Legal Archive

Samsung paid Microsoft $1 billion a year for Android patents

In September 2011, the two companies entered a seven-year cross-licensing agreement for mobile-related patents. The payments for the first year were made without fuss. In August 2013, Samsung told Microsoft that it had assessed the value of the royalties owed for the second year as over $1 billion. Payment of this fee was due in October, but Microsoft says that no payment was received until late November 2013. Redmond's complaint says that Samsung owes more than $6.9 million in interest fees for the late payment (per the terms of the original licensing agreement).

What changed between August and October? In September 2013, Microsoft announced that it was buying Nokia's Devices division. The software giant asserts that Samsung is both claiming that Nokia's devices are not covered by the cross-licensing deal - and hence violating Samsung's own patents - and that the Nokia purchase voids the licensing agreement in its entirety.

Only in bizarro-idiotic-upside-down world can you not contribute a single line of code to a product and yet still get $1 billion a year simply by sitting on your ass.

Windows 8 on tablets was a colossal flop and Windows Phone barely gets by, and this is how Microsoft pads the numbers in mobile. Classy.

EU: Apple-Ireland tax deal illegal, possible fines imposed on Apple

We already reported on this one yesterday, but it's official now: after a preliminary investigation, the EU has accused Ireland of providing illegal state aid to Apple by means of Apple-specific low tax rates which the EU states do not conform to market standards. In addition, while there are certain specific cases in which state aid is legal, none of those seem to apply in this case. These cases cover things like aid to severely impoverished regions, natural disaster relief, important projects of common European interest, and similar things.

At this stage, the Commission considers that the measure at issue appears to constitute a reduction of charges that should normally be borne by the entities concerned in the course of their business, and should therefore be considered as operating aid. According to the Commission practice, such aid cannot be considered compatible with the internal market in that it does not facilitate the development of certain activities or of certain economic areas, nor are the incentives in question limited in time, digressive or proportionate to what is necessary to remedy to a specific economic handicap of the areas concerned.

Possible fines, which could run in the billions of euros, would be on Apple. So, unlike what some of our readers vehemently claimed - "There is no possibility of a fine upon Apple whatsoever" - Apple could very well end up paying billions of euros.

The Commission wishes to remind Ireland that Article 108(3) of the Treaty on the Functioning of the European Union has suspensory effect, and would draw your attention to Article 14 of Council Regulation (EC) No 659/199935, which provides that all unlawful aid may be recovered from the recipient.

This is only the beginning. Several other companies and countries - Google, Starbucks, The Netherlands, Luxembourg - are also under investigation, and will likely face similar proceedings in the near future.

Software patents are crumbling, thanks to the Supreme Court

The Supreme Court's June ruling on the patentability of software - its first in 33 years - raised as many questions at it answered. One specific software patent went down in flames in the case of Alice v. CLS Bank, but the abstract reasoning of the decision didn't provide much clarity on which other patents might be in danger.

Now a series of decisions from lower courts is starting to bring the ruling's practical practical consequences into focus. And the results have been ugly for fans of software patents. By my count there have been 10 court rulings on the patentability of software since the Supreme Court's decision - including six that were decided this month. Every single one of them has led to the patent being invalidated.

This doesn't necessarily mean that all software patents are in danger - these are mostly patents that are particularly vulnerable to challenge under the new Alice precedent. But it does mean that the pendulum of patent law is now clearly swinging in an anti-patent direction. Every time a patent gets invalidated, it strengthens the bargaining position of every defendant facing a lawsuit from a patent troll.

Great news.

Judge rejects $324.5 million settlement over Apple, Google hiring

Four Silicon Valley companies including Apple and Google failed to persuade a U.S. judge to sign off on a $324.5 million settlement to resolve a lawsuit by tech workers, who accused the firms of conspiring to avoid poaching each other's employees.

In a ruling on Friday, U.S. District Judge Lucy Koh in San Jose, California, said the class action settlement was too low, given the strength of the case against the companies. Intel and Adobe were also part of the proposed deal.

Good on her.

I've said it before and I'll say it again: Eric Schmidt, Tim Cook, and the other criminals behind this crime belong in jail. If a poor member of a minority steals a wallet, he gets jail time. Rich CEOs steal hundreds of millions - and if you do the math, it actually comes down to billions - and they can get away with a paltry sum and walk free.

This is unfair and unjust. Eric Schmidt, Tim Cook, and the others are criminals. They belong in jail.

Samsung and Apple agree to drop legal disputes outside the US

Apple and Samsung are making peace - at least outside the United States. In a surprise move late Tuesday, the two companies said they were dropping all litigation outside the country.

