Apple Inc. and Samsung Electronics Co. have held a series of private negotiations about their numerous patent disputes since a court victory by Apple in one case last summer, according to legal documents and people familiar with the situation.
The negotiations included face-to-face meetings in Seoul, South Korea, in December, one document states. The two companies even appeared to come close to a settlement in February before talks cooled off.
ReutersSamsung Electronics stormed into the smartphone lead in 2011, selling 24 million units in the third quarter of that year, according to Gartner. Apple, by comparison, sold 17 million iPhones in that quarter. Above, Apple's iPhone 5 and Samsung's Galaxy S4.
There is no indication that the two sides are close to a settlement, but talks between the companies are still going on, the people familiar with the discussions said.
In the negotiations, described sparingly in heavily redacted documents from the U.S. International Trade Commission made public earlier this month and by people familiar with them, Samsung has pushed for a broad patent cross-licensing deal that could settle all outstanding litigation between the companies. It is unclear whether Apple was interested in such a deal.
The possibility of a broad settlement, or a series of separate deals, marks another twist in the relationship between the two technology giants that began with Samsung supplying parts necessary to make smaller and thinner iPod music players in 2005, and has ballooned into fierce competition over smartphones.
Samsung, relying primarily on the Android software platform created by Google Inc., stormed into the smartphone lead in 2011, selling 24 million units in the third quarter of that year, according to Gartner. Apple, by comparison, sold 17 million iPhones in that quarter. Samsung widened that lead in the first quarter of this year, selling 64.7 million smartphones, while Apple sold 38.3 million, Gartner said.
The companies have been partners and combatants ever since.
Apple claimed Samsung copied its products in a lawsuit filed in 2011, touching off battles in courtrooms around the globe as the two jousted about technology patents and trademarked designs, with attempts to both win jury awards and block the sales of one another's products.
Samsung has accused Apple of infringing broad patents that are deemed essential for creating wireless devices. Apple has generally accused the South Korean company of infringing patents covering unique functional aspects of its mobile devices or their physical designs.
So far, the results have been mixed, analysts say.
In late August last year, a jury in San Jose, Calif., awarded Apple more than $1 billion after finding that some Samsung devices had infringed its patents. Three of the six patents the jury said Samsung infringed covered the shape of the iPhone and on-screen icons. The judge presiding over the case has since reduced those damages as the case wends its way toward an appeal.
Samsung on June 4 won an order from the ITC that bans the import of some older models of Apple's iPhones and iPads, including the AT&T Inc. version of the iPhone 4, which is still sold in stores today. President Barack Obama has less than three weeks to decide whether to veto the order, which Apple also can appeal.
The two companies have reason to settle. They are deeply intertwined, with Samsung supplying parts for Apple's mobile devices while the iPhone maker is one of Samsung's biggest customers for processors and memory chips.
Though Apple has attempted to reduce its reliance on Samsung by recently signing an agreement with Taiwan Semiconductor Manufacturing Co. to make some chips starting in 2014, Apple has also reportedly signed an agreement with Samsung to produce some chips in 2015, according to the Korea Economic Daily. The report couldn't be confirmed.
"They have a classic symbiotic relationship," said Bob O'Donnell, an analyst at market researcher IDC. He added that even though Apple continues to divorce its business from the Korean tech giant, it still will likely rely on it for some parts for a while. "That's the painful transition process they're in."
Settlement talks between the companies go back as early as 2010. A court filing last year during its lawsuit indicates that Apple early on offered Samsung a license for its patents at a rate of $30 per handset and $40 per tablet. The iPhone maker offered some discounts if Samsung agreed to cross-license its patents to Apple.
Samsung has also offered a license for its patents, but Apple has complained the rate was too high.
Most details about the recent talks are contained in the 161-page ITC document explaining its June 4 ruling, with most proposed settlement terms redacted. It states that Apple made a settlement offer to Samsung in September, shortly after its win in the California trial.
But the most serious of talks appear to have taken place between December and March, according to the document. The two met for rounds of face-to-face negotiations in mid-January, but the companies couldn't come to an agreement. The reasons are redacted in the ITC document.
The two companies again agreed to meet in person in February, the document states. On Feb. 7, representatives for the two companies drafted a "memorandum of understanding," suggesting a potential settlement, which was brought to more senior leaders at the companies. Its terms are redacted, and there is no indication management of the companies accepted the terms.
The two companies continued negotiations until March, but talks appear to have broken down soon after. On March 22, Samsung asked to reopen negotiations, a proposal the ITC document indicates Apple hadn't yet responded to by the time of the decision, though Samsung asserted some of its earlier offers were still on the table.
The ITC said, as part of its explanation for ruling against Apple, it didn't believe Samsung's proposed royalties for licensing its patents were unreasonable or lacking good faith.
"The fact that representatives for both parties were able to reach a memorandum of understanding," the document reads, "indicates Samsung is negotiating in good faith and, to be colloquial, is playing in the same ballpark as Apple."
Apple, for its part, has continually said Samsung's royalty demands were unfair and not in line with its commitments to international standards bodies. Apple also argued Samsung was obligated to make an initial offer of "a specific fair and reasonable royalty rate." The court disagreed, saying "the evidence on record does not support Apple's position."
The Silicon Valley company has also criticized Samsung's attempts in the negotiations to seek cross-licenses of both company's mobile-phone patent portfolios. The court disagreed, "we cannot say that Samsung's offers in this regard are unreasonable."
