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Samsung sought ITC ban would be limited to older iPhones and iPads, company admits

post #1 of 28
Thread Starter 
In a filing with the U.S. International Trade Commission, Samsung confirmed that its declared standard essential wireless patents only apply to older iOS devices due to hardware changes in more recent versions, meaning that a proposed ban on the products would be somewhat limited if enforced.

Samsung


As noted by FOSS Patents' Florian Mueller, Samsung is seeking a U.S. sales ban on AT&T versions of the iPhone 4, iPhone 3GS and iPhone 3G, as well as the iPad and iPad 2. While the new filing looks to extend the older model coverage to "other carriers," it admits that newer iPhones and iPads running a certain Qualcomm baseband chip would be excluded from the ban.

The Korean company is asserting infringement of U.S. Patent No. 7,706,348 regarding UMTS technologies, which are present in certain cellular-enabled iPhones and iPads using an Infineon-made communications chip. Newer cellular-connected iOS devices leverage Qualcomm silicon to which Samsung's assertions do not apply.

From Samsung's filing:

Based on Samsung's understanding, the current configurations of the iPhone 4 (CDMA version), iPhone 4S, iPhone 5, iPad 2 (CDMA version), iPad (third and fourth generations) and iPad mini contain [REDACTED]. Accordingly, unless these devices are altered to incorporate [REDACTED], they would not be subject to an exclusion order or cease and desist order. Similarly, future devices incorporating [REDACTED] would not be subject to an exclusion order or cease and desist order.


With Apple not even offering the iPhone 3GS, 3G and first-generation iPad, that leaves only the iPhone 4 and iPad 2 as being possible liabilities if the ITC were to agree to Samsung's request. Further, given the current iOS device cycle, which discontinues first-party iPhone sales for versions over two years old, a sales ban may not even affect Apple's handset lineup.

Mueller believes the ITC is unlikely to issue a sales ban, but points out that if such action was taken, only low-end Apple devices and the company's after-sales service business would be affected. He also said that the normal delay period before an import ban takes effect would go further in lessening the blow to Apple's bottom line.

After announcing a delay to its final ruling, the ITC is now scheduled to hand down a decision on May 31.
post #2 of 28
Better hurry with that ban! A few more months and there will be none of those left except refurbs.
post #3 of 28
Considering all those products will be discontinued in a few months.. yeah.
post #4 of 28
Heck the iPad 3 is the cheaper one now anyway, and like was said here above the iPad 2 will drop off when the new iPad comes out this year and the 3 will be the really cheap one, same with the iPhone 4 its gone as soon as the 5S comes out so much ado about nothing lol seems like a huge waste of money for shamelessung but oh well if there stupid enough to pursue a ban on a FRAND patent then there stupid enough to blow money for nothing.
post #5 of 28
Quote:
Originally Posted by Mechanic View Post

Heck the iPad 3 is the cheaper one now anyway,

Nope. The ipad3 was dropped for the 4. Those 'cheap 16 gb are iPad 2.

That said, IF Samsung can get the ban, Apple can just switch to Qualcomm chips. If they haven't lready. Or Apple might pull out a patent exhaustion deal which shows Samsung was paid already and its game over

Same with the iPhone 4

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post #6 of 28

For Samsung to win this one would be pretty ho-hum....sort of like kissing your own sister.

"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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post #7 of 28
So the infringement is in someone else's chips which Apple uses. Seems like they are going after the wrong company! FK Samsung!
post #8 of 28
Quote:
Originally Posted by Mechanic View Post

... but oh well if there stupid enough to pursue a ban on a FRAND patent then there [sic] stupid enough to blow money for nothing.

 

 

It's not "stupid" to pursue a FRAND related injunction with the ITC.  They exist specifically for that purpose.

 

Unlike Federal courts, the ITC's sole power is import bans, so they issue them from time to time.

