Apple wants $2.525 billion from Samsung in damages, but prefers injunctions against allegedly infringing products

by: Chris SmithJuly 24, 2012

It looks like it’s Super Tuesday today when it comes to legal matters here at Android Authority. We talked just earlier today about Apple’s and Samsung’s second mediation meeting that did not go that well, and then we heard that Apple obtained an EU-wide injunction against the Galaxy Tab 7.7 in Germany, but was denied one against the Galaxy Tab 10.1N in the same region.

Now we have one more rather important piece of legal news for you in this complex Apple vs Samsung and it concerns Apple’s financial requests in the American lawsuit that’s about to start –  you should expect more such updates, as the U.S. Apple vs Samsung case is set to start in just a few days, on July 30, while a similar case is already being tried in Australia.

Not to mention that we’re looking at around 50 patent-based cases between the two giants, spread across four continents, in 10 countries, and we’re far from reaching an end in either one.

“A combined total of $2.525 billion”

In a redacted pre-trial filing from Apple, the company is basically telling the court that it considers that Samsung should pay $2.525 billion for its allegedly infringing products. This is the first time an actual number has come up, and we can’t but wonder if it has anything to do with the recently dismissed (with prejudice) U.S. Apple vs Motorola trial in which Judge Richard Posner said that neither party was able to prove that it has lost money due to the allegedly infringing products of the competitor.

This time around Apple clearly asks for $2.525 billion in damages:

“Samsung adopted as its number one goal to [redacted]’ in the smartphone and tablet markets, and it chose to compete by copying Apple. Samsung’s infringing sales have enabled Samsung to overtake Apple as the largest manufacturer of smartphones in the world. Samsung has reaped billions of dollars in profits and caused Apple to lose hundreds of millions of dollars through its violation of Apple’s intellectual property. Apple conservatively estimates that as of March 31, 2012, Samsung has been unjustly enriched by about [redacted; presumably $2 billion] and has additionally cost Apple about $500 million in lost profits. Apple also conservatively estimates that it is entitled to over $25 million in reasonable royalty damages on the proportionately small set of remaining sales for which it cannot obtain an award of Samsung’s profits or Apple’s own lost profits, for a combined total of $2.525 billion.”

But Foss Patents reveals that Apple would rather have the court award a sales ban on the allegedly infringing products instead of getting paid:

“In an interview a few weeks ago [the one at AllThingsD’s D10 conference], Apple’s Chief Executive Officer Tim Cook explained the significance of this case for Apple. ‘[I]t is important for Apple not to be the developer for the world,’ Mr. Cook said. ‘We just want other people to invent their own stuff.’
Apple looks forward to a trial that will vindicate its intellectual property rights. Samsung must play by the rules. It must invent its own stuff. Its flagrant copying and massive infringement must stop.”

Whatever the case is, should Apple obtain a clear victory in this particular case, then Samsung is in a world of trouble.

The same publication notes that an Apple expert’s study reveals that “Samsung’s customers are willing to pay between $90 and $100 above the base price of a $199 smartphone and a $499 tablet, respectively, to obtain the patented features covered by Apple’s utility patents”.

In fact, here are some of the royalties calculated by Apple for its different patents covered by the suit, which apply to every single allegedly infringing Samsung device sold:

  • $2.02 for the “overscroll bounce” (or “rubber-banding”) ‘318 patent
  • $3.10 for the “scrolling API” ‘915 patent
  • $2.02 for the “tap to zoom and navigate” ‘163 patent
  • $24 for use of any of Apple’s design patents or trade dress rights

Should an injunction not be awarded to Apple, then the court should offer Apple a “reasonable royalty,” which Samsung would have to pay hence forward, for every infringing device, in addition to paying for the devices that have been or will be found to be infringing Apple’s patents.

“$0.0049 per unit for each infringed patent”

Sure, you’ll say that Samsung has its own patents that are allegedly infringed by Apple, and they do, but the South Korean manufacturer is relying on FRAND patents, or standard essential patents. These are patents that are used – therefore licensed for a decent fee – by a variety of companies that make mobile devices.

Samsung says that it wants Apple to pay 2.4% of Apple’s sales for its wireless standard essential patents, which cover 3G technology. That’s a number Apple has not agreed to. Instead, it’s saying that for each infringing iOS device (iPad or iPhone with 3G support) it’s willing to pay $0.0049 or almost half a cent.

