Sunday, November 3, 2013

Samsung’s Standard Essential Patents Strategy against Apple

Samsung recently appealed to CAFC for ITC’s ruling of non-infringement regarding its HSUPA standard essential patent (SEP) – US7486644. US7486644 and US7706348 are the two SEPs that Samsung alleged that Apple’s products infringed them. Even if ITC finally determined that Apple’s products (iPhone 4 (AT&T models); iPhone 3GS; (AT&T models); iPhone 3 (AT&T models); iPad 3G (AT&T models); and iPad 2 3G (AT&T models)) infringe the asserted claims (claims 75-76 and 82-84) of the US7706348 (’348) patent “Apparatus and Method for Encoding/Decoding Transport Format indicator in CDMA Mobile Communication System,” the USTR (U.S. Trade Representative) vetoed against the ITC’s ruling. Notwithstanding the recent administrative and judicial blocking against exploiting SEPs for injunction, Samsung decided to appeal for its SEPs. Why? Because recently several courts ruled that SEPs are still eligible for monetary relief for infringement.

For example, in In re INNOV A TIO IP VENTURES, LLC, No. 1:11-cv-09308 (N.D. Ill. 2013), Dkt. No. 975, the court calculated FRAND royalty of WiFi SEPs: (average profit margin to the contribution of patentee’s SEPs) x (net profit of relating products) x (pro rata share of patentee’s SEPs to the total number of WiFi SEPs providing similar contribution to the profit). Similar calculation can also lead to the FRAND royalty cap for 3G UMTS SEPs. Considering the huge net profit from Apple’s 3G UMTS products sale in the US market and the pro rata share of Samsung’s SEPs to the total number of 3G UMTS SEPs, the amount of licensing royalty generated by Samsung’s share of 3G UMTs SEPs will be significant in amount. Thus, Samsung’s SEPs can play an important role in the potential settlement negotiation with Apple.

For more information, please contact Alex Lee at .

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