 

That's why every company, Apple included, often runs to the ITC right away.  They're usually quicker than courts, and an import ban is great leverage for getting deals made.

 

Quote:
Originally Posted by FreeRange View Post

So the infringement is in someone else's chips which Apple uses. Seems like they are going after the wrong company! FK Samsung!

 

In the telecom world, buying a chip doesn't necessarily buy the IP rights needed to make use of the chip.  Those are often separate, especially with newer chips that are multi-purpose.   You would not want to pay for LTE if you weren't using the LTE side, for example.

 

Example:  Qualcomm charges Apple about $15 per chip.  Just for the chip.  Then Qualcomm charges another ~4% of the device's cost on top of that for patent royalties, depending on what radios are involved.

post #9 of 28

I hope it stops Apple selling the iPad 2. It was a winner in it's time, and I see why it was the one they chose to keep around to capture the low-end market, but there comes a point where having too many low end units in circulation encourages developers to not leverage the extra power in newer units, enabling competitors' tablets to catch up app-wise.

post #10 of 28
Quote:
Originally Posted by Macky the Macky View Post

For Samsung to win this one would be pretty ho-hum....sort of like kissing your own sister.
 

This ban sounds like just Samsung noise.

 

Well now, my iPhone4 will be banned.

Lovely,  I'll keep it forever as an Apple product banned near the end of it's contract life!  What a museum piece.

post #11 of 28

Time for the USA Gov to ban the imports of the Samsung devices made in that North Korean  factory.

Those products come from a not so nice country.

post #12 of 28
Quote:
Originally Posted by KDarling View Post

Example:  Qualcomm charges Apple about $15 per chip.  Just for the chip.  Then Qualcomm charges another ~4% of the device's cost on top of that for patent royalties, depending on what radios are involved.

 

Please post a link to verify this outlandish claim.

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post #13 of 28
Quote:
Originally Posted by JoshA View Post

Time for the USA Gov to ban the imports of the Samsung devices made in that North Korean  factory.

Those products come from a not so nice country.

Samesung has an assembly plan in NORTH Korea? They're a SOUTH Korean company, and I don't believe the South Koreans want anything to do with the NORTH Koreans. Nothing would surprise me, though. 

post #14 of 28
Originally Posted by RedGeminiPA View Post
…I don't believe the South Koreans want anything to do with the NORTH Koreans.

 

Uh… reunification of their country. That's relatively important to them.

 

Each side still views the other as their brothers. The North views the South as having been brainwashed by the capitalist dogs in the United States. The South knows about the North and feels pity on them, but recognizes that while they do want reunification, it will start with a massive amount of damage to the south and end with an economic black hole that will make post-Soviet German Reunification look like two guys going out for coffee and one of them picks up the tab.


Originally Posted by hill60 View Post
Please post a link to verify this outlandish claim.

 

One or two neurons firing over here that tell me what he's saying is sort of true. Or at least there were lawsuits about this problem in the past.

 

Remember? Someone sued Apple because the telephony chips that Apple bought used software (or maybe a hardware patent, I think) that the someone had made, and they demanded Apple pay them, but Qualcomm had ALREADY paid them their licensing fee and had passed that cost onto Apple in the price. Apple did NOT need to pay it separately.


Edited by Tallest Skil - 4/6/13 at 7:35am

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post #15 of 28
Quote:
Originally Posted by Tallest Skil View Post

 

Uh… reunification of their country. That's relatively important to them.

 

Each side still views the other as their brothers. The North views the South as having been brainwashed by the capitalist dogs in the United States. The South knows about the North and feels pity on them, but recognizes that while they do want reunification, it will start with a massive amount of damage to the south and end with an economic black hole that will make post-Soviet German Reunification look like two guys going out for coffee and one of them picks up the tab.

 

 

One or two neurons firing over here that tell me what he's saying is sort of true. Or at least there were lawsuits about this problem in the past.