"Samsung and Apple have agreed to drop all litigation between the two companies outside the United States," the two companies said in a joint statement to The Verge. "This agreement does not involve any licensing arrangements, and the companies are continuing to pursue the existing cases in U.S. courts."

Good news of course, but just imagine if all the money and resources wasted on fruitless court cases was spent on actually useful things. I also wonder how this settlement-that-isn't-a-settlement will affect the ongoing American court cases. Won't the judge push them to settle even harder now?

Samsung stops paying protection money, Microsoft sues

Microsoft is suing yet another Android device maker - but this time it's a very different case than their usual protection money scheme. Microsoft claims that Samsung has stopped complying with a patent sharing agreement between the two companies.

After becoming the leading player in the worldwide smartphone market, Samsung decided late last year to stop complying with its agreement with Microsoft. In September 2013, after Microsoft announced it was acquiring the Nokia Devices and Services business, Samsung began using the acquisition as an excuse to breach its contract. Curiously, Samsung did not ask the court to decide whether the Nokia acquisition invalidated its contract with Microsoft, likely because it knew its position was meritless.

Interesting, if true. This is what happens when you stop paying protection money - the burly men with clubs show up.

Pixar’s Ed Catmull central figure in the wage-fixing scandal

If you think only Apple, Google, Intel, and several other technology companies flagrantly broke the law by illegally robbing their employees of wages - think again. As it turns out, the digital animation industry - centering around Steve Jobs' Pixar, unsurprisingly - was just as bad.

Catmull's deposition and emails from the lawsuit confirm that he was instrumental in operating a secret wage-theft cartel that violated the Sherman Antitrust Act. But it's even worse than you think. The cartel orchestrated in large part by Catmull robbed potential wages and job opportunities from thousands of animation industry workers at other studios, including DreamWorks, Lucasfilm, Robert Zemeckis’ ImageMovers, the now-defunct Orphanage, and Walt Disney Animation Studios.

Pando Daily has the meat on this story (here and here).

The wage fixing scandal is way, way more sprawling than anyone could have originally anticipated. The sad thing is that the criminals behind this illegal behaviour - Steve Jobs, Tim Cook, Eric Schmidt, George Lucas, Ed Catmull, and many, many more - will never have to face any serious consequences for their crimes.

Google, Canon, Dropbox, others pool patents to ward off trolls

A coalition of technology companies large and small has created a sort of arms-control treaty to prevent future abuses of their intellectual property.

Among Google, Canon, SAP, Newegg, Dropbox and Asana, there are nearly 300,000 patent assets on the line. But the companies aren't licensing all of each others' patents today. Instead, by agreeing to join the License on Transfer network, they promise to grant licenses to one another whenever one of those patents is sold.

Clever. Sad, though, that companies have to resort to complicated tricks like this instead of just having the damn law changed to align with reality.

Supreme Court doesn’t understand software, and that’s a problem

The problem, at root, is that the courts are confused about the nature of software. The courts have repeatedly said that mathematical algorithms can't be patented. But many judges also seem to believe that some software is worthy of patent protection. The problem is that "software" and "mathematical algorithm" are two terms for the same thing. Until the courts understand that, the laws regarding software patents are going to be incoherent.

If you ever find yourself arguing with someone who supports software patents - just link to this article by Timothy B. Lee. An excellent and concise look at where software patents come from, the inability of courts to understand software, and why the Supreme Court of the United States seems so hesitant to reaffirm its own rulings about the intrinsic inability to patent software. Key passage:

One reason the courts might hesitate to do this is that it would be a big blow to the bottom lines of some of the biggest companies in America. Such a ruling would have invalidated thousands of dubious software patents held by trolls, but it also would have invalidated Amazon.com's infamous 1-click patent, the "data detectors" patent Apple used to sue Samsung, and Google's patent on its search ranking algorithm. Invalidating software patents would have wiped billions of dollars off the balance sheets of some of America's largest technology companies. The Supreme Court generally tries to avoid making waves, and those would have been some very big waves.

And there you have it. Large American technology companies want to have their cake and eat too - they supposedly support patent reform, but only reform that weakens the position of small players (which happens to include non-practicing entities) while strengthening their own positions.

Lee ends with the simile that I have used on numerous occasions in the past - one that perfectly sums up the inherent ridiculousness of patenting software:

The mathematical ideas in software, like the literary ideas in novels, are part of society's common intellectual heritage. Neither should be eligible for patent protection.

The Supreme Court just mildly restricted software patents

The US Supreme Court has made it ever so slightly harder to patent software.

The patent claimed a method of hedging against counter-party risk, which is a fancy word for the risk that you make a deal with someone and later he doesn't uphold his end of the bargain. The Supreme Court unanimously held that you can't patent an abstract concept like this merely by stating that the hedging should be done on a computer. This kind of abstract patent is depressingly common in the software industry, and the CLS ruling will cause lower courts to take a harder look at them.