According to the Cupertino-based company, that number has been obtained by looking at similar deals involving standard essential patents:

“Samsung’s declared-essential patents represent only a small portion of the total set of declared essential UMTS patents–around 5.45%”. Apple argues that the proper royalty base for Samsung is not the entire market value of Apple’s products, “which contain computer and application functionality far beyond simple UMTS wireless technology”. Instead, “the royalty should be applied to a base equal to the price of the baseband processor, the smallest priceable unit containing the accused functionality”. […]

Apple used an analogy and said that all car drivers pay the same highway toll, whether they own a jalopy or a new sports car.

Therefore, Apple is essentially arguing that Samsung’s 3G patents are responsible for only a portion of the functionality of a 3G baseband chip, which commonly retails for around $10.

Apple has sold to date over 350 million iOS devices – probably well over 400 million if we include unannounced iOS sales for Q2 2012 – which include non-3G devices such as the iPod touch or the iPad Wi-Fi. Assuming for a second that all these 400 million iOS devices would have 3G connectivity and Apple would pay half a cent in royalties for each then Apple would end up paying around $2 million for infringing devices.

It’s too early to tell what’s going to happen in this Apple vs Samsung case, but things are not looking good for Samsung if Apple’s infringement claims will be held up by the court, and that’s expecially so if more than one Galaxy-brand product will be found to be infringing. In that case, the South Korean company will either have to pay damages and/or royalties or have the device(s) banned from selling in the region. In turn, Apple won’t shell out a lot of cash for standards essential patents, with courts not likely to offer injunctions based on FRAND patents either.

We’ll be back with more news once we have them, in the mean time we’re five days away from this Apple vs Samsung lawsuit, and we can only expect more details from the proceeding to come to the surface.

  • alex13809

    I figure its only a matter of time before apple tries to patent the sleep button on their device -__-

  • Nasry Al-Haddad

    “Samsung’s declared-essential patents represent only a small portion of the total set of declared essential UMTS patents–around 5.45%”. Apple argues that the proper royalty base for Samsung is not the entire market value of Apple’s products, “which contain computer and application functionality far beyond simple UMTS wireless technology”. Instead, “the royalty should be applied to a base equal to the price of the baseband processor, the smallest priceable unit containing the accused functionality”. […]

    If Apple considers the royalty should be applied to a base equal to the price of the component of the handset that infringes Samsung’s patent, then Apple should never get any cent on OS design patents (icons with backgrounds, slide to unlock, fixed icon set, …).

    Android is free and open source, so whatever price Apple requests for OS design patent infringement, it will be multiplied by the OS base price (zero).

    And since design patents having the highest value ($24) as indicated in the article:
    * $24 for use of any of Apple’s design patents or trade dress rights

    The total $2.525 billion will be reduced by 50%, if not more. If Apple had split the design patent cost ($24) to two values, one for H/W design patents, and another for OS design patents, the amount deducted from the $2.525 billion would have been more accurate.

  • Point

  • Tom

    don’t think they’ll be satisfied until everyone else stops making rectangular phones…this is why i’ve considered buying apple products, then felt so disgusted and vowed to myself never even consider them.. this kinda business tactics will only lead to lack of innovation for the years to come

    • agree…apple is only good in Apps…None other than that….

  • Apple can go F themselves

  • I Heart Moldy Apple Products

    can u please put LG’s Prada phone next to these 2 in this article so that everyone can see Apple copied from someone else

    • leoingle

      ^^ THIS ^^

  • Ty

    Incredible… apple cant take the heat…

  • Apple? This is your yesterday.

