Standards-Essential Patents & Destruction of Evidence In Apple vs. Samsung Patent Wars

Apple and Samsung have been locking horns in legal battles since 2011 over intellectual properties. Apple claims Samsung “slavishly” copied its iPhone and iPad designs in launching their own Galaxy smartphone and tablet line. Meanwhile, Samsung claims Apple is infringing on several 3G-related patents that Samsung owns, but that are considered standard in today’s mobile industry.

In recent news, a U.S. court has granted an injunction banning the sale of the Samsung Galaxy Tab 7 in that particular market. However, a XXX court has also ruled that Apple had infringed on patents relating to 3G data transmission technologies that Samsung owns.

It’s sort of a stalemate and nobody wants to budge. Apple and Samsung were both given the chance to resolve their issues out-of-court before, although neither party agreed with the proposed settlement terms. Litigation has commenced, and we’ve been getting news of sales bans and injunctions in different territories.

Apple has mostly had the upper hand in the worldwide patent disputes, with several variants of the Samsung Galaxy Tab being banned, the Google Galaxy Nexus getting an injunction, and with Samsung pulling out local search in the Galaxy S3. However, Apple is found to have infringed on 3G-related patents owned by Samsung, and the South Korean company wants Apple to pay royalties.

The issue here, though, is coming to a fair computation of royalty payments. Apple says Samsung’s royalty demands are unfair. In a legal brief recently unsealed in a U.S. court this week, Apple says Samsung has never sought royalty payments this high from other licensees.

The issue now lies in the fact that Samsung’s patents are now considered standards essential. In this kind of setup, the patent owner agrees to license out their technology to competitors at a significantly lower rate — but still fair and reasonable — in exchange for the technology to be implemented as a standard in that particular industry.

“Samsung’s royalty demands are multiple times more than Apple has paid any other patentees for licenses to their declared-essential patent portfolios,” Apple said in a statement, noting that Samsung wants a 2.4% rate on the “entire selling price” of Apple devices like the iPhone and iPad.

Samsung, however, claims that the rate they have offered “is consistent with the royalty rates other companies charge,” and that Apple has never made a counter-offer. “Instead, it simply rejected Samsung’s opening offer, refused to negotiate further and to this day has not paid Samsung a dime for Apple’s use of Samsung’s standards-essential technology,” Samsung’s statement adds.

Judges are said to be reluctant to issue injunctions arising from these cases. However, in this case, some actions on Samsung’s part may have been damaging to their case against Apple. According to Judge Paul Grewal, Samsung was at fault by not disabling the auto-delete feature in its email system by the time the company was aware Apple would be suing for patent infringement.

Grewal ordered that the jury be instructed to presume likelihood that Samsung destroyed evidence favorable to Apple, even though it had a duty to preserve such evidence.

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