Bloomberg News

Apple, LG Electronics Face Alcatel-Lucent in Patent Trial

November 27, 2012

Apple Inc. (AAPL:US) and LG Electronics Inc. (066570) infringed an Alcatel-Lucent SA (ALU) unit’s patents for electronic devices including phones and computers, a lawyer said at the start of a trial.

The jury trial, which began today in federal court in San Diego, stems from a 2010 lawsuit by the Paris-based company’s Multimedia Patent Trust accusing Apple and LG Electronics of copying video-compression technology that allows data to be sent more efficiently over communications media, including the Internet and satellites, or stored on DVDs and Blu-Ray disks.

“Apple and LG have chosen not to license these patents while 33 other companies have paid over $190 million for these licenses,” Frederick Lorig, an attorney for the patent trust, told the jury. He said the trust was unable to negotiate a license with Apple “even though a company as prominent as Motorola is paying $18 million to license the patents. And Apple sells four times the number of infringing products that Motorola does.”

The trust claims its patents are infringed by products including multiple versions of Apple’s iPhone, iPod, iPad and MacBook, as well as LG Electronics’s Chocolate Touch VX8575, Bliss UX700, Touch AX8575, Lotus Elite LX610, Mystique UN610 and Samba LG8575.

“The motion pictures you see on your screens are made possible by these patents,” Lorig said today. “This technology lets you download in half the time and store twice as much content.”

Electronic Advances

Attorneys for Apple and LG Electronics told jurors that their companies had already paid the Multimedia Patent Trust for the technology covered by the patents from an industrywide “pay-as-you-go” pool. They said the trust is trying to broaden the scope of its intellectual property to cover new electronic advances in the allegedly infringing products based on technology that supersedes the patents.

“LG and Apple are not going to pay rent for technology they do not use,” said Juanita Brooks, an attorney for Cupertino, California-based Apple. “Why are we here in this trial? They are trying to get $170 million from Apple. I can think of 170 million reasons they are asking us to pay more than all of the other licensees combined.”

Michael McKeon, an attorney for Seoul-based LG Electronics, told jurors “what we have here is MPT trying to double dip. It is suing over technology it does not own.”

The Alcatel-Lucent patent trust said in court filings that it seeks a “reasonable royalty” based on what it would have been paid if a licensing agreement had been reached before the infringements began.

Licensing Negotiations

Those licensing negotiations would have occurred in 2005 for the Apple products and 2009 for the LG Electronics products, according to court filings. Apple is accused of infringing three Alcatel-Lucent patents and LG Electronics is alleged to have infringed two of the patents.

The Alcatel-Lucent trust didn’t specify in pretrial filings how much it seeks in damages. According to court filings, a financial expert for the trust estimated that licensing negotiations could have resulted in Apple paying a $195.9 million royalty and LG Electronics a $9.1 million royalty.

U.S. District Judge Marilyn Huff ruled that some of the economic assumptions made by the patent trust’s expert weren’t proper and said those figures should be adjusted.

Huff told jurors to expect the trial to take about two weeks.

The case is Multimedia Patent Trust v. Apple, 3:10- cv-02618, U.S. District Court, Southern District of California (San Diego).

To contact the reporter on this story: Bill Callahan in federal court in San Diego at Callahan@san.rr.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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