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Meanwhile Samsung seeks to make a deal with Apple in Australia

In what could be a small sign that a cross-licensing (and potentially damages) settlement agreement could be at hand in the legal war [1][2][3][4] [5][6][7] between Samsung Electronics Comp., Ltd. (SEO 005930) and Apple, Inc. (AAPL), Apple revealed that is former chief executive had sought out Samsung to discuss a deal, before he initiated the legal war by filing a civil suit against Samsung in Northern California District Court.

I. Did Steve Jobs Try to Cut a Deal with Samsung?

The revelation came, according to international news service Bloomberg, in testimony by Richard Lutton, a senior director at Apple and the company's patent attorney, during a hearing in Australian court.  Apple is seeking to ban sales of Samsung's popular Galaxy 10.1 tablet in Australia, until a final trial decision is handed down in its Australian federal lawsuit against Samsung.  

Samsung has agreed to temporarily delay the release of the tablet in Australia, allowing for the Australian judge to decide whether or not to agree to Apple's request of issuing a preliminary injunction banning Samsung's tablet sales.  The decision was supposed to occur this week.

In testimony, Mr. Lutton painted Apple as the victim, rather than the aggressor in the patent war.  He claims that Apple co-founder and chief executive Steven P. Jobs approached Samsung in July 2010 to try to negotiate with the company.  It is unclear what exactly Apple suggested.  One possibility is that it asked Samsung to stay out of the tablet market -- which would be very unfavorable for Samsung to agree to.  Alternatively, it could have wanted payment for a cross-licensing deal, similar to the deal Samsung recently inked with Microsoft Corp. (MSFT).

Steve Jobs cackling
Steven P. Jobs [Source: AP Photo]

Whatever Mr. Jobs' proposal was, Samsung decided it to be too adversive.  Negotiations between the firms, which Mr. Lutton says did not involve Mr. Jobs (who is facing a health crisis) fell apart shortly thereafter.  Samsung would go on to launch its first tablet -- the Galaxy Tab (7-inch) in September.  The rest, as they say, is history and Samsung and Apple reached their current state of suing each other in at least 23 federal courts or trade agencies in at least 10 countries.

Mr. Lutton did have some kind words for Samsung commenting, "Samsung is an important supplier with whom we have a deep relationship."

Bloomberg says its research data indicates that Samsung is Apple's second largest supplier and that Apple is Samsung's largest electronics component client.

II. Samsung Proposes a Truce

In related news, Samsung's legal chief David Catterns has reportedly proposed a cross-licensing agreement in Australia, which would put the companies' legal conflict behind them -- in one country at least.  The news was first reported by Bloomberg.

The news came shortly after Apple dropped two of patents from the case, patents that it initially planned to pursue infringement claims on.  During the initial filing of the case Apple had claimed Samsung infringed on ten of its patents, then in a later filing it broadened that to a whopping thirteen patents.  But in later court filings, its lead barrister Stephen Burley reduced the number Apple intended to enforce to five.  

In other words Apple may still contend Samsung violates those other patents, it's just not expending resources trying to sue to assert them in court.  This is probably because it thinks they're comprised of weaker claims, which risk being invalidated in court.

Now that number has been cut again.  Apple excluded for unknown reason its patent on touch screen unlocking via a swipe gesture (patent AU 2008100011).  And it also excluded its patent on a bouncing animation when zooming in on a document or icon (patent AU 2009208103, as Samsung agreed to remove this feature from its Australian tablets.

Now only three touch-related patents -- a patent on the manufacturing of a capacitive touch screen used in the iPad 2 and Galaxy Tab 10.1 (patent AU 2005246219), a patent covering selective rejection of inadvertent finger movements on a touch screen (patent AU 2008258177), and a heuristics patent used to correct a user's finger movements when scrolling vertically on a screen (patent AU 2007286532).

Galaxy Tab 10.1, in hand
Apple has reduced its claims against Samsung from 13 to 3. [Source: Android Community]

Apparently Samsung wants to cross-license those patents.  In exchange it will drop its claims agaisnt Apple regarding various wireless patents it owns, which it says Apple's i-devices violate.  The terms of the cross-licensing proposal have not been revealed, so it's unclear whether Samsung would be seeking any additional payments from Apple, or vice-versa as part of the arrangement.

Apple lawyer Steven Burley reportedly said in court that his company would consider the proposal.  Apple will have a bit of time to think it over.  The sides failed to conclude their arguments on time today so the Judge did not rule on whether a preliminary injunction would be issued.  The hearing is set to resume on Oct. 4, after a public holiday in New South Wales.

