Apple vs. Samsung Patent Case: Secret $250M Licensing Deal for Apple's Core Tech Uncovered

By Alexandra Burlacu | Aug 11, 2012 01:23 PM EDT

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Tech giants Apple and Samsung are battling in court in a high-profile patent infringement case, but according to one document that came up Friday, Aug. 10, during the course of ongoing testimony in the trial, things didn't have to go this far. Apparently, Apple tried to reason with Samsung and come to an agreement, but was forced to take matters to court as its attempt yielded no results.

In October 2010, seven months after Steve Jobs made the famous "thermonuclear" threat claiming Google's Android ripped off the iPhone, he and then-CFO Tim Cook reportedly offered Samsung a secret licensing deal. This fact only came out now, as Apple seemingly saved the best for last in its multimillion dollar patent suit against Samsung. The Korean electronics maker is both a key Apple supplier and its greatest rival, as it is the largest manufacturer of Android phones.

In a testimony late Friday afternoon, Apple's director of patent licensing strategy, Borks Teksler, said the company's tech executives were downright "shocked" in March 2010 when Samsung came up with its first line of Galaxy S touchscreen phones. "We didn't understand how a trusted partner would build a copycat product like that," Teksler told the jury. In response, Jobs and Cook contacted Samsung and demanded a meeting to discuss the matter.

In Aug. 2010, Apple prepared a document listing dozens of examples where the company believed Samsung was using or encouraging the use of Apple's patented technology, Teksler said in his testimony. The jury was then presented with Defendant's Exhibit No. 586: a keynote presentation Teksler made in early October, detailing exactly what Apple demanded in return. "Because Samsung is a strategic supplier to Apple, we are prepared to offer a royalty-bearing license for this category of device," reads the preamble.

Under Apple's licensing terms, it was to receive $30 per Android, Symbian and Bada smartphone and $40 per touchscreen tablet. Windows phones remained to be discussed, and Apple was also open to various discounts, for instance 20 percent in exchange for a license to use Samsung's patent portfolio. As CNN Money points out, at $600 per unsubsidized phone that translates to a royalty rate of 5 percent. According to earlier press reports, Samsung has demanded 2.4 percent per device for its patents. Apple's calculation amounts to $250 million with the discounts, and $288 million without discounts for calendar year 2010.

Samsung now faces Apple's demand for more than $2.5 billion in sales, lost profits and damages. Moreover, if the jury finds that Samsung willfully infringed on Apple's patented technology, the damages could triple.

Friday, Aug. 10, was the first time Apple's offer to license its core technology came to light. It is uncertain at this point why Samsung declined this offer, but the truth is expected to come out next week.