Apple Offered Samsung Silent Patent Licensing Deal
Nearly two years ago, Apple (NASDAQ: AAPL) offered its patent portfolio to Samsung in a backroom licensing deal that would have netted it some $250 million in royalties in 2010, months after the late Steve Jobs threatened to go “thermonuclear” on Google’s (NASDAQ: GOOG) Android operating system.
According to published reports, this little golden nugget of information emerged Aug. 10 during the patent infringement trial between the two companies, courtesy of testimony and materials offered by Borks Teksler, Apple’s director of patent licensing strategy. Here are the details:
It’s not an everyday occurrence for outsiders to learn the specifics of a private licensing agreement but in this case (pardon the pun) Teksler said he created a document in October, 2010 outlining a licensing royalty deal Apple offered to Samsung, a proposal the Korean manufacturer subsequently rejected, despite Apple having recorded numerous instances in which it believed Samsung illegally appropriated its patented technology.
The wording in the document read: “Samsung chose to embrace and imitate Apple’s iPhone archetype. Apple would have preferred that Samsung request a license to do this in advance. Because Samsung is a strategic supplier to Apple, we are prepared to offer a royalty-bearing license for this category of device.”
The terms? Apple would license its patent portfolio to Samsung for $30 per smartphone and $40 per tablet, which, using Samsung’s 2010 unit sales, amounted to some $288 million. However, if Samsung agreed to cross-license some of its intellectual property to Apple, the forthcoming 20 percent discount would reduce Apple’s royalties to $250 million.
Those figures appear tiny in comparison with what’s at stake in trial now. With Apple demanding some $2.5 billion in damages and Samsung looking for 2.4 percent of every iPhone sold — Apple moved 26 million iPhones in Q2 alone adding up to $375 million in damages just for those three months — the courtroom disclosure that for a relatively minor amount in annual royalty fees both companies could have sidestepped the potentially severe financial consequences of this trial, is, to say the least, simultaneously enlightening and dumbfounding.