Sunday, November 25, 2012

Of Ransoms and Rounded Rectangles, Part 2

This is a continuation of a series on issues surrounding standards-essential patents, FRAND licensing, and the other legal/business attributes that are in the spotlight thanks to the Apple/Samsung/Google/Microsoft smartphone wars.


Samsung's patents are part of the 3G standard so they can't sue to stop Apple from using them

False.  Samsung does have a number of standards-essential patents regarding cellular communication. However, industry standards are not necessarily free and open (a topic for another day!).  Corporations regularly develop patentable work on their own, and for reasons of monetization, influence and control, and/or interoperability, they sometimes submit those patents to standards bodies.  The cost of doing so is an obligation to license those patents under fair, reasonable, and non-discriminatory (FRAND) terms.


Since Samsung's patents are important hardware patents and Apple's are just silly design stuff, doesn't Samsung have the upper hand with way more valuable patents?
Not necessarily. Samsung's patents are in a FRAND pool and Apple's are not.  Apple is under no obligation to license any patents that Samsung might be infringing upon at any cost.  If Apple wants to charge $50 per unit to license patents it holds, it can.  It can even charge Samsung $50 and let Microsoft use them for free in a cross-licensing deal.  

Samsung doesn't have that option.  They have no choice but to accept an amount that is consistent with what other companies are paying.  That's not easy, because the big players don't pay anything, having cross-licensing deals.  Samsung is arguing that because Apple is a big player with little to contribute to the standards, that it should pay a lot more than nothing.  Apple is arguing that Samsung is demanding that Apple pay for rights already held by Qualcomm, Apple's supplier of 3G radios, in essence "double dipping".  I'll look at that in more detail another time.

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