  • menithings

    Samsung is a South Korean Mafia who’s CEO has been jailed repeatedly but quickly bailed out due to Samsung’s deep political ties. To substitute their inability to innovate   at the same level of originality as a company like Apple, they have developed a sustained culture of copying American innovation and have profited tremedously from it. Samsung’s many Galaxy products have very directly, blatantly, and most seriously, illegally stolen legitimate intellectual property and trade dress from Apple Inc. Samsung, being an enormous monopoly (they make ships and cars in South Korea) operates with the attitude that they can break international patent law because they are too big to be stopped. Apple has defined themselves by creating unique and legitimately original industry disrupting technology with the iPhone and iPad, which took them years and billions of dollars to develop. Samsung has come in and literally stolen Apple’s original IP and then called it their own. Apple has, for the first time in Samsung’s history, decided to aggressively challenge them. I for one think it’s about time. With that in mind, I find the level of naïveté exhibited by the Android fans in this comment board depressing. I understand how tech nerds can be duped by Google’s “open” nonsense, but cheering on a South Korean mafia over an American innovator just shows how misguided and gullible Android fans have become.

    • Gr33nBack

      You are the gullible and misguided one. Apple is the innovator of nothing, not a single product they make was original or even top of the line for that matter. You seem to be extremely simpleminded with your narrow view that anyone who doesn’t drink the apple kool-aid is instantly a fan boy. The fact of the matter is any intelligent consumer is going to choose the device with the superior hardware and functionality. Apple products look great have sub-par hardware and work well. although too restricted and pricey for my liking. If that’s you cup of tea by all means drink it but don’t stand here on your little soap box acting all high and mighty. the only thing the Iphone and galaxy lines have in common is a rectangular shape. last i check Jobs didn’t invent the triangle or anything for that matter. also the ownership of Samsung has nothing to do with the article at hand. The bottom line is if Apple were so confident in the superiority of their products the wouldn’t have to stoop so low as to sue the “manufacturer” of all their hardware

    • marc

      thank you for simply showing me that some people STILL have functioning brain cells! weather or not you like apple is besides the point. the technology in question was clearly owned, and patented BY APPLE! some they created, some they purchased, but all of it under apples legal control! so why should they sit back and allow some greedy thieves to capitalize off of their product?

      • because they should never have been granted a lot of it in the first place as apple pretty much polished up someones old product.

  • SamsaraGuru

    All entities – individual humans, governments or corporations – that fly in the face of “The Force” ultimately find themselves destroyed; regardless of the fact they may win a few temporary victories along the way to their ultimate and well deserved demises.

    The world, the market demands, embraces and needs innovation and diversity just as nature must have a diverse ecosystem of competing organisms to yield a balanced healthy system that promotes and allows life as we know it to exist and continue and evolve.

    A truly smart corporation, government and/or individual understands this and because they truly are smart – and not brazenly, cravenly greedy like Apple – structures their approach to all things in a way that encourages freedom and choice and the growth of greater, not less, freedom and diversity.

    Alas, humans and the corporations they spawn, almost always take on the characters of the people who found and run them, whether you are talking Hitler and Germany of Jobs and Apple and once set on the path to destruction may for a time be successful but in the end their negative, selfish and repugnant approach ultimately causes the world to bring to a stop the anti-life practices they have embraced.

    People look at Apple and think, “Wow, a great, successful creative company.” Yet what have they truly done lately except move any and all production of their products to a slave labor nation – China – where the working conditions were and probably still are so horrible that in 2010 at least 10 people we know about – not counting the ones that Foxconn probably managed to keep quiet and away from the public eye – committed suicide.

    Their products are not really “their” products but an amalgamation of bits and pieces and parts made by everyone in the tech world – their retina screens by Samsung, their dual core iPhone 4S process, again made by Samsung, their camera in the 4S by Sony, etc., etc., etc.

    Apple is not a technology company; it is a marketing company most likely in no small measure controlled by lawyers who have found the most perfect cash cow in history.

    Apple is no longer about – if it ever was – about creativity, but about the money and they make the transgressions of Microsoft pale in comparison to their own blatant and avaricious efforts to control, constrict and the market and bend it to their will.

    Fortunately, they, like all tyrants throughout history are on a collision course with reality and destruction; Hitler too felt he was invincible, but as we all know that didn’t work out too well for him.

  • A

    Everything that Apple has sued for this time can be traced back to innovation by other companies. Two of the ones listed in this articles were developed by and in use on Palm devices 5 years before the iPhone(‘y) hit the market. If Samsung can go toe to toe with Apple and knock them on their greedy butts, they have my full support.

    • marc

      now for some reality my friend. what you fail to state is that apple LEGALLY PURCHASED technology for the above mentioned things, and then improved on it. unlike samsung who simply STOLE IT from apple