Samsung: Psst, EU regulator. About that $17.3bn fine... let's talk Samsung is in discussions with the EU about settling charges of anti-competitive behaviour against Apple, in order to slip the potential $17.3bn fine it faces if found guilty. The news comes from Reuters, which has been chatting to a couple of "people familiar with the matter" and discovered Samsung has opened negotiations …
Do you honestly think the EU regulator is so stupid they'd go after samsung if that was the case? We don't know what apple offered, but we do know samsung were demanding comedy amounts. The facts suggest samsung are continuing their tradition of walking just on the wrong side of the legal line.
Actually I thought that was pretty much the case. (I am going to attempt to not take any sides here, personally I don't like either company more than the other so apologies if this seems in any way biased, it's not intended to).
There is some disagreement over the fair amount to pay (this I agree with). Once that is settled they need to look at if samsungs offer or apples offer was fair. The big question (which a lot of this and other frand patent suits are about) is once you turn down a fair frand offer do you have a right to another frand offer or do you revert to commercial terms?
Samsung HAVE to make the patent license available to apple, this is a given but for how much and is there a penalty for possibly trying to force down a fair rate using the courts, this swings both ways and the answer should be interesting. If samsung did make their request too high then for sure Apple have a right to expect it be dealt with, if Apple are trying to force costs lower by refusing a frand offer (assuming it was fair, it may not have been) then again this needs to be dealt with. That and how the hell do you figure out what is fair, especially given the number of patents, their obscurity and the complexity of devices.
Frankly the whole frand situation is ridiculous. It's a bodged solution. Patent holders do deserve to be paid, and the idea that anyone should be able to pay a fair price for a patent used in a standard is right. The execution of this is crazy, it needs one small but very important change. Every standard should have a patent pool, if you want your IP in a standard you must add it to the pool which will pay out a fair amount. That way if you want to make a GSM \ LTE smart phone you simply pay for the two pools, you know how much it will cost and theres no risk of later ambush lawsuits for obscure patents, oh and the patent holders get paid. Frand does just not go far enough. In one small change you could get rid of a lot of lawsuits. Sure you would have fun deciding on who gets how much and how much each pool costs, but we have to find a way to make standards less costly in the long run. The only people getting rich here are the lawyers, and frankly that is very wrong. Part of the cost of every phone we buy will be going to pay for these ambulance chasing vampires. Burn the lawyers, lock the execs in a room and no one is allowed out for potty breaks until they have a deal.
EditL Just saw below samsung wanted over 2%, thats insane. Unless apple have been playing bskyb maths with the numbers. Again, mandatory patent pools for standards and burn the lawyers.
Apple offered in a U.S. court trail a total of no more than $1 for Samsung patent royalties. .... the U.S. judge decided that Apple had no plans to negotiate in good faith and no settlement was possible. .... The judge issued a ruling about types of claims that Apple did not like and also dismissed Apple and Samsung claims against each other. Many believe that the dismissal was more damaging to Apple than to Samsung or Google position. Apple claims that frand patents(standards in communication) have little value vs a simple pinch to zoom patent, which apple claims its patent should be worth 25-35 us $ vs .05- .15 $ us for standard patents. Standard patents make the phone work with cell towers.... no patents ... no connection.... only Apple fails to pay.....
... what really happened.
We'll never find out what Apple have paid, what Samsung wanted and where any abuse took place. A quick bribe, sorry out of court settlement, no admission of liability and it all goes away...
It's the same playing route the publishing houses chose in the iBooks case and many have chosen before - pay 'em off, hush 'em up.
While I have no idea of Samsung (or any of the publishers for that matter) had done anything wrong, it's a bit disappointing really that justice or an examination of actions can seemingly be avoided in such a way.
We don't know what apple offered to pay, but we know samsung wanted 2.25% (or was it 2.4%?) of the retail price of an iphone for their patents. At a retail price of £500, that would be £11.25. Just for a small subset of the stuff required to connect to a 3G network.
Considering that hundreds of companies own patents relating to 3G, WiFi, H264, bluetooth and all the other standardised stuff, the cost of licensing patents along for an iphone would add £1000+ to the retail price. I don't think it's hard to find that totally out of order, so no wonder the EU is in the middle of raising a nice big hammer and samsung are looking for an easy way out.
Having once been involved with a company that was all about creating intellectual property that manufacturers would license to manufacture products, that sounds quite reasonable to me.
The price my firm was looking for was 3% of OEM* plus $100,000/quarter. And the time frame for that asking price was the early 1990s. If as part of the licensing deal Samsung got other patent rights back from other vendors, those other vendors would be paying significantly less cash than 2.x%, but I would expect the overall capital value to Samsung would be similar.
*For Apple OEM = retail so there is no markup from the OEM manufacturing point.
I'll untangle the confusion for you. Samsung aren't being fined for having a patent per se.
When a patent you own becomes part of a standard, you agree to a covenant that says that you will license the patent to all comers on FRAND terms. This is done to ensure that companies understand the cost of using the standard up front, thus helping to ensure that the standard does indeed become a standard.
In contrast, Apple's slide unlock patent isn't part of any standard so the same rules don't apply. If there were some standard for cellphone form factor and user interface - and Apple was to contribute their patents to that standard - then you could indeed expect them to be fined if they tried to use those patents against a competitor in the future ...
Does it not seem odd to you that a standards mandatey patent (of which many 1000's ) seems to trump unnecessary but nice 'slide to unlock' or 'bounce back' in terms of product protection power...?
Apple weren't in ETSI\3GPP ( they prob are now ) when gsm and wcdma were decided, but they pay a pitance to play in the game.
Apple got how much (per device) out of Samsung for bounce back or whatever?
It just seems unfair to me.
DIsclaimer - I was on ETSI radio standards committee years ago... the chairman made no secret that the wording was to confuse those outsider firms (not present ) what was actually meant- e.g. use of should and shall -'shall' being mandatory. Some firm might have their chipset do loads of unnecessary things because the standard said it should...
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