Sunday, January 26, 2014

CNET - Google, Samsung Patent Licensing Deal - A Comment

Today, in Google, Samsung Patent Licensing Deal CNET reports that Google and Samsung have agreed to a broad cross-license of their patents and their applications filed over the next 10 years. CNET notes the companies were vague about the licensing terms. We don't know if all or a subset of the patents and applications are subject to the cross-license.

The article correctly notes Apple and Samsung are unlikely to agree to a broad patent cross-license. Here's my take on that. Judge Lucy Koh's order for settlement talks in February 2014 only highlight the unwillingness to settle. The press release mentioned in the article only suggests Samsung and Google's may wish for the patent war to end. Seungho Ahn, the head of Samsung's Intellectual Property Center, says we have "more to gain from cooperating than engaging in unnecessary patent disputes," and Allen Lo, deputy general counsel for patents at Google, says "by working together on agreements like this, companies can reduce the potential for litigation and focus instead on innovation." But an agreement requires both sides to see a benefit.

The problem is the economics weigh against an Apple-Samsung settlement in the patent war. The damages are huge, e.g., $1B, and Apple's legal fees appear to be less than the probability of being awarded damages x the damages awarded. In addition, Apple's success in enforcement of its patents suggests it will continue. See FOSS patents for the details. Finally, Apple's ability to capture its innovation in non-standard essential patents, with much higher damages, make it rational to continue to sue for patent infringement.

Thus, the Google-Samsung patent cross-license is not a change of heart about the merits of the patent war, but an acknowledgment they are not winning it and don't want to make things worse by fighting each other.

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