Apple Inc. (AAPL) to Pay $24.9 Million for Alleged Siri Patent Infringement

Apple Nanjing

Apple Inc. (NASDAQ:AAPL) to pay $24.9 million for a Siri patent infringement. Reports that Apple Inc. just entered into a settlement with Dynamic Advances LLC, which is a wholly owned subsidiary of the Company, under which the Company decided to dismiss the litigation that was pending in the United States District Court of the Northern District of New York “Rensselaer Polytechnic Institute and Dynamic Advances LLC v Apple Inc.”

The terms of the agreed settlement reveal that Apple will get a patent license from Dynamic Advances together with a 3-year covenant for them not to sue from the Company. Other than the information given above everything else is confidential.

Apple has agreed to pay $24.9 million under the settlement agreed, with $5 million of it payable after the dismissal of the pending litigation and the additional $19.9 million paid after certain conditions are met. These conditions include:

  • Consent to the license by Rensselaer Polytechnic Institute (“RPI”)
  • Dismissal of the pending litigation with prejudice
  • A final decision by a court holding that Dynamic Advances has authority to grant the license in the settlement
  • The expiration or invalidity of the patents in suit

Dynamic Advances itself expects to pay around 50 percent of its gross proceeds to RPI, the Dynamic Advances legal team and also the predecessor exclusive licensee of the patents in suit.

The firm beliefs RPI has been unreasonably withholding its consent to the reasonable royalty rate which was set forth in the settlement agreement between Dynamic Advances and Apple. Dynamic Advances believes the issue might have to be solved by an arbitration court by they believe that the resolution would not in any way deter the resolution which is between Apple and Dynamic Advances. The Company, however, is unable to predict the outcome of any such arbitration.

The Company believes the settlement agreement was entered in the ordinary course of business and as such has not been filed as an exhibit hereto in accordance with ITEM 6.01 (b)(10)(ii) of Regulation S-K under the Securities Act which was established in 1933, as amended. Dynamic Advances believes that any other voice recognition products infringe the ‘798 patent.

The lawsuit dates back to October 2012 after Apple had introduced Siri a year before that with the iOS 5 and the iPhone 4S. Apple now features Siri on all of its iOS product lines, including the Apple TV, though for some reason it is still not on Macs.