Samsung to Pay Ongoing Royalty on Phones, Tablets Infringing Apple's Features Patents

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By Tony Dutra

Nov. 26 — Samsung must pay ongoing royalties for continuing infringement by its smartphones and tablets of Apple's patents on certain features, the U.S. District Court for the Northern District of California ruled Nov. 25.

Two cases were litigated in parallel. This case revolved around Apple's “quick links” (U.S. Patent No. 5,946,647), “slide to unlock” (8,046,721) and “word recommendations” (8,074,172) patents, which the court found infringed by certain Samsung phones—Admire, Galaxy Nexus, Galaxy S II, Galaxy S II Epic 4G Touch, Galaxy S II Skyrocket, Galaxy S III and Stratosphere—and the Galaxy Note and Note II tablets.

The redacted decision blacked out the rates to be applied per patent infringed, but there is reason to believe that the rate for a product that infringed all three patents would be as much as $6.50 per device.

Samsung may have to pay between $2-3 per Galaxy S III, found to infringe only the quick links patent. Though the company contends that changes to software in that product mean that it no longer infringes, the court said that royalties would be due for future products “not more than colorably different” from the adjudicated products.

Rate, Timing, Products Disputed.

A jury had awarded just under $120 million in damages on May 5, itemized as a lump sum for each product—that is, it did not separately place a per-unit value on any of the patents.

Apple requested a permanent injunction, which Judge Lucy H. Koh refused Aug. 27. That decision is on appeal at the Federal Circuit.

Apple subsequently filed the instant motion for ongoing royalties for the adjudicated products and any others “not more than colorably different.” The latter could be important because Samsung claims that it “long ago designed around these patents,” such that the adjudicated products either no longer infringe or are no longer being sold.

In the Nov. 25 redacted opinion, Koh first denied Samsung's request for a stay as to ongoing royalties, rejecting the argument that Apple's injunction appeal could resolve the future infringement dispute.

The court then turned to the calculation of ongoing royalty rates. Apple “reverse engineered” the jury's award to suggest that the per-patent rates were $2.75 for the ’647 patent, $2.30 for the ’172 patent, and $1.41 for the ’721 patent, and it sought the same rates for future infringement.

“Although Apple's estimated per-unit rates are roughly consistent with the jury verdict, the Court finds no basis for estimating the per-unit royalties as Apple suggests,” Koh said.

The court calculated “starting rates” from the verdict and then applied the Georgia-Pacific factors, which, in general, were neutral or favored Apple, so as to suggest increases to the starting rates. However, Apple only requested rates consistent with the jury verdict and the court ultimately came to that same conclusion.

Thus, the court set the starting rates as the final ongoing royalty rates as well.

Samsung's responsibility to pay ongoing royalties will begin once final judgment is entered, whenever it occurs, as the court has already awarded supplemental damages to Apple up to that date.

Rachel Krevans of Morrison & Foerster LLP, San Francisco, represented Apple. Victoria F. Maroulis of Quinn Emanuel Urquhart Oliver & Hedges LLP, Redwood Shores, Calif., represented Samsung.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Tom P. Taylor at ttaylor@bna.com

Full text at http://www.bloomberglaw.com/public/document/Apple_Inc_v_Samsung_Electronics_Co_Ltd_et_al_Docket_No_512cv00630/8.