Licensing Is The Answer: Apple, Samsung Settle Seven Year Patent Dispute

by: Patrick Anderson, Chief Technology Officer | June 29, 2018

Multiple news outlets are reporting that Apple and Samsung have reached a settlement, putting an end to their seven year patent dispute. Naturally, the parties are keeping the terms confidential for now (and, likely, forever). Of course, commentary continues to fly in despite the lack of detail, as pundits search for meaning (and relevance). However, you might as well ask those same pundits to opine on the contents of a locked trunk. Your typical licensing deal is equally opaque.

For example, academic Brian Love told CNET “After almost a decade of litigation, what was accomplished? I’d say very little.” CNET goes on to say that Love acknowledged Apple receiving hundreds of millions of dollars, “but it never succeeded in taking Samsung products off the market.” Of course, this glib attitude is provably incomplete, despite the lack of transparency.

Granted, the frustration and temptation to characterize litigation in this way is understandable. After all, to an outsider, the license and settlement seems like something that could have been accomplished back in 2011, at the outset of litigation. However, this limited view omits a key factor. Patent litigation has changed dramatically in the past seven years. Substantive changes from the Supreme Court and Congress forever altered nearly every aspect of the patent landscape. This migration occurred throughout the case, resulting in massive uncertainty. Combined with the initial billion dollar verdict, the uncertainty bred just enough incentive to continue the fight.

While knowing little, we can safely assume that any settlement agreement resulted in mutual licenses to asserted and counter-asserted patents, in addition to payment. Further, the agreement also likely licenses numerous unasserted patents, as parties are generally wary to settle one lawsuit only to discover a second one on its heels. Thus, in addition to “hundreds of millions of dollars,” Apple likely received licenses to multiple Samsung, which also carries substantial value.

Further, as to Apple failing to “tak[e] Samsung products off the market,” this should hardly be described as a failure. Removing products from the marketplace is the antithesis of licensing. Granted, competitors may not always launch litigation with each other with licensing as the primary goal. However, realists in the industry know that rights to exclude are largely illusory, and that most disputes end in licenses. Thus, the more successful an infringing product is, the better off the licensor.

On the other hand, speaking to USA Today, Rutgers Law School professor Michael Carrier said, “the oft-touted ‘smartphone patent wars’ were not all they were made out to be, not blocking products from the market and barely denting the companies’ bottom line.” Indeed, this very point was made previously on IPWire. As noted, “the actual, cumulative royalty yield turns out to be a paltry 3.4% of the average selling price of a smartphone.” Thus, despite claims to the contrary, Apple accomplished much by enforcing its patent rights and hopefully helped restore a bit credibility and respect for intellectual property rights along the way.

Subscribe to get the latest news