In just a few weeks, Apple and Samsung will begin their second large-scale patent infringement battle in the US District Court for the Northern District of California. The trial comes just weeks after top executives from each respective company were unable to reach an amicable settlement agreement via court-ordered mediation.
Earlier this week, Florian Mueller over at FOSS Patents unearthed court transcripts which help shed some light on the licensing terms Apple was and perhaps is hoping to extract from Samsung. Specifically, Apple is seeking US$40 per device from Samsung in licensing fees. As Mueller himself points out, that type of royalty rate is ridiculously high.
A damages expert will argue on Apple's behalf that, if the parties had acted reasonably and rationally in a hypothetical negotiation, Samsung would have agreed to pay $40 -- forty dollars! -- per phone or tablet sold as a total royalty for the five patents-in-suit, which relate to (but don't even fully monopolize) the phone number tapping feature, unified search, data synchronization, slide-to-unlock, and autocomplete. The theory is that Samsung would simply have raised its prices accordingly.
What's particularly interesting about Apple's proposed $40 fee is that it's higher even than previous Apple licensing proposals made to Samsung.
Back in October 2010, Apple offered Samsung a $30 licensing fee per each smartphone device and a $40 licensing fee per each tablet sold. At the time, Apple indicated that it was willing to knock off 20% off its proposed royalty rate if Samsung agreed to cross license its own patents to Apple. That would have resulted in Samsung ponying up $24 to Apple for each smartphone sold and $32 for each Android tablet sold.
Mueller further points out that the royalty rates Apple sought in the first trial included $3.10 for pinch-to-zoom, and $2.02 for both inertial scrolling and tap to zoom, representing a grand total of $7.14 for just three software patents.
Apple's royalty-type damages claim for five software patents is also far out of the ballpark of anything that has ever been claimed or rumored to be paid in this industry for entire portfolios. After Apple and Nokia settled in 2011, the highest per-unit royalty estimate I heard about (and this was just an analyst's claim, not official information) was in the $10 range -- for Nokia's huge portfolio of SEPs and non-SEPs, not for a handful of patents. Guesstimates of what various Android device makers pay to Microsoft -- again, for a portfolio license, not a five-patent license -- that have appeared in the media did not exceed $15-20 per unit, at least the ones I'm aware of. (And Microsoft has a stronger software patent portfolio than Apple.)
Like the first trial, this one is on track to get real interesting real quick.