Samsung Collared on Patents by Ericsson just as Samsung Signs Global Intellectual Property Deal with Google

By Tony Rizzo January 27, 2014

It has certainly been a rocky patent road for Samsung of late. In fact it has been a rocky road for Samsung on patents for quite some time. Samsung's court losses to Apple have approached nearly $1 billion to date and last week Samsung's upcoming new patent litigation with Apple (News - Alert) was thrown a monkey wrench by federal Judge Lucy Koh. Following Judge Koh's judgment that Samsung infringes one Apple patent and her ruling that one of Samsung's patents is invalid is quite a monkey wrench. Samsung is also being watched by the patent courts for willful patent violations, generally bad behavior with competitors (and potential licensing partners) and possible contempt of court issues.

Is it any wonder then that Samsung has now perhaps taken a step back and is beginning to consider the possibility that patent transgressions are not a good idea? That perhaps they are becoming rather costly and that bad patent-related press is a significant negative from both a marketing and overall cost of doing business perspective? We think perhaps Samsung is beginning to get it. Certainly not with regard to Apple, where the company will continue to pursue its various litigations, but perhaps with the rest of the world.

Between Sunday evening and early this morning Samsung has managed to bring to closure two key outstanding, large scale patent issues. One involves Ericsson, and the other rather tightly unites Samsung with Google.

An Ericsson Shutout

Let's look at Ericsson more closely. Early this morning Ericsson announced that it and Samsung has reached a settlement over various infringement issues Ericsson claims Samsung violated. Generally speaking it is a direct win for Ericsson - the company announced that it will receive at least two up-front payments from Samsung - one of $650 million and a second of $500 million. Over time the deal will likely call for substantially more dollars from Samsung. Ericsson will be in attendance at ITEXPO this week as well, serving as one of the contributors at the Miami, Florida event.

The licensing deal comes just ahead of the two companies heading into court in front of both the International Trade Commission (ITC) and the United States District Court for the Eastern District of Texas. Samsung may have had no choice but to settle as it was running up against a very interesting and initially unexpected roadblock in arguing its case relative to Ericsson. Florian Mueller over at Foss Patents puts it best:

The dispute with Ericsson complicated Samsung's assertions of FRAND-pledged standard-essential patents against Apple because Samsung raised some Apple-like arguments in its defense against Ericsson's assertions. At the same time, Ericsson's SEP assertions are being investigated by the Competition Commission of India in two parallel cases. Both Samsung and Ericsson had to put an end to this dispute because any attempt to enforce an ITC import ban over a FRAND-pledged SEP could have had far-reaching implications.

In other words, Samsung's defense against Ericsson would work directly against it in its upcoming litigation with Apple. If Samsung had swayed the courts with its arguments against Ericsson, Apple would then be able to wield (and is in fact wielding) the very same arguments against Samsung. Talk about unintended consequences!

Google and Samsung - Best Interests Win Out

Just ahead of this morning's Samsung-Ericsson news, on Sunday evening Google and Samsung announced they have entered into a joint ten-year cross-licensing agreement involving their respective patent portfolios. The statement announcing the deal makes it clear that the agreement covers both existing Samsung and Google patents as well as those filed over the next 10 years. That is certainly broad and potentially far ranging.

It is worth pointing out here that although to date the two companies have long had a close working relationship relative to Android to date, they've never had an actual formal intellectual property deal…until now. So why now?

Early last week we took of the fact that Samsung's alternative mobile operating system Tizen, which Samsung had been working on as a possible means to unlock itself from Android at some future point, is likely dying a slow death. The short version of this issue is that Samsung is going to remain wedded to Android in a major way for many years to come.

In the meantime, just as Samsung has had little luck in court over patent issues, so has Google. Perhaps two heads will be better than one. Even so, we are rooting for Google to win its latest large scale patent battle with Intellectual Ventures in the upcoming weeks.

Google has a number of Android issues on its hands that transcend patents. More specifically, the company has been struggling to ensure that Android doesn't become impossibly fragmented and that major vendors such as Samsung don't either create their own substantially different version of Android or somehow manage to highjack the operating system through the ability to sell ever greater numbers of mobile devices running a vendor-specific version of Android - as Samsung is very capable of doing.

With Tizen fading, Samsung - which has very loudly proclaimed that software, not hardware, is the path to far greater global successes - will obviously need to turn back to Android to drive software innovation. Google, meanwhile, may in fact own Android and is the arbiter of what its "official" Android versions will consist of, but as we noted above that may ultimately prove meaningless in the face of overwhelming Samsung Android device sales.

Google's dilemma here is that Samsung is by far the single greatest distributor of mobile devices (it really has no competitors in terms of Android device sales) and is in a position to co-opt Android by ending up in a position to drive its own version of Android that could conceivably dwarf sales of devices running Google's Android reference. Such a scenario would lead inevitably to a significant fracture in the long-standing but unofficial Google-Samsung working relationship.

The alternative of course, and what is the smart business move for both Samsung and Google, is for each to accept the other's leadership positions and to forge a relationship where the two can work very closely with one another. And exactly towards this end, this is what the two companies now hope to achieve. We wish them luck - it all makes a lot of sense.

Between the two of them, Google and Samsung easily control tens of thousands of patents across a wide variety of potential applications. “By working together on agreements like this, companies can reduce the potential for litigation and focus instead on innovation,” said Allen Lo, Google’s Deputy General Counsel for Patents. There is that word - "innovation" - which Samsung so dearly wants to latch on to for itself. Having been painted as an infringer by Apple, Samsung continues to crave recognition as a software innovator. Clearly working closely with Google will help Samsung get closer to this goal.

Samsung and Google framed the agreement - as Lo's comment suggests, as the right way for the mobile industry to do business. OK, so they had to toss some sort of words in there to make it appear that the two are now the adults in the room - working together instead of beating each other up in court.

It will be very interesting to see if any of their upcoming joint work - or their pooling of patents through cross-licensing - creates any opportunities for the two of them to go after anyone from a patent perspective - to which we would say, "Count on it."




Edited by Cassandra Tucker

TechZone360 Senior Editor

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