Apple says Samsung patent royalty demands unfair

SAN FRANCISCO Thu Jul 26, 2012 3:05am IST

Employees hang a poster advertising the New iPad at an Apple dealership in Wuhan, Hubei province July 19, 2012. REUTERS/Stringer

Employees hang a poster advertising the New iPad at an Apple dealership in Wuhan, Hubei province July 19, 2012.

Credit: Reuters/Stringer

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SAN FRANCISCO (Reuters) - Apple Inc said Samsung Electronics Co Ltd is demanding from the iPhone maker a far higher patent royalty than Apple pays to other companies, at a rate the South Korean company has never sought from any other licensee.

The information was contained in portions of an Apple legal brief freshly unsealed in U.S. court on Wednesday, and provides more detail about each side's negotiating position in the run-up to a high stakes trial set to begin next week. In a separate filing, Samsung contended that its royalty demands are consistent with industry norms.

Also on Wednesday, a U.S. magistrate in San Jose, California, ruled that Samsung wrongly let employees delete emails that could have helped Apple pursue its $2.53 billion lawsuit over disputed patents. The magistrate, Judge Paul Grewal, also said that a jury may hold it against the South Korean company.

A Samsung spokesman could not immediately comment on the ruling.

A trial is scheduled to start in the San Jose federal court July 30.

Apple and Samsung, the world's largest consumer electronics corporations, are waging legal war around the world, accusing each other of patent violations as they vie for supremacy in a fast-growing market for mobile devices.

One of the key issues in dispute between the companies is how to value Samsung's standard essential patents. These are patents which Samsung has agreed to license to competitors on fair and reasonable terms, in exchange for having the technology be adopted as an industry standard.

Some judges are reluctant to issue injunctions on such patents.

Samsung is demanding a 2.4 percent rate on the "entire selling price" of Apple's mobile products, Apple said in the court filing.

"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.

The legal filings do not disclose the rate Apple pays to other companies for standard essential patents. In a court filing on Tuesday, Apple had said it should pay one-half of 1 cent per unit for each infringed standard essential patent.

However, Samsung said in a separate filing on Wednesday that its offer "is consistent with the royalty rates other companies charge" and that Apple 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 Appleā€˜s use of Samsung's standards-essential technology," Samsung said.

In his ruling, Judge Grewal said Samsung "acted with conscious disregard of its obligations, or willfully" in failing to disable the "auto-delete" feature of its in-house "mySingle" email system by the time it should have known that Apple would sue over patents for technology used in smartphones and tablets.

"In effect, Samsung kept the shredder on," Grewal wrote. "This plan fell woefully short of the mark."

Grewal ordered that a jury be instructed that it may presume that it is more likely than not that Samsung destroyed evidence favorable to Apple after its duty to preserve that evidence had started.

The case in U.S. District Court, Northern District of California, is Apple Inc v. Samsung Electronics Co Ltd et al, 11-1846.

(Additional reporting by Jonathan Stempel in New York; Editing by Gerald E. McCormick and Richard Chang)