Apple Offered Licensing Deals to Patent Foes

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By Ian Sherr

Apple Inc. is fighting a multi-front patent war against competing makers of mobile devices, demanding injunctions that would block sales of their products. But the company has also indicated a willingness to cut deals with competitors, according to people familiar with the matter.

The consumer-electronics company has put forth proposals to Motorola Mobility Holdings Inc. and Samsung Electronics Co. to settle some pending litigation in exchange for royalty payments to license its patents, among other terms, these people said.

This is not a new tactic; Apple had some discussions with companies such as Samsung before initiating litigation, according to statements made to a court in at least one suit.

Apple isn’t attempting to offer patent licenses to all its competitors or create a royalty business, one person familiar with the matter said.

However, some people familiar with the situation see more reason for Apple to consider legal settlements, following a mix of legal victories and setbacks against smartphone makers that use Google Inc.’s Android mobile operating system. Apple has targeted these hardware makers rather than sue Google directly, and they have responded with their own patent suits against Apple.

One factor is that Android has proliferated so widely that shutting the software out of the market using injunctions is no longer practical, one of the people said. Licensing is an alternative that could add cost to Android development and make it less appealing for manufacturers.

Apple, of Cupertino, Calif., has asked for between $5 and $15 per handset for some of its patents in one negotiation with Motorola, or roughly 1% to 2.5% of net sales per device, another person familiar with the matter said. Motorola, for its part, has been criticized for asking for 2.25% of net sales per device from Apple for its patents, which are considered essential for creating wireless devices.

None of the people could confirm if settlement talks are currently taking place, but say this is part of an ongoing process.

 

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(Published Mar. 6, 2012, in The Wall Street Journal.)