Just to make the handset patent disputes even more abstruse, Apple has admitted it is using a Samsung patent ‘ but claims it is not infringing, because of the way it has implemented the technology. And it claims its rival owes it over $2.5bn in damages in the US alone.
The argument was made on the second day of a trial in one of the main arenas for the gladiatorial Apple-Samsung battle, Australia. Here, Samsung is alleging, in a countersuit, that Apple infringes three of its 3G patents in the iPhone 4 and 4S and the iPad 2. Apple said it uses but does not infringe on one of the items ‘ ‘ a method and apparatus for data transmission in a mobile telecommunication system supporting enhanced uplink service’.
Apple lawyer Stephen Burley said the IPR was used via Qualcomm’s baseband chips, but that Samsung had failed to check how the device actually performs the function at issue. The standard is open to interpretation in this case and Apple has not taken the same approach as Samsung in implementing, he said.
Burley also denied Samsung’s claims that Apple had rejected further negotiations to license its IPR on a ‘Frand’ (fair, reasonable and non-discriminatory) basis. “Apple has not refused to negotiate with Samsung. Apple continues to be willing to negotiate on Frand terms for Samsung’s standards essential patents, including the three involved in this suit,” he said. The case will continue in late August.
Another twist in the saga emerged from the Australian hearings, when Samsung admitted it had ended a patents truce with Qualcomm once the Apple war kicked off. Previously, the Korean firm had signed a deal not to sue Qualcomm or its customers for using Samsung 3G IPR, but that was called off when Apple filed its lawsuit against the Galaxy Tab. According to court documents in Australia, this pact was first made back in 1993.
“There was an agreement between Samsung and Qualcomm. That agreement was not a licence agreement. It contains a contractual provision that Samsung would not sue Qualcomm or customers of Qualcomm who apply [the 3G patents].’
Meanwhile, over in the US, Apple has decided that Samsung owes it $2.5bn to settle American infringement claims. According to Florian Mueller of Foss Patents, the amount is based on per-unit royalties for several technologies – $2.02 for an ‘overscroll bounce’ patent, $3.10 for the ‘scrolling API’ technology, $2.02 for ‘tap to zoom and navigate’, and in addition, $24 to cover the use of any of Apple’s “design patents or trade dress rights’. That, once again, puts design rather than technology IPR at the heart of the claims, a controversial tactic which has been a hallmark of Apple’s assault on its arch-rival.
As summarized by Mueller, Apple’s argument goes that Samsung set itself the goal of being the leader in smartphone and tablets and ‘it chose to compete by copying Apple. Samsung’s infringing sales have enabled Samsung to overtake Apple as the largest manufacturer of smartphones in the world. Samsung has reaped billions of dollars in profits and caused Apple to lose hundreds of millions of dollars through its violation of Apple’s intellectual property. Apple conservatively estimates that as of March 31, 2012, Samsung has been unjustly enriched by about [redacted; presumably $2bn] and has additionally cost Apple about $500m in lost profits. Apple also conservatively estimates that it is entitled to over $25m in reasonable royalty damages on the proportionately small set of remaining sales for which it cannot obtain an award of Samsung’s profits or Apple’s own lost profits, for a combined total of $2.525bn.’
As the stakes get higher, top executives from both firms ‘ Apple CEO Tim Cook and Samsung vice chairman Choi Gee-sung ‘ met for the second time last week to try to reach an agreement before a key trial starts in California. According to Reuters, no agreement was reached and the trial is scheduled to begin in San Jose on July 30.
And Samsung has suffered another blow in Germany, where a Dusseldorf court has ruled that an existing ban on the Galaxy Tab 7.7 can be extended across the whole European Union, though it also ruled that the Tab 10.1N (which was amended to get round Apple design patents) could remain on sale. The smaller model was banned in Germany last September and the injunction is now applied to all 27 EU states. But the EU judgement may conflict with a recent decision in the UK High Court, which said three Samsung products, including the Tab 7.7, did not infringe Apple’s design IPR (because they were ‘not cool enough’). All these rulings are preliminary and full trials on the alleged violations still await, but vendors are increasingly seeking to remove their rivals’ gadgets from the stores while they wait for the court proceedings to take place.
In another of Apple’s US patent fights, this one with Google/Motorola, both firms have appealed against Judge Richard Posner’s decision to dismiss their case in Chicago ‘ a ruling which some believed could lead to a shake-up of the whole IPR litigation process. Posner cancelled a jury trial on June 22, saying neither vendor had been able to prove they would be damaged by the claimed infringements, and he also forbade them from bringing the tit-for-tat case back again. Posner has also been critical of the whole process of using patent litigation as a competitive weapon.
Meanwhile, Eastman Kodak has suffered a blow to its hopes of gaining huge sums for its vast digital imaging patents portfolio. It has lost a key patent case against Apple and RIM, and this could affect the perceived value of its IPR, which it aims to sell as part of its plan to exit Chapter XI bankruptcy protection.
Kodak said it will appeal the decision by the US ITC (International Trade Commission), which upheld an earlier ruling in favor of Apple and RIM. In May, Judge Thomas Pender at the ITC ruled that the image preview patent at issue was invalid, though had it been legitimate, Apple and RIM would be in violation. The full ITC panel has now confirmed that opinion.
Kodak had been hoping for a victory which would have boosted the price of its assets and forced the two handset makers to pay licensing fees ‘ it had claimed that Apple alone owed it $1bn in royalties.
The dispute has been dragging on for 2.5 years, almost twice as long as a typical ITC case, and further appeals will follow. The patent’s validity ‘has been upheld in previous litigation at the ITC, and was affirmed by the US Patent and Trade Office in the face of two separate challenges, so we are confident that its validity will ultimately be upheld,’ said Kodak spokesperson Chris Veronda in a statement. The firm can now challenge the ITC decision in a federal appeals court. The proceedings have been complicated because Apple has claimed to be the true owner of the image preview patent at issue in this case, and some others, as a result of a research deal between the two firms dating back to the 1990s. That argument has been rejected by the ITC but is still awaiting a separate lawsuit.
The latest setback is likely to delay the sale of the two patent portfolios which Kodak has put on the table, one related to digital capture and one to imaging systems and services. It had hoped to sell them in order to avoid having to file for bankruptcy but firm offers were not forthcoming, despite high levels of interest, partly because of uncertainty over the outcome of various legal battles. The company then filed for Chapter XI in January and is undergoing a complete reorganization, which hinges on the IPR sale. Kodak said last month that 20 parties had signed agreements to view confidential information ahead of potential bids for its two portfolios and it hopes to announce the buyers on August 13.
Among its licensees are Samsung, LG, Motorola Mobility and Nokia and Kodak claims to have made $3bn in licensing revenues from its IPR.
Kodak has another ITC case against Apple, and also HTC, involving different patents. That is scheduled for trial in February 2013.
Finally, a name from a previous generation of patent wars, NTP, has re-entered the limelight. The firm is most famous for its long-running battle with RIM over its mobile email IPR. Now it has signed an agreement to allow 13 firms, including Google, Apple and Microsoft, to use its key patent. Other licensees include AT&T, Verizon, Sprint, T-Mobile, HTC, Motorola Mobility, Palm, LG, Samsung and Yahoo. This ends all litigation with the companies. NTP and RIM made a similar settlement for $612.5m in 2006.