Apple offered Samsung UMTS cross-licensing agreement prior to trial

Posted:
in General Discussion edited January 2014
It was revealed in a court filing this week that prior to its California patent trial against Samsung, Apple proposed a mutual agreement regarding cross-licensing patented 3G/UMTS technologies with the Korean company under what it considered to be FRAND terms.

Teksler Letter
Source: Apple v. Samsung court documents.


A recently unredacted letter from Apple's property licensing director Boris Teksler to his counterpart at Samsung, Seongwoo Kim, described a reciprocal deal in which each company would pay royalty rates for the other's 3G/UMTS wireless patents under the same FRAND principles. The letter, which was included in a flurry of post-trial filings, was dated April 30, 2012, just three months before the Apple v. Samsung jury trial began.

In its proposal, Apple said it would license Samsung's 3G/UMTS patents under fair, reasonable and non-discriminatory (FRAND) terms, rather than the 2.4 percent requested by the Korean company, if Apple's own wireless patents were licensed at rates calculated using the same approach.

The letter points out more than once that Samsung hasn't offered evidence of any company paying a royalty similar to the 2.4 percent of average selling price (ASP) it requested of Apple.
Apple is willing to license its declared-essential UMTS patents to Samsung on license terms that rely on the price of baseband chips as the FRAND royalty base, and a rate that reflects Apple?s share of the total declared UMTS-essential patents (and all patents required for standards for which UMTS is backward-compatible, such as GSM)--provided that Samsung reciprocally agrees to this same, common royalty base, and same methodological approach to royalty rate, in licensing its
declared-essential patents to Apple.

Apple estimates that this approach, which implements the true meaning of and requirements imposed by FRAND, results in a $.33 (thirty-three cents) per unit royalty for the Apple patents. Apple will today license its declared-essential UMTS patents to Samsung at that rate, provided Samsung reciprocally agrees to the FRAND principles that result in that rate. This rate would be applied to all Samsung units that Apple has not otherwise licensed. Samsung would likewise need to agree that it would only charge royalties on Apple units that Samsung has not otherwise licensed.
Apple asked that Samsung respond by May 7, and while it is unclear whether any further discussion took place, the apparent outcome was not deemed copacetic by one or both parties.

During the landmark patent case, a separate but similar licensing deal was discovered to have been floated by Apple, with the company asking Samsung to license certain iPhone and iPad patents for $30 and $40, respectively.

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Comments

  • Reply 1 of 37
    From what we see as spectators of all this wrangling, you can't help but get the impression that Samsung's management doesn't even understand what's being disputed.
  • Reply 2 of 37

    Quote:

    Originally Posted by Mode 5 View Post



    From what we see as spectators of all this wrangling, you can't help but get the impression that Samsung's management doesn't even understand what's being disputed.


     


    Very much doubt that, Samsung know full well what is being questioned with concern to their behaviour and intentionally copying Apple products!

  • Reply 3 of 37
    Gotta give Apple credit for not bringing their FRAND pledged patents into the courtroom or ITC, unlike Samsung, Moto, and HTC.
  • Reply 4 of 37
    nagrommenagromme Posts: 2,834member
    Everyone pegs Apple as the aggressor and bully, conveniently forgetting all the patent attacks and unreasonable licensing demands made against them. How can Apple be expected to be the one lone company that just gives in to every demand and violation and won%u2019t play hardball?
  • Reply 5 of 37
    hill60hill60 Posts: 6,992member

    Quote:

    Originally Posted by Mode 5 View Post



    From what we see as spectators of all this wrangling, you can't help but get the impression that Samsung's management doesn't even understand what's being disputed.


     


    Samsung's management know very much what they are doing.


     


    Using FRAND based patents as a bludgeon to extort Apple into licensing their other, non-FRAND, iOS based IP, thus forcing Apple to take legal action. 

  • Reply 6 of 37
    sennensennen Posts: 1,472member


    No sign of the usual suspects. Not surprising.

  • Reply 7 of 37
    gtrgtr Posts: 3,231member


    Idiots.


     


    It almost seems like they wanted to get fined.


