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Wednesday, August 15, 2012, 09:04 am PT (12:04 pm ET)

Samsung to call Motorola's "one bullet to kill" witness to justify iPhone royalty demands

After working to defend against for two weeks of Apple's copying claims, Samsung has gone on the defensive to claim that Apple owes it steep royalties for infringing its 3G standard essential patents, using the same witness called by Google's Motorola Mobility to bring standards essential patent claims against Microsoft.

According to a report by Florian Mueller of FOSS Patents, Samsung has listed two expert witnesses conversant in justifying high patent royalty rates for standard essential patent claims that are actually subject to "Fair, Reasonable and Nondiscriminatory" licensing terms.

One bullet to kill

One name on Samsung's witness disclosure list, David J. Teece, a professor at the University of California, Berkeley, was recently used by Google's Motorola Mobility case against Microsoft related to H.264 patents.

Teece testified that a single standards essential patent claim could be worth as much or more than the large number of other patents contributing to a given industry standard because "it takes only one bullet to kill," an allusion to the fact that one wouldn't need a clip full of bullets to take down a opponent, so therefore one patent should similarly be enough to destroy the ability of another company to compete in the market.

In using that phrase, Teece was justifying the 2.25 percent royalty rate Motorola was demanding from Microsoft on sales of Windows 7, Xbox and other products that use the H.264 video standard portfolio, the same nightmare scenario Google used to vilify H.264 before acquiring Motorola and continuing its H.264 FRAND patent offensive.

Microsoft argued that Motorola's demands of $4 billion in annual royalties for the 50 standards essential patents it contributes to the H.264 standard were clearly out of line with its FRAND obligations, contrasting the $6.5 million it pays annually for the other 2,339 patents essential to H.264.



ITC Judge Shaw blocked Motorola's efforts to seek a US import injunction against Microsoft for refusing to pay Motorola's 2.25 percent demands, noting that, "the evidence shows that the royalty rate offered by Motorola of 2.25%, both as to its amount and the products covered, could not possibly have been accepted by Microsoft," and that "the evidence supports Microsoft's conclusion that Motorola was not interested in good faith negotiations and in extending a [F]RAND license to it."

Defending Android through unFRANDly patent claims

Motorola is, coincidentally, demanding the same 2.25 percent royalty from Apple's iOS devices related to standard essential patents it owns in the 3G standard patent pool.

In a Dutch case, Samsung similarly demanded a 2.4 percent royalty from Apple for each of several of its standard essential patents (albeit charged against the price price of a relevant chip, not the entire device).

However, even in that case Samsung's royalty claim rate and injunction efforts were thrown out because its royalty demands was deemed so unreasonable by the court that it determined Samsung had failed to honor its FRAND commitments and had not negotiated in good faith.

But with so little leverage in its case against Apple, where it has repeatedly stumbled with court procedures even as Apple pressed its case of willing, purposeful infringement of its design and technical patents, Samsung has stepped up the 2.4 percent royalty demands that it has asserted at least twice before in other cases worldwide.

"By far and away the worst expert witness I've seen"

In pushing its royalty claim offensive as its best defense, Samsung's use of Teece has necessitated what Mueller called "ridiculous claims," going so far to question whether "the credibility of those institutions [represented by expert witnesses, specifically UCB] may be affected by highly problematic or downright preposterous claims made by certain individuals."

With regard to FRAND, Mueller called Teece "by far and away the worst 'expert witness' I've seen." Mueller also noted Samsung has listed Swedish consultant Eric Stasik, of whom he said "we can expect more of the same."

Stasik was cited as making a similar "one bullet to kill" comment on the GSM standard, writing that "the relationship between the number of patents and the total royalty rate is not linear" and testifying that a single patent may be worth 2.5 percent royalty.

Apple sought to present testimony from an expert witness Samsung had earlier used in a UK case to defend itself from FRAND-pledged standards essential patent claims, noting that the company previously held a very different view on patent abuse when the shoe was on the other foot. However, Judge Koh ruled that the British case involved different parties, different patents and different standards, making it insufficiently relevant to the case at hand.