It's a small victory, but hey, I take whatever I can. Sadly, the SCOTUS also states that "many computer-implemented claims" are still eligible for patent protection, without actually explaining which claims. So, while appending "on a computer" to an obvious abstract concept does not make it patentable, the actual concept of patenting software is still very much allowed.

Even if the SCOTUS had completely abolished software patents, however, we still would have to deal with them for more than a decade - existing software patents would not magically vanish, and would still require lengthy and expensive court cases to be invalidated. Something bullies like Microsoft and Apple can afford easily, while many others cannot.

Sorry for not putting a smile on your face, but reality is reality. Sadly.

Apple, Google settle smartphone patent litigation

Apple Inc and Google Inc's Motorola Mobility unit have agreed to settle all patent litigation between them over smartphone technology, ending one of the highest profile lawsuits in technology.

In a joint statement on Friday, the companies said the settlement does not include a cross license to their respective patents.

Good news.

"Apple and Google have also agreed to work together in some areas of patent reform," the statement said.

Bad news. Two of the largest technology companies in the world working on "patent reform"? Translated to Standard English, that reads: "working together to strengthen the position of large, established companies to make it even harder for newcomers to challenge us".

Oracle wins copyright ruling against Google over Android

A San Francisco federal judge had decided that Oracle could not claim copyright protection on parts of Java, but on Friday the three-judge Federal Circuit panel reversed that ruling.

"We conclude that a set of commands to instruct a computer to carry out desired operations may contain expression that is eligible for copyright protection," Federal Circuit Judge Kathleen O'Malley wrote.

This is terrible news for the technology industry and us enthusiasts.

This case should have ended with this. Everything after that is a sham.

Lies, deceit, and hypocrisy

One single paragraph from one of the many court documents (via!) in the ongoing legal battle between Apple and Samsung. One single paragraph that not only perfectly highlights the hypocrisy of technology companies, but also the complete and utter disjoint between a technology company's legal, marketing, and engineering departments.

Contrary to the image it has cultivated in the popular press, Apple has admitted in internal documents that its strength is not in developing new technologies first, but in successfully commercializing them. When Apple was developing its campaign to promote the first iPhone, it considered - and rejected - advertisements that touted alleged Apple "firsts" with the iPhone. As one Apple employee explained to an overly exuberant Apple marketer, "I don't know how many things we can come up with that you can legitimately claim we did first. Certainly we have the first successful versions of many features, but that's different than launching something to market first." In this vein, the employee methodically explained that Palm, Nokia and others had first invented the iPhone's most prominent features.

The marketing department has no clue about the technology it needs to advertise. The legal department cleverly writes its patent application despite knowing full well that the technology it tries to patent is not new. Meanwhile, the engineer - the actual person implementing the technology - knows exactly what is going on, but is gagged from openly speaking his or her mind. The only thing I'm not sure about is which of these three is the biggest hypocrite.

Intellectual property - and patents in particular - has ruined the technology industry with lies, deceit, and hypocrisy. We just stood by and let it happen.

Apple v. Samsung jury: verdict not meant to send big message

When a federal jury two years ago clobbered Samsung with nearly $1 billion in damages for violating Apple's iPhone and iPad patent rights, the jury foreman emphasized that the verdict was meant to send a strong message about copying in the tech industry.

But there was no such deliberate message in the verdict in the latest patent showdown between Apple and Samsung that drew to an end on Monday, according to jurors who spoke outside the federal courthouse after finishing their role. In fact, the jury foreman said the mixed verdict in the trial sequel was not intended to send any broader message in the smartphone wars.

It's almost as if having a jury led by a technology patent holder has a huge stake in making sure patents are as valuable as possible. The foreman in the current case, Thomas Dunham, stated that this jury didn't intend to send a message - it just looked at the evidence and awarded fair damages. Either of the two company's initial claims - Apple's $2 billion and Samsung's $0.12 billion - were dismissed by the jury as unfair and unjust.

"Ultimately, the consumer is the loser in all this," Dunham said. "I'd like to see them find a way to settle. I hope this (verdict) in some way helps shape that future."

Clearly, one of these two foremen is the wise one.

The great smartphone war

For three years, Apple and Samsung have clashed on a scale almost unprecedented in business history, their legal war costing more than a billion dollars and spanning four continents. Beginning with the super-secret project that created the iPhone and the late Steve Jobs's fury when Samsung - an Apple supplier! - brought out a shockingly similar device, Kurt Eichenwald explores the Korean company's record of patent infringement, among other ruthless business tactics, and explains why Apple might win the battles but still lose the war.

