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Apple’s end goal: Cripple Samsung’s ability to profit from smartphones

Published Mar 11th, 2014 3:30PM EDT
Apple Vs. Samsung Patent Lawsuit

Florian Mueller, the leading phone patent maven, writes about a fascinating new twist in the handset industry patent wars. Mueller has in the past been harshly critical of Samsung’s own royalty demands but now he finds himself aghast that Apple is demanding a staggering $40 fee for smartphones and tablets using a suite of five Apple software patents.

The patents do include some central and crucially important features such as slide-to-unlock and tap-the-phone-number-to-call features. But that $40 fee would mean that making a profit on any phone or tablet sold under $400 without subsidies would be impossible. And eking out even a tiny profit on $650 to $750 models would be extremely challenging. Naturally, a vast and rapidly growing portion of Samsung’s overall phone portfolio consists of models costing less than $400.

Fascinatingly, Mueller points out that in 2010, Apple was demanding $30 per device licensing fee covering all its patents, not just a basket of five. This implies that the attitude in Cupertino has hardened over the past four years, not moved towards a compromise position. The handset industry patent battles seem to be inching towards some sort of dark climax that may force governments and companies to seek some kind of a new status quo.

Microsoft’s plan to buy Nokia’s phone unit while leaving Nokia in charge of its phone patent portfolio may unleash a torrent of Finnish fury on Asian Android vendors. Apple seems intent on forcing Samsung to accept exceptionally harsh terms or face verdicts with potentially devastating results.

The industry may require some sort of a disaster scenario that will finally force all sides to reach a compromise to avoid slowly being taken over by IPR lawyers.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.