for standard essential patents and seeking a 2.25 percent royalty rate for every Microsoft based device sold, that came out to 4 billion in licensing patents. The Judge ended up awarding Motorola 14 million, a significant reduction in what Microsoft sought. Samsung was trying the same thing. Namely, asking for way more than FRAND rates. Further, Apple is claiming, and a jury agreed, that Apple’s FRAND rate was covered by Apple’s license with Qualcomm. So, Samsung was trying to double dip, and ask for a rate that failed to satisfy FRAND terms. Based on the jury’s view, Apple didn’t owe Samsung anything because by purchasing the broadband chip, Qualcomm’s license covered Apple.

The most important distinction is that Apple’s at issue patents are not standard essential. It has no obligation to license them at all any more then you have to sell me your car against your wishes and for a price I deem reasonable. If I wanted to buy your car, you could seek any amount you wanted reasonable or not. The same applies to Apple. It isn’t required to license patents to Samsung at all.

It is worth noting, Apple’s ask price is going up, which makes sense considering Samsung is continuing to use Apple’s patents and making Apple go through a lengthy Court battle. Apple sought $30 a device originally.

Further, Microsoft is believed to be getting around $15 a device from many Android manufacturers. In some cases, that is about the same thing it gets for licensing its own OS.

geoduck

Terren
That’s a very good point. FRAND patents have “Fair and Reasonable” in the name. If I remember correctly, njot onoly was Samsung asking for high fees, they were significantly higher than what they were demanding from other companies. Apple’s patents are not standards essential and AFAIK not licensed to anyone else, so Apple can ask for anything it wants.

John Dingler, artist

Florian’s outrage over Apple’s testing what market forces will bear in offering non-essential IP on the market puzzles the thinking person.

MacFrogger

Terrin: I couldn’t agree more - well said!  Apple’s key patents in question were not offered up as standards-essential, and there was never any intention to do so.  That is precisely why Steve Jobs, in introducing the iPhone, claimed that all of this “magical” product was covered by multiple patents.  His presentation left little doubt that Apple would NOT be licensing the major patents that enabled the iPhone to be…an iPhone!

RonMacGuy

Exactly MacFrogger. In a normal world, Apple would have no desire to license any of its key patents, except maybe in very rare exceptions.  They don’t need the money, and frankly they want nobody else to have anything that resembles their products.  They simply want others to innovate in their own way.  Unfortunately, with samsung in existence, copying whatever they want, it is far from a normal world.  There is obviously no desire from samsung to stop using patents that Apple would rather they not use, so Apple is trying to motivate them to just stop using them altogether by forcing them to pay exorbitant fees for what they use.  Absolutely nothing wrong with that, and is obviously the reason why all talks between Apple and samdung have failed.

adamC

@Jeff

Perhaps you will give away anything you have patented away for free, good for you./s

Draugminaion Formenghobel

Suppose you have someone living in your garden, and you want them out.
They have been fined, but they like your garden, they’d pay if they have to, but will delay paying while trying to get the fine reduced for as long as they can.
The police will not help you throw them out.
Might you not try if asking for ridiculous rent will get them to leave?
Maybe if they are back on their rent you could get them evicted.
Worth a try, no?

daemon

“The police will not help you throw them out.”

The police routinely execute evictions, where do you live?

See, Apple doesn’t own the garden. Apple owns the rights to one of the plants in the garden, that is owned by Samsung. And Apple wants the entire garden owned by Samsung to be seized and destroyed, just because one of the plants is similar enough to a plant they own exclusive rights to is in the Samsung garden. And everyone else is laughing at Apple for being douches.

Draugminaion Formenghobel

@deamon Ok, analogies can be tricky. The “garden” in the analogy is what the previous trial, and retrial, was about. A judge and jury agreed it is Apple’s and Samsung was not allowed to use it, and should pay a fine. Samsung is still infringing the same patents, or in the analogy, still in that “garden”. The “police” is the FTC and the judge that don’t want to grant an injunction. So Samsung was found guilty, is still doing what it was found guilty of, but nobody is willing to stop them. Apple is not expecting to Samsung to pay $40 per device for those patents, it is pretending to hope Samsung will think “wow that’s expensive, let’s just use our own stuff”.

Patent law is pretty silly, but we’re stuck with it for now. Patent law is supposed to give Apple exclusive rights to their patents, and the state is supposed to enforce that. It’s not working.

jfbiii

“And everyone else is laughing at Apple for being douches.”

Nah…the people laughing at Apple are laughing because they, not Apple, are douches. The kind of douches who think that it’s comical for a company to have to demonstrate the plainly obvious in exhaustive detail at great expense and, having done so, find that they are still unable to obtain any relief.

Terrin

daemon:

I remember about a year, and a half after the first iPhone came out. I was in a Best Buy. Samsung had a display by the front of the store. I was waiting for my girlfriend to come pick me up. In the fifteen minutes I was there, I heard at least three people refer to the Samsung phone on display as an iPhone. “Hey mom, look at the iPhone.” It really was no wonder, I couldn’t tell the phone from an iPhone without looking at it carefully. Samsung copied everything about the iPhone down to the display and packaging. It really was a blatant disgusting rip off.

These Apple suits against Samsung really do not do Apple justice either because the Judge has made Apple whittle down its case by forcing Apple to bring its case against Samsung in peace meal fashion by making Apple drop many of its patents from the original suit because she thought the volume of at issues patents was to difficult for one jury to comprehend. So to get justice, Apple has to continue to file cases just to get all its patents in play. Ironically, the Judge then claims an injunction is not necessary because the patents at issue, which she made Apple whittle down, are only small parts of the product. That is sickening as well.

Samsung has a history of gaining market share by using the work of others. Sharp, GE, LG, Dyson are all innovation companies that have had issues with Samsung.

Apple’s business model from its inception has always been to set itself apart by bringing to market products that stood apart from competitors. That is how it managed to compete against much bigger companies. It wants its products to look and act differently then other companies. I see nothing wrong with the approach, and Apple trying to defend what would be the uniqueness of its products if it were not for disgusting companies like Samsung dipping their hands in Apple’s cookie jar without permission.

On a closing note, you do not seem to know what the word “everybody” means. I clearly do not think Apple is acting like a douche.

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