Linked by Thom Holwerda on Sat 3rd Aug 2013 20:34 UTC
Legal The Obama administration:

After extensive consultations with the agencies of the Trade Policy Staff Committee and the Trade Policy Review Group, as well as other interested agencies and persons, I have decided to disapprove the USITC's determination to issue an exclusion order and cease and desist order in this investigation.

Lots of talk about SEPs and FRAND in Obama's decree, which means that the Obama administration contradicts everything the ITC has said. To freshen your memory, the ITC ruled that not only was the patent in question not a standard essential patent, but Samsung's offer was actually proper FRAND:

Additionally, the Commission found that there were still disputed issues concerning the patent at issue was even actually essential to the standard (and therefore whether a FRAND or disclosure obligation applied at all).

[...]

The Commission analyzed the history of negotiations between Apple and Samsung (this portion is heavily redacted) to see if Apple showed that Samsung failed to negotiate “in good faith,” and found that Apple failed to do so. Notably, the Commission dismissed Apple’s arguments that (1) Samsung’s initial offer was so high as to show bad faith, and (2) Samsung’s attempts to get a cross-license to Apple’s non-SEPs violated its FRAND commitments.

In other words, the Obama administration threw out virtually everything the ITC has said in order to protect Apple. This effectively means that American companies can infringe on non-American companies' (standard essential) patents all they want, because the president will simply step in if they try to fight back.

So, I was wrong. I expected the Obama administration to be impartial and not give such a huge slap in the face of the ITC - as cynical as I usually am, I can still be naive. Protectionism is more important to the POTUS.

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RE[5]: Huh.
by Tony Swash on Mon 5th Aug 2013 16:45 UTC in reply to "RE[4]: Huh."
Tony Swash
Member since:
2009-08-22

Here is the back ground to the merits of this case. Hidden inside Samsung's behaviour and tactics are some principles apparently that you seem to think are worth defending. love to know what they are.

The "patent infringement" that Samsung asserted in order to win its original (now vetoed) U.S. import ban against certain GSM versions of Apple's iPhone 4 and iPad 2 models isn't a matter of Apple copying technology that Samsung invented, and then refusing to pay Samsung for the use of it.

Samsung claimed infringement of a radio technique implemented in low level code and related to the GSM / UMTS 3G networking standard. That code was sold to Apple as part of a finished product, embedded in the PMB9801 baseband chips it purchased from Infineon to solder into the logic boards of its iPhone 4 and iPad 2.

On the iPhone 4 and iPad 2 models Samsung was targeting, Apple's iOS runs the A4 Application Processor (AP) while a second, embedded operating system RTOS, sold by Mentor Graphics) runs the Baseband Processor (BP). The two chips communicate like a PC connected to an external modem via a serial cable.

The Application Processor is the main SoC, such as the iPhone 4's A4, which incorporates an ARM CPU core, a PowerVR GPU core and additional integrated logic. This "brain" also has RAM attached to it externally.

The Baseband Processor is a computer unto itself which handles the device's mobile radio and analog audio processing. On the GSM iPhone 4 and iPad 2, this is Infineon's PMB9801, branded as "X-GOLD 616" and identified as 337S3833 on the chip itself. It has its own ARM microcontroller, RAM and integrated ROM firmware and talks to the AP, the antenna's radio chip and the SIM card.

In 2010, iSuppli estimated the iPhone 4's A4, which is manufactured by Samsung, to cost $10.75, while it estimated its Infineon baseband chip to cost $11.72.

In its hardball negotiations with Apple last year, Samsung demanded a 2.4 percent royalty to cover the use all of its Standards Essential Patents (SEPs) pertaining to 2G/3G GSM/UMTS technologies used in the baseband chip.

Apple had a few problems with this, as noted in an April 30, 2012 letter from Apple's intellectual property licensing director Boris Teksler, addressed to Seongwoo Kim at Samsung. First, it disputed whether Samsung's SEPs were even valid. Second, it doubted whether they were even in use within the components it was buying. Third, the baseband components Apple was buying, initially from Infineon and later Qualcomm, had already licensed Samsung's technologies on behalf of their customers.

This "first sale" doctrine means that if you buy a product from a company that has legitimately licensed the use of the technologies it employs, the original patent owner can't go "double dipping" and demand more patent royalties from the end user, just as a landowner can't lease their property to a hotel chain, then come back and demand rent from anyone who comes to stay there.