 

Remember? Someone sued Apple because the telephony chips that Apple bought used software (or maybe a hardware patent, I think) that the someone had made, and they demanded Apple pay them, but Qualcomm had ALREADY paid them their licensing fee and had passed that cost onto Apple in the price. Apple did NOT need to pay it separately.

 

Believe it or not, most Koreans don't want reunification. Having lived there and travel there frequently, the consensus is most like the idea, however, most don't want it. A few times, I've seen thousands of students protest at the University of Seoul against reunification. Years ago, Koreans wanted reunification, but times have changed and attitudes have changed towards reunification. The issue for South Koreans is reunification would destroy their economy. Reunification would be too much a burden for South Korea. I'm sure many Koreans feel they still want it, but from what I've seen having spent so much time there is the majority don't. 

post #16 of 28
Quote:
Originally Posted by RedGeminiPA View Post

Samesung has an assembly plan in NORTH Korea? They're a SOUTH Korean company, and I don't believe the South Koreans want anything to do with the NORTH Koreans. Nothing would surprise me, though. 

 

The other poster was referring to the Kaesong industrial complex in North Korea. That's a joint complex run by South and North Koreas. As far as I'm aware, Samsung doesn't have an assembly plant there. The Kaesong complex does build parts for Samsung devices though. 

post #17 of 28
Quote:
Originally Posted by KDarling View Post


It's not "stupid" to pursue a FRAND related injunction with the ITC.  They exist specifically for that purpose.

Actually it is stupid to try for it. Because the courts and the ITC have taken public stands against such bans because they are for standards essential patents. It is felt that doing so is unfair to the banned party since the rules of FRAND include a requirement to license so the owners can't say no to taking money from the offenders if offensive is determined

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post #18 of 28
Quote:
Originally Posted by Tallest Skil View Post



Remember? Someone sued Apple because the telephony chips that Apple bought used software (or maybe a hardware patent, I think) that the someone had made, and they demanded Apple pay them, but Qualcomm had ALREADY paid them their licensing fee and had passed that cost onto Apple in the price. Apple did NOT need to pay it separately.

That someone was Samsung and I believe it was in the counter suit to the big design patent brouhaha. Apple brought in proof of payment and exhaustion and Samsung was forced to drop the claim

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post #19 of 28
Quote:
Originally Posted by charlituna View Post

Actually it is stupid to try for it. Because the courts and the ITC have taken public stands against such bans because they are for standards essential patents. 

 

Quite the contrary.  This whole thread is about a possible ITC Section 337 ban.  In fact, just last October a judge at the ITC ruled that...

 

"ETSI and its FRAND provisions do not preclude the imposition of Section 337 remedies in investigations in which the Commission determines that the authorizing statute is violated by reason of the importation into the United States of articles that infringe a valid and enforceable United States patent." - ITC

 

In other words, injunctions are definitely available for FRAND patents at the ITC.   He also ruled that the ITC did not have to go along with the Koh jury's determination of patent exhaustion.

 

 

What you and others are probably thinking of, is the DOJ/USPTO policy paper that asked the ITC to not use injunctions.  Yet that same paper said that injunctions are available under some circumstances:

 

"For example, if a putative licensee refuses to pay what has been determined to be a F/RAND royalty, or refuses to engage in a negotiation to determine F/RAND terms, an exclusion order could be appropriate." -DOJ

 

Even fanboy favorite Mueller, who generally sides with licensees, thought the DOJ policy paper was a mess and not likely to be adopted by the ITC.

 

The ITC exists to ban offending imports.  It has no other power, and it's not likely to give up bans and become a moot government agency, not even in a subset like FRAND patents.


Edited by KDarling - 4/6/13 at 12:19pm
post #20 of 28
Quote:
Originally Posted by FreeRange View Post

So the infringement is in someone else's chips which Apple uses. Seems like they are going after the wrong company! FK Samsung!