Federal Court Justice Annabelle Bennett commented, "I can't promise when I’ll make a decision.  I will try to get it out as soon as possible."

A cross-licensing agreement could be a signal of the beginning of an international peacemaking process between Samsung and Apple.  That could allow Apple to retain Samsung as its primary supplier of low-cost, high-quality NAND flash storage.  In recent reports Apple was rumored to be considering a switch to other suppliers, but was expected to take a price, and possibly quality, hit if it did so.

Sources: Bloomberg ("Steve Jobs Started Talks With Samsung ..."), Bloomberg ("Samsung Electronics Gives Apple Proposal...")

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RE: Something seems amiss here...
By Tony Swash on 10/2/2011 7:08:02 PM , Rating: -1
What absolute hysterical nonsense - you really need to get a grip. I know the rise of Apple has scared you witless but you really should try to calm down, they are not out to get you personally :)

Lets run through this one by one.

Absolutely right. what Apple want is to drive all competition out of the market, so they can have a monopoly control. The reason they want this is because their strict control, walled-garden approach has failed to maintain dominance of the market in the past. They know it is at risk of being overwhelmed by open platform products again.

There is not shred of evidence that Apple's business model is monopolistic. In fact Apple has entered three entirely new markets in the last decade, each full of existing and strong competitors, and went on to disrupt and make vast profits in each one through product innovation and massive success with consumers. Nothing about those markets, or Apple's business model in any of those markets, indicates that Apple has some sort of monopolistic stranglehold.

Secondly how could Apple 'drive out all competition'? Through legal actions? Surely it must be obvious that it is impossible for any company to somehow engineer the worlds legal system to crush it's opponents. That's the stuff of silly adolescent paranoid fantasies. Apple sue people who copy their designs in software and hardware, and they sue aggressively. Apple will win some legal cases and lose some, but even if they won them all their competitors could continue to make phones, and music players, and media devices and tablets.
As a company that thrives on the position of "low market share, high profit margin," Apple is always conerened about fluctuations in its market share. Where minor fluctuations in market share can be easily absorbed by companies with a "large share, low margin" approach, Apple is always at risk from small changes in their sales. A small drop in sales means a large drop in profits.

More silliness. For a start Apple has a large share of the smart phone market (it makes the worlds' best selling smart phone handset) and a huge share of the total tablet sales. Neither of those things are likely to change in the near future. Android tablets are nowhere in the market, not because of Apple's legal actions, but because consumers don't like them and they really do like the iPad a great deal. In fact there is no such things as tablet market - there is just an iPad market. That will probably change with the Kindle Fire which will probably sell quite well and sit in exactly the market segment that will permanently shut out Android and Window tablets whilst having no impact on iPad sales.
Consequently, it is in their best interests to keep the competition to a minimum. The more competition, the more chance of their market share fluctuating at every product release. What is immensely high now could become unsustainably poor in one generation is the market shifts against them. They can't risk that - hence the need to try and litigate all potential competition out of the market.

Even greater silliness! The old 'Apple is doomed' meme! Every scrap of evidence from the last ten years indicates that Apple is the best managed tech company with the most coherent and long term strategic vision in the business. I am sure Apple has its product pipeline planned out for several years ahead. The result is that in just four years Apple has created an entirely new business, the iOS device business, that on it's own is bigger and makes more profit than the whole of Microsoft. Apple will be as big in the world of mobile devices (already is in fact) as proportionately Microsoft and Intel were combined in the old PC world. But not through monopolistic practices. Anybody can compete with Apple for the affections of fickle consumers, its just none have been as good as Apple at this game.

What really scares you Apple phobes is just Apple's success. Hence the faux outrage over legal actions. I sympathise, if I was Apple phobic this would be a very bad time with no sign of any relief in the near future. Of course the way to get some relief and feel better is to stop being so phobic.

When asked, before he rejoined Apple, what he would do to save the ailing Apple Steve Jobs said he would milk the Mac for it was worth and look for the next big thing. And that's just what he did.

RE: Something seems amiss here...
By Helbore on 10/3/2011 5:52:37 AM , Rating: 2
Why is it you turn everything into a schoolground "us vs. them" slagging match? You really ought to grow up and dispense with the "Apple is making you run scared" stupidity.

I didn't even say that Apple were doomed, but that's what you read into my post - simply because you see anything anti-Apple and assume.

Your the one who needs to get a grip, calm down and actually READ what people are saying, extrapolate the point from the post and comment accordingly. Otherwise you end up coming off like a rambling Apple fanboy.

"We don't know how to make a $500 computer that's not a piece of junk." -- Apple CEO Steve Jobs

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