     


    Scorecard:


    Samsung: 0


    Apple: 1bn

  • Reply 8 of 37
    jungmarkjungmark Posts: 6,926member
    See Fandroids, Apple offered cross-licensing to Sammy. They didn't want to sue.
  • Reply 9 of 37
    tylerk36tylerk36 Posts: 1,037member


    Samsung, by refusing to cooperate or compromise is trying to create an atmosphere of negative attitude towards Apple.  Smear campaign.  They are hoping to discredit Apple so much that Apple will lose face in the public eye and then Apple sales of their devices will suffer and Samsung will gain a foothold.

  • Reply 10 of 37


    Just let me start by saying Samsung should license the portfolio out. However easy for Apple to say that they will cross reference their FRAND patents out at .33c and Samsung should do the same.


    How many patents are they both bringing to the table? I would imagine Samsung has more patents in this area than Apple as they have been in the mobile space long before Apple even thought about an iPhone.


     


    So if they both have the same amount of patents then .33c sounds great infact they should just cross license with out charge but some how I think Samsung has many more than Apple. Samsung is in their right to ask for what ever they want with in reason unless Apple sweetens the pot.

  • Reply 11 of 37
    gtrgtr Posts: 3,231member


    Just let me start by saying that Samsung is one of the few companies in this day and age that actually seems willing to travel the long, hard road of investing in research and development for products that will truly impress and delight their customers. This is a company that has a long history of innovation, not to mention a CEO who's very name has been associated with the I. T. industry for decades.


     


    Their combination of savvy business acumen, ability to accurately anticipate what their customers want, honesty, and integrity is what has put them in the position that they find themselves in now. It is unfortunate that a company like Apple seems willing to attempt to ride in behind them on their coat-tails.


     


    However, I do believe that the example that Samsung has set will serve to guide, not only Apple, but many companies in the future as to how to genuinely become successful.


     


    Oh, and by the way, when I told you about everything above...


     



     


    ...I lied.

  • Reply 12 of 37
    entropysentropys Posts: 4,164member
    No, petrosy,Samsung does not have the right to ask for what ever they want if the patents in question are FRAND
  • Reply 13 of 37
    adonissmuadonissmu Posts: 1,776member


    Oh dear... and all this time everyone thought it was Apple who was being obtuse. 

  • Reply 14 of 37
    sipsip Posts: 210member


    There are a lot of different companies who have different FRAND patents which go towards making-up wireless technology. If Apple, because of its success, was forced to pay 2.5% of the average selling price of each unit sold to each of these companies, Apple's profit margins would probably reduce to (or very close to) single-digits.


     


    How much technology a company owns is neither here nor there if you do nothing with that tech -- the iPhone made people want to own a smartphone. Apple single-handedly dragged the mobile phone industry from mediocrity to first-choice device. Yes, people still settle for simple phones, and poorer people across the world cannot afford smartphones -- yet. There may well come a time when economies of scale and some regulation of networks (one can hope) will result in lowering prices and then the world and his dog are going to be using smartphones. The smart companies are going to make the money, just like Apple does right now.

  • Reply 15 of 37
    maestro64maestro64 Posts: 5,043member

    Quote:

    Originally Posted by petrosy View Post


    Just let me start by saying Samsung should license the portfolio out. However easy for Apple to say that they will cross reference their FRAND patents out at .33c and Samsung should do the same.


    How many patents are they both bringing to the table? I would imagine Samsung has more patents in this area than Apple as they have been in the mobile space long before Apple even thought about an iPhone.


     


    So if they both have the same amount of patents then .33c sounds great infact they should just cross license with out charge but some how I think Samsung has many more than Apple. Samsung is in their right to ask for what ever they want with in reason unless Apple sweetens the pot.



    You're correct Apple own patent portfolio for cell phones is probably small but they own the Nortel portfolio as well and that is large since they were one of the companies which help designed the the cell phone and communication industry before they died. Basically it was Motorola, Lucent and Nortel who help defined most of today's modern mobile communications standards. Okay maybe you can add in Nokia as well. Samsung only implemented what other defined and possible made derivative improvements. 

