Monday, January 13, 2014

Samsung tells U.S. court Apple-Nokia patent license deal covers period to December 31, 2016

Hardly anything is known about the terms of the June 2011 Apple-Nokia settlement agreement. There's been plenty of speculation, but the deal terms remained confidential, except that a certain breach (or series of breaches) occurred in the "Patentgate" context, as a result of which some Samsung executives had the opportunity to learn about some of the commercial terms.

In February 2013, Apple told a U.S. appeals court that the Nokia-Apple patent deal was "merely a 'provisional license' for a limited 'standstill' period". It just didn't tell the general public how many years that "limited 'standstill' period" related to.

Late last week, Samsung responded to Apple's renewed (post-appeal) motion for a permanent injunction, and the following passage from Samsung's filing basically says that it was a five-and-a-half-year deal (click on the image to enlarge or read the text below the image):

"Third, Apple does not dispute that its separate license with competitor Nokia covers the '381 patent. Instead, it contends that this license is not relevant because it is a ''provisional license' for a limited 'standstill' period.' [...] But the Apple-Nokia license did not simply resolve claims for past damages; it is forward-looking and covers the period from June 12, 2011 to December 31, 2016."

This is the first time that a publicly-accessible court filing states an expiration date for the Apple-Nokia patent deal. (The earlier filing Samsung refers to is confidential.)

In the injunction context it's in Samsung's interest to argue that the Apple-Nokia deal was a comprehensive, reasonably long-term license deal. While it must have some factual basis for arguing that the agreement "covers the period from June 12, 2011 to December 31, 2016", I would be careful in light of Samsung's interest in a particular interpretation.

I don't think Apple would have called a straightforward five-and-a-half-year license deal a "provisional license" for merely a "limited 'standstill' period". Five years are a pretty standard license deal term. There are longer-term deals. For example, Apple and HTC signed a ten-year agreement. But there are many five-year agreements in this industry. One well-known example is the patent agreement that Ericsson and Samsung had in place (they're presently litigating).

While I don't doubt that the date of December 31, 2016 appears somewhere in the Apple-Nokia agreement, I've seen so many license agreements since the late 1980s that I know there can be all sorts of structures -- including asymmetrical terms -- in such contracts. It could be that the agreement will be in force until the end of 2016 if certain requirements are met, but otherwise it would expire before. Or it could provide for some renegotiation of financial terms somewhere along the way, and in the event of a disagreement, it expires well ahead of the end of the maximum term. It's also possible that new products are covered only if they are launched ahead of a certain date, but then they are licensed until the end of 2016.

All in all, I wouldn't rule out that Apple and Nokia have to negotiate a new license deal well in advance of 2016. Otherwise Apple's representation that this license was just "provisional" and only "for a limited 'standstill' period" wouldn't have made sense.

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