Once you brush off the apple pie that spontaneously erupts from your monitor and get over the "Asian Samsung bad, American Apple good!"-mentality, this article has some very decent stuff in it. Worth the read.

Jury rules Apple, Samsung infringe each other’s patents

An eight-person jury on Friday handed back a mixed verdict in the Apple v. Samsung patent-infringement case.

The jury found Samsung's gadgets infringed Apple's '647 patent, but not the '959 patent or '414 patent. Results were mixed for the '721 patent, with some Samsung devices, such as the Galaxy Nexus, found to infringe, and others not.

The jury awarded Apple only $119.6 million for the infringement.

Apple wanted more than $2 billion. The verdict is still being read, and the jury has also ruled that Apple infringed on one of Samsung's patents, awarding Samsung $158000 for it.

So, pocket change both ways. A total waste of money, public resources, the jury members' time, and the court system. Well done you, patent system.

Google to cover some of Samsung’s costs in Apple patent case

A Google lawyer testified on Tuesday that the software maker, pursuant to its contractual obligations, agreed to take over defense of some of the claims in Apple’s current patent lawsuit as well as to indemnify Samsung should it lose on those claims.

Apple played deposition testimony from Google lawyer James Maccoun, who verified emails in which Google agreed to provide partial or full indemnity with regard to four patents as well as to take over defense of those claims.

If this case was really about "justice", as Apple claims it is, they should just get it over with and sue Google directly, instead of playing these proxy games. In any case, it's good to know Google is taking responsibility for its OEMs here - long overdue.

Judge confirms link between Apple and patent troll Rockstar

Rockstar, the massive patent troll in which Apple is a majority shareholder, sued Google for patent infringement. Of course, Rockstar filed suit in the Eastern District of Texas, the usual venue for patent trolls. Because of Apple's involvement, Google motioned to have the suit take place in California instead, where it stands a much greater chance of winning. Judge Claudia Wilken sides with Google. She states in the ruling:

Google and Apple's rivalry in the smartphone industry is well-documented. Apple's founder stated that he viewed Android as a "rip off" of iPhone features and intended to "destroy" Android by launching a "thermonuclear war." Defendants' litigation strategy of suing Google customers is consistent with Apple's particular business interest... This 'scare the customer and run' tactic advances Apple's interest in interfering with Google's Android business.

Every now and then, someone just gets it. Judge Wilken looked beyond the constructed sham companies and legal cobwebs - such as Rockstar setting up a sham company in Delaware with zero California contacts and transferring all patents-in-suit to that company a day before it sued Google.

The world needs more judges like this. In addition - it seems like Jobs' remarks about Android are catching up to the company. Delightful.

Apple, Microsoft join hands to stop software patent reform

Called the Partnership for American Innovation, the group warned that steps to stop the PAEs could also hurt truly innovative companies.

Companies signing on to the effort so far are Apple Inc., DuPont, Ford Motor Co., General Electric, IBM Corp, Microsoft Corp and Pfizer Inc.

In particular, the group would oppose efforts to make software or biotechnology unpatentable.

Google, Cisco and other supporters of efforts to curb frivolous patent litigation from PAEs, often termed "patent trolls," supported a bill that easily passed the U.S. House of Representatives in December.

Software patents are destructive and hinder innovation. Apple, Microsoft, and the other members are actively lobbying to limit innovation in the technology industry. This, in turn, will harm the American economy, and cost the American people tens of thousands of jobs.

It's easy to sound like a politician.

Round two: Apple, Samsung suit up for another patent war

The Verge, summarising the first US patent lawsuit between Apple and Samsung:

Apple was awarded just over $1 billion in damages, though that figure was later cut down to $939.8 million after the judge pointed out errors in the way the jury did its math. Those damages were retried, and came in lower than the original figure, though the entire amount has since been appealed, and Samsung hasn't paid a penny. Alongside that, Apple and Samsung failed to win bans against one another's products in the US, making the first trial seem like nothing more than a legal spectacle.

Or, just call it what it is: an abject failure on both company's sides, and a huge waste of money that could have gone to product development, higher salaries, or even shareholder returns. Two gigantic and hugely profitable companies using despicable weaponry - and all, for, nothing.

But in the midst of all that was a very real threat: another lawsuit, one that targeted more successful devices from both companies, and used easy-to-understand patents covering basic software features. Apple filed it against Samsung in February 2012, targeting 17 devices. Samsung responded in kind, and this week the pair go head to head once again; the outcome could be very different. Here's what to expect over the next weeks and months as these two titans clash again in California's courts.

So, prepare for another week of lawyers laughing all the way to the bank, while two companies with more money than they know what to do with waste precious time of the US justice system that could be spent elsewhere, and better.

Let the cheering contest continue. Which faceless corporation that cares none about you do you root for?