  • Reply 16 of 37

    Quote:

    Originally Posted by petrosy View Post


    Just let me start by saying Samsung should license the portfolio out. However easy for Apple to say that they will cross reference their FRAND patents out at .33c and Samsung should do the same.


    How many patents are they both bringing to the table? I would imagine Samsung has more patents in this area than Apple as they have been in the mobile space long before Apple even thought about an iPhone.


     


    So if they both have the same amount of patents then .33c sounds great infact they should just cross license with out charge but some how I think Samsung has many more than Apple. Samsung is in their right to ask for what ever they want with in reason unless Apple sweetens the pot.



     


    Having read the attachment, Apple did not say Samsung should charge $0.33.  It said based on the percentage of FRAND Patents I control times the average cost of a baseband chip (The part that actually uses the patents) I would charge $0.33 if you agree to use the same FRAND calculations.  Lets say that Samsung has 10x the number of UTMS Patents that Apple does (it unlikely to be that high, considering Apple controls the former Nortel Patents), this would make the amount that Apple has to pay Samsung $3.30 not the $15.60 (Based on an ASP of $650 for a 16GB iPhone 5) Samsung is asking for. 


     


    Apple also said that it should not have to pay anything on any part that is already licenses through their supplier.  (eg From another Topic, Either Samsung or Motorola I forget now, sent a letter to Qualcom stating that their licensing agreement no longer applies to parts sold to Apple.  That is a clear violation of the non-discrimitory part of FRAND.)


     


    It looks like Apple is truly questioning the "with in reason" part of what Samsung is asking for.  They even point out that in the case where they were sued by Erricson, they made the same arguments that Apple is making now.  While IANAL, This does sound like a case of Judicial Estoppel.  If it is, that will get the case thrown out quickly.

  • Reply 17 of 37
    jragostajragosta Posts: 10,473member
    gtr wrote: »
    Just let me start by saying that Samsung is one of the few companies in this day and age that actually seems willing to travel the long, hard road of investing in research and development for products that will truly impress and delight their customers. This is a company that has a long history of innovation, not to mention a CEO who's very name has been associated with the I. T. industry for decades.


    That's what happens when you look at a multinational, diversified holding company as a single entity.

    While it is true that some parts of Samsung have innovated greatly, that does not change the fact that their entire mobile handset business appears to have been built around slavishly copying Apple's products. We can't give their handset division a free ride simply because their semiconductor division has been innovative.

    Please don't confuse the two.
  • Reply 18 of 37
    leonardleonard Posts: 528member

    Quote:

    Originally Posted by petrosy View Post


    Just let me start by saying Samsung should license the portfolio out. However easy for Apple to say that they will cross reference their FRAND patents out at .33c and Samsung should do the same.


    How many patents are they both bringing to the table? I would imagine Samsung has more patents in this area than Apple as they have been in the mobile space long before Apple even thought about an iPhone.


     


    So if they both have the same amount of patents then .33c sounds great infact they should just cross license with out charge but some how I think Samsung has many more than Apple. Samsung is in their right to ask for what ever they want with in reason unless Apple sweetens the pot.



    Your forgetting that Apple has the Nortel patents which is a big bundle of patents.


     


    Apple didn't pay billions for the Nortel patents for nothing.  There are alot of cell phone and communication patents in that bundle.

  • Reply 19 of 37

    Quote:

    Originally Posted by Spacepower View Post



    Gotta give Apple credit for not bringing their FRAND pledged patents into the courtroom or ITC, unlike Samsung, Moto, and HTC.


     


    so let me get this straight, Apple wants to charge $25 / per device for a handful of utility patents, but also wants to access Samsung's vast communication 3G/UTMS patents for pennies in exchange for Apple's meager collection of comm/tech patents?

  • Reply 20 of 37
    noahjnoahj Posts: 4,503member
    For those that speak of Apples "meager collection" of patents. Can you please describe for us the number of patents they are currently holding that they are asking for FRAND terms on? Then also describe for us the number of Patents that Samsung holds and are asking to be paid for. It would be helpful to put a number around what meager is.
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