Except when Apple goes after Samsung for an infringement which is in someone else's software which Samsung uses (for instance, the "selecting text" patent mentioned the other day — stock Android definitely has the ability to highlight selected text with a translucent box). That's perfectly cool.


Edited by Durandal1707 - 4/6/13 at 1:16pm
post #21 of 28
Quote:
Originally Posted by KDarling View Post

Quite the contrary.  This whole thread is about a possible ITC Section 337 ban.  In fact, just last October a judge at the ITC
ruled
 that...

In other words, injunctions are definitely available for FRAND patents at the ITC.   He also ruled that the ITC did not have to go along with the Koh jury's determination of patent exhaustion.

The ITC exists to ban offending imports.  It has no other power, and it's not likely to give up bans and become a moot government agency, not even in a subset like FRAND patents.

One of the patent blogs wrote an article yesterday on a brief submitted to the judge by the ITC staff supporting an injunction on applicable Apple devices as entirely appropriate for infringement of Samsung's standard-essential IP in this case.
http://essentialpatentblog.com/2013/04/itc-staff-exclusion-order-is-an-appropriate-remedy-for-apple-infringement-of-samsung-sep/
Edited by Gatorguy - 4/6/13 at 5:41pm
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post #22 of 28
Quote:
Originally Posted by Tallest Skil View Post


One or two neurons firing over here that tell me what he's saying is sort of true. Or at least there were lawsuits about this problem in the past.

Remember? Someone sued Apple because the telephony chips that Apple bought used software (or maybe a hardware patent, I think) that the someone had made, and they demanded Apple pay them, but Qualcomm had ALREADY paid them their licensing fee and had passed that cost onto Apple in the price. Apple did NOT need to pay it separately.

To be more specific, the claim that Qualcomm charges ~4% of the cost of iPhones in royalties, a figure way out of the ballpark when it comes to standard essential licensing.
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post #23 of 28
Quote:
Originally Posted by hill60 View Post

To be more specific, the claim that Qualcomm charges ~4% of the cost of iPhones in royalties, a figure way out of the ballpark when it comes to standard essential licensing.

I assume you're questioning that specific percentage and not whether Qualcomm's royalty is based on a completed device. You and I had that discussion before and I gave you numerous pieces of evidence pointing to the facts. Here's where you can find Qualcomm's own statement of the royalty basis again if you've forgotten about it, page two of the download if you don't like to read.:
http://www.qualcomm.com/media/documents/ltewimax-patent-licensing-statement#node-10731

I'm more inclined to believe Apple is paying Qualcomm a royalty between 3% and 3.25% of the device cost (not just a chipset) with a potential credit for cross-licensing Apple's own applicable IP. That's been Qualcomm's standard royalty rate, their SEP patent package included, the past several years according to both them and financial articles. "Back in the day" it was a lot higher even than that, 4.5% on-going royalties on top of a one-time fee just to become a licensee.
http://money.cnn.com/magazines/fortune/fortune_archive/2000/05/15/279766/index.htm

Anyway, they say they were charging Nokia more than 3% of the total phone build cost at the time of the iPhones release in 2007. Do you think they were feeling generous and told Apple they could pay a lot less? Not very likely IMO. With that said I do seem to recall that Apple's royalties to Qualcomm are computed from the Foxconn (or whoever) per-device BOM charge to them. That ended up with Apple paying Qualcomm perhaps $8 royalties on a basic iPhone. If I come across that again I'll link it for you.

http://www.ecommercetimes.com/story/56757.html
Edited by Gatorguy - 4/7/13 at 6:03am
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post #24 of 28
Quote:
Originally Posted by hill60 View Post

To be more specific, the claim that Qualcomm charges ~4% of the cost of iPhones in royalties, a figure way out of the ballpark when it comes to standard essential licensing.

 

Yes, Qualcomm has the highest single ETSI figure, I believe.  It's because they created most of the (W)CDMA technology.  