Most egregiously, however, Samsung wasn't just demanding a double-dipping royalty for questionable patent claims on the baseband chip. It was demanding a royalty percentage of the full retail price of the finished product. With an average selling price of $660 in 2012, that amounted to around $15.84 per iPhone and iPad Apple was selling, that is more than the cost of the component containing the disputed Samsung feature.

"Can Samsung provide Apple with any evidence of any company paying Samsung a royalty similar to the 2.4% of ASP [Average Selling Price] terms that Samsung has requested from Apple?" Teksler asked in the letter.

Apple stated that it was willing to pay Samsung FRAND rates for its UMTS portfolio, comparable to what it paid to license technologies like H.264. However, it was only prepared to pay a total of 5-7 percent royalties for baseband chip patents, and only on the value of the chip itself. Samsung's share of those total royalties would have to be proportional to its contribution. In return, Apple would offer Samsung a reciprocal arrangement on its own UMTS patents. Samsung didn't like any of this.

Due to its history as a component and featurephone manufacturer, Samsung didn't have many valuable smartphone user interface, operating system or device design patents, but it did have patents on lower level mobile radio and other component-related technologies.

However, Samsung was also manufacturing many of the components in Apple's iPhone and iPad, including its AP, DRAM and flash memory, parts accounting to over $50 of the total $187.51 bill of materials estimated by iSuppli. Samsung therefore had to focus on the patents it could allege against the technology in one of the parts it wasn't already suppling Apple with: the baseband chip. Most of the patents Samsung asserted in the U.S. case, and in the more than 50 lawsuits worldwide raging in at least 9 different countries, are related to 3G UMTS technologies built into the baseband.

That includes patent 7,362,867, which Samsung almost successfully used to block sales of Apple's older products in the ITC case last week.

If the Obama administration hadn't intervened, Samsung's import ban wouldn't have stopped sales of Apple's modern iPhone and iPad, but it would have disrupted Apple's operations and taken away the cheapest iPhone option on AT&T, a carrier that, according to Kantar, is already pushing more entry level Android phones to new smartphone users than it is iPhones.

Samsung had originally filed patent '867, for "a scrambling code generating apparatus of a downlink transmitter in a UMTS mobile communication system," in 2000. It was granted in 2008, but Samsung only began alleging infringement by Apple in 2011, in response to Apple's suit against it.

The ITC import ban Samsung initiated (separately, in parallel to Judge Koh's U.S. Federal Court case) only managed to successfully allege infringement by Apple of '867 on products using Infineon chips, which Apple had begun phasing out the previous fall in a move toward a "global" iPhone compatible with CDMA networks.

Apple's shift to Qualcomm baseband chips fortuitously limited the potential fallout of the ITC ban that was eventually granted in June 2013, before being vetoed over the weekend prior to the first business day when the ban was slated to go into effect.

Apple wasn't forced to stop using the UMTS technology Samsung had patented. Qualcomm, the vendor of Apple's current baseband chips, had licensed the use of the patent from Samsung. The ITC recognized that this "exhausted" Samsung's ability to sue Apple for "using" the patent on modern devices with Qualcomm chips. Samsung managed to convince the ITC that Infineon's license was no longer valid once Apple bought the chips and began using them.

But Infineon had also licensed Samsung's patents. The difference was that Samsung managed to convince the ITC that Infineon's license was no longer valid once Apple bought the chips and began using them.

To do this, Samsung invented a specious legal argument that insisted that, despite Infineon having a legitimate license to Samsung patents, and despite Intel, which had bought Infineon, also having secured a license to Samsung's patents, and despite having signed agreements with a UMTS standards body that barred it from being able to arbitrarily revoke its license in order to extort higher licensing fees, that it could revoke its license anyway and insist that Apple had to pay, not just FRAND licensing fees, but anything Samsung could imagine, a veritable blank check.

And if Apple refused to give Samsung whatever it demanded, Samsung would tell everyone that Apple was refusing to pay licensing fees and refusing to negotiate while also publicly insisting that Apple was "infringing its patents."

Samsung somehow managed to convince the ITC that Intel's license was only valid in the United States, and that Intel's American sales of Infineon chips to Apple in California was not a transaction it recognized to be in the United States.

Reply Parent Score: 3

RE[6]: Huh.
by jigzat on Mon 5th Aug 2013 19:39 in reply to "RE[5]: Huh."
jigzat Member since:
2008-10-30

Cool bro, very insightful.

Reply Parent Score: 0