Write to Ian Sherr at [email protected]
The negotiations included face-to-face meetings in Seoul, South Korea, in December, one document states. The two companies even appeared to come close to a settlement in February before talks cooled off.
ReutersSamsung Electronics stormed into the smartphone lead in 2011, selling 24 million units in the third quarter of that year, according to Gartner. Apple, by comparison, sold 17 million iPhones in that quarter. Above, Apple's iPhone 5 and Samsung's Galaxy S4.
There is no indication that the two sides are close to a settlement, but talks between the companies are still going on, the people familiar with the discussions said.
In the negotiations, described sparingly in heavily redacted documents from the U.S. International Trade Commission made public earlier this month and by people familiar with them, Samsung has pushed for a broad patent cross-licensing deal that could settle all outstanding litigation between the companies. It is unclear whether Apple was interested in such a deal.
The possibility of a broad settlement, or a series of separate deals, marks another twist in the relationship between the two technology giants that began with Samsung supplying parts necessary to make smaller and thinner iPod music players in 2005, and has ballooned into fierce competition over smartphones.
Samsung, relying primarily on the Android software platform created by Google Inc., stormed into the smartphone lead in 2011, selling 24 million units in the third quarter of that year, according to Gartner. Apple, by comparison, sold 17 million iPhones in that quarter. Samsung widened that lead in the first quarter of this year, selling 64.7 million smartphones, while Apple sold 38.3 million, Gartner said.
The companies have been partners and combatants ever since.
Apple claimed Samsung copied its products in a lawsuit filed in 2011, touching off battles in courtrooms around the globe as the two jousted about technology patents and trademarked designs, with attempts to both win jury awards and block the sales of one another's products.
Samsung has accused Apple of infringing broad patents that are deemed essential for creating wireless devices. Apple has generally accused the South Korean company of infringing patents covering unique functional aspects of its mobile devices or their physical designs.
So far, the results have been mixed, analysts say.
In late August last year, a jury in San Jose, Calif., awarded Apple more than $1 billion after finding that some Samsung devices had infringed its patents. Three of the six patents the jury said Samsung infringed covered the shape of the iPhone and on-screen icons. The judge presiding over the case has since reduced those damages as the case wends its way toward an appeal.
Samsung on June 4 won an order from the ITC that bans the import of some older models of Apple's iPhones and iPads, including the AT&T Inc. version of the iPhone 4, which is still sold in stores today. President Barack Obama has less than three weeks to decide whether to veto the order, which Apple also can appeal.
The two companies have reason to settle. They are deeply intertwined, with Samsung supplying parts for Apple's mobile devices while the iPhone maker is one of Samsung's biggest customers for processors and memory chips.
Though Apple has attempted to reduce its reliance on Samsung by recently signing an agreement with Taiwan Semiconductor Manufacturing Co. to make some chips starting in 2014, Apple has also reportedly signed an agreement with Samsung to produce some chips in 2015, according to the Korea Economic Daily. The report couldn't be confirmed.
"They have a classic symbiotic relationship," said Bob O'Donnell, an analyst at market researcher IDC. He added that even though Apple continues to divorce its business from the Korean tech giant, it still will likely rely on it for some parts for a while. "That's the painful transition process they're in."
Settlement talks between the companies go back as early as 2010. A court filing last year during its lawsuit indicates that Apple early on offered Samsung a license for its patents at a rate of $30 per handset and $40 per tablet. The iPhone maker offered some discounts if Samsung agreed to cross-license its patents to Apple.
Samsung has also offered a license for its patents, but Apple has complained the rate was too high.
Most details about the recent talks are contained in the 161-page ITC document explaining its June 4 ruling, with most proposed settlement terms redacted. It states that Apple made a settlement offer to Samsung in September, shortly after its win in the California trial.
But the most serious of talks appear to have taken place between December and March, according to the document. The two met for rounds of face-to-face negotiations in mid-January, but the companies couldn't come to an agreement. The reasons are redacted in the ITC document.
The two companies again agreed to meet in person in February, the document states. On Feb. 7, representatives for the two companies drafted a "memorandum of understanding," suggesting a potential settlement, which was brought to more senior leaders at the companies. Its terms are redacted, and there is no indication management of the companies accepted the terms.
The two companies continued negotiations until March, but talks appear to have broken down soon after. On March 22, Samsung asked to reopen negotiations, a proposal the ITC document indicates Apple hadn't yet responded to by the time of the decision, though Samsung asserted some of its earlier offers were still on the table.
The ITC said, as part of its explanation for ruling against Apple, it didn't believe Samsung's proposed royalties for licensing its patents were unreasonable or lacking good faith.
"The fact that representatives for both parties were able to reach a memorandum of understanding," the document reads, "indicates Samsung is negotiating in good faith and, to be colloquial, is playing in the same ballpark as Apple."
Apple, for its part, has continually said Samsung's royalty demands were unfair and not in line with its commitments to international standards bodies. Apple also argued Samsung was obligated to make an initial offer of "a specific fair and reasonable royalty rate." The court disagreed, saying "the evidence on record does not support Apple's position."
The Silicon Valley company has also criticized Samsung's attempts in the negotiations to seek cross-licenses of both company's mobile-phone patent portfolios. The court disagreed, "we cannot say that Samsung's offers in this regard are unreasonable."
Write to Ian Sherr at [email protected]