 

It's hardly "way out of the ballpark", though.  Other common rates include these (LTE rates are the same or very similar as the 3G rates, and include 3G):

 

 

Now, this 2010 chart says 3.25% for Qualcomm.  The rate fluctuates each year.. it was above 4% a few years earlier, at which time many people think that Apple made a special deal, explained in articles such as this one:

 

"...the royalties paid to Qualcomm are based on the price Apple pays Foxconn for each iPhone – about $244, they estimate – not the wholesale price that Apple charges carriers like AT&T for iPhones, which they say averages about $590. Assuming those prices and a 4% royalty rate, they estimate that Foxconn pays Qualcomm about $9.70 per iPhone–compared to $23.60 per phone that Apple might pay directly, based on the higher wholesale price."  - WSJ - Does Apple enjoy a Licensing Loophole?

 

--

 

As I noted before, chips are priced separately, because they come with differing collections of features, and users only want to pay royalties on the IP they use... and royalties are based on phone price.  Plus Qualcomm cannot live on royalties alone.

 

For example, if a 3G EVDO phone wholesales for $100, then Qualcomm only gets a little over $3 in royalties. That would be nowhere near enough to also cover the $16 chip cost... which itself sometimes includes a $6 per chip royalty payment from Qualcomm to Broadcom for use of their chipset IP!

 

--

 

Agreed that starting IP rates are high. (OTOH, these companies spent billions in R&D and deserve compensation.)  In theory, a newcomer who refuses to cross-license might pay up to 30% of the price of a phone in ETSI FRAND payments.  A cell phone founder like Nokia, who cross-licenses everything to cut costs, is said to pay as low as 3% total.  It's all about contributions and cross-licensing and negotiation.

 

Of course, if we think ETSI FRAND rates are high, consider that Apple revealed in court that they wanted $30 per phone or $40 per tablet (the equivalent of 5% of a $600 phone or 10% of a $400 tablet) for their IP... which, unlike ETSI patents, wasn't even necessary to create such devices.


Edited by KDarling - 4/7/13 at 8:11am
post #25 of 28
KD, thanks for finding that mention of the specific dollar amount Apple may be paying Qualcomm. I knew I'd read it at some point.

Keep in mind too that there's not a standard across-the-board royalty basis either. While Qualcomm says they base theirs on the bill-of-materials for a completed device, Ericsson would prefer to base their collection of SEP royalties on the much higher retail price, ie 2% of a smartphone sales price to an end-user. IIRC Moto is somewhere in the middle, using wholesale cost, but I'm less certain of that.
Edited by Gatorguy - 4/7/13 at 6:42am
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post #26 of 28
Quote:
Originally Posted by Gatorguy View Post

Keep in mind too that there's not a standard across-the-board royalty basis either. 

 

Google's letter (sorry, don't have a direct link.. I keep a lot of documents stored locally) to the Senate last year listed some of the rate basis, although it's not clear what the difference is between "end-device" and "price of the end-device", if any... e.g. the latter might be retail.

 

post #27 of 28
Quote:
Originally Posted by KDarling View Post

Google's letter (sorry, don't have a direct link.. I keep a lot of documents stored locally) to the Senate last year listed some of the rate basis, although it's not clear what the difference is between "end-device" and "price of the end-device", if any... e.g. the latter might be retail.



Link to the letter is here:
http://ftc.gov/os/testimony/120711standardpatents.pdf

Ericsson actually wants up to 2% of the retail price now. The figure Google quoted was the old commitment to ETSI. They feel safe in being more aggressive now since dropping their phone manufacturing.
http://www.fosspatents.com/2013/03/standard-essential-patent-litigation.html

You're welcome;)
Edited by Gatorguy - 4/7/13 at 7:40am
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post #28 of 28
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Originally Posted by Gatorguy View Post

You're welcome;)

 

Thank you!  :)

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