Apple offered patent licensing deal to Samsung before trial

iPhone maker proposed a reciprocal agreement to license Samsung's 3G/UMTS patents for what it considered FRAND terms, a letter from Apple to its smartphone rival reveals.

Apple proposed a reciprocal patent agreement to Samsung in the months leading up to their landmark trial, but the two could not arrive at a deal acceptable to both companies.

Apple's intellectual-property licensing director, Boris Teskler, outlined a deal to his equivalent at Samsung, Seongwoo Kim, in a three-page letter that was revealed this week after U.S. District Court Judge Lucy Koh rejected the companies' request to keep documents sealed.

Tesker's April 30 letter (see below) offered to license Samsung's 3G/UMTS patents for what it considered to be reasonable, and nondiscriminatory (FRAND) terms rather than the 2.4 percent Samsung demanded, 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 estimated the FRAND payment to be 33 cents per device:

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 requested a reply by May 7, and it's unknown what if anything Samsung's response was, but apparently no agreement was reached.

Samsung declined to comment on its response to the letter. CNET has also contacted Apple for comment on the letter and will update this report when we learn more.

In the often-critical letter, Apple also challenged Samsung to provide evidence it had ever received its requested 2.4 percent average selling price (ASP) terms during negotiations.

"You have previously suggested that you cannot share license-terms information because of confidentiality agreements. But Samsung's own valuations of its own patents, as conveyed to other companies, constitute information that is within Samsung's sole control," Tesker wrote. "Again, can you provide any evidence that Samsung has ever negotiated a license based on a proposal that Samsung's declared-essential UMTS patents be valued at 2.4% of ASP?"

Apple has made patent-licensing overtures to Samsung before, offering a proposal to its smartphone rival in 2010 in which Apple offered to license its patent portfolio if Samsung would pay $30 per smartphone and $40 per tablet . In the document, Apple said Samsung would have owed it $250 million in 2010.

12-04-30 Apple-Samsung Teksler-Kim Letter Re FRAND

 

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