Apple open to settlement talks with Android manufacturers – Report

Tue, Mar 13, 2012

Legal, News

Apple and Samsung remain at each other’s throats as the two companies continue to battle it out over patent infringement issues that span the globe and encompass a wide array of technologies.

In Steve Jobs biography, the Apple co-founder didn’t mince words when describing his outlook on Android.

“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong,” Jobs said. “I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this.”

…In a subsequent meeting with Schmidt at a Palo Alto, Calif., cafe, Jobs told Schmidt that he wasn’t interested in settling the lawsuit, the book says.

“I don’t want your money. If you offer me $5 billion, I won’t want it. I’ve got plenty of money. I want you to stop using our ideas in Android, that’s all I want.”

Jobs’ opinion on Android notwithstanding, it’s not terribly out of the question for Apple to settle with Android manufacturers. After all, they had no problem settling with Nokia a few months back.

Besides, you might remember that Apple at one point tried to avoid litigation with Samsung entirely and engaged in negotiations with the Korean-based company back in 2010. Those talks, obviously, never resulted in a licensing agreement.

With that as a backdrop, an interesting piece of news surfaced late last week claiming that Apple is willing to license out some of its patents at issue to varying Android manufacturers.

According to Ian Sherr, reporting for the Dow Jones Newswires, Apple has indicated a “willingness to cut deals with competitors.”

Apple isn’t attempting to offer patent licenses to all its competitors or create a royalty business, one person familiar with the matter said.

However, some people familiar with the situation see more reason for Apple to consider legal settlements, following a mix of legal victories and setbacks against smartphone makers that use Google Inc.’s Android mobile operating system…

One factor is that Android has proliferated so widely that shutting the software out of the market using injunctions is no longer practical, one of the people said. Licensing is an alternative that could add cost to Android development and make it less appealing for manufacturers.

Apple is reportedly looking to get somewhere between $5 and $15 for each Android handset sold.

At the same time, with upwards of $98 billion in cash, Apple isn’t exactly wanting for money. As opposed to Microsoft, Apple isn’t necessarily keen on revenue streams borne out of licensing agreements. In an ideal world, Apple would wield its patents against Android manufacturers and get them to stop infringing upon their intellectual property.

But the patent lawsuit game can sometimes be long and drawn out, and Apple may come to the realization that it’s interests are better served by getting a piece of the Android pie rather than trying, perhaps in vain, to utterly destroy Android.

Besides, with Microsoft already getting what’s reported to be about $5 for each Android handset sold, an Apple victory would work to increase the Android tax on manufacturers, thereby making devices running Windows Phone 7 all the more desirable. And what hurts Google helps Apple.

With Android as Apple’s top competitor these days, Apple would much rather constrain Android and pump up Microsoft.

Other considerations include the fact that winning an injunction against individual products may not end Apple’s legal efforts, since competitors have many different devices waiting in the wings to be sold, the people familiar with the matter said. By contrast, so much of Apple’s sales are generated by current iPhone and iPad tablet models that any injunction won by competitors could have a more devastating impact on the company, they added.

However, these patents often lead to successful claims for royalty payments from defendants. So one possible goal for Apple in any negotiations is to use its own patents as bargaining chips to reduce any potential royalties it might face as a result of such “essential” patents. Another common motivation is to show judges presiding over patent litigation that a company is not being unreasonable, and will negotiate in good faith to settle suits.

Apple’s ongoing string of lawsuits keeps getting messier as the number of suits and countersuits seems to increase each and every month. A sizable royalty rate from Android manufacturers may be Apple’s best bet to curb the attraction to Android.

via Nasdaq



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