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European Commission slaps Samsung with formal antitrust complaint

post #1 of 31
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The European Union's executive body on Friday formally accused Samsung of abusing its dominant market position to gain a foothold in legal disputes being waged against Apple, a complaint the South Korean electronics giant tried to avoid by pulling out of such litigation in Europe.

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Just one day after the European Commission issued a statement saying it would officially charge Samsung with antitrust allegations, the body announced that it had sent a formal complaint to the company regarding the potential misuse of standard-essential patents as legal weapons, reports Bloomberg.

At issue is Samsung's use of declared essential wireless patents which were asserted against Apple in multiple EU countries, as well as internationally, in a bid to garner sales bans of products like the iPhone. Samsung dropped suits involving the industry essential patents in five European countries on Tuesday, though a number of cases still remain active.

"Intellectual property rights are an important cornerstone of the single market," said Joaqu?n Almunia, the European Commissioner for Competition. "However, such rights should not be misused when they are essential to implement industry standards, which bring huge benefits to businesses and consumers alike. When companies have contributed their patents to an industry standard and have made a commitment to license the patents in return for fair remuneration, then the use of injunctions against willing licensees can be anti-competitive."

Joaqu?n Almunia
Joaqu?n Almunia speaking at the European Commission in Brussels. | Source: European Commission


The EU is investigating whether Samsung violated its duty to license the standard-essential patents to rival phone makers under fair, reasonable and non-discriminatory (FRAND) terms.

?We are studying the statement and will firmly defend ourselves against any misconceived allegations,? Samsung said in a statement. ?We will continue to fully cooperate with the commission." The company added that it is ??confident that in due course the commission will conclude that we have acted in compliance with European Union competition laws.??

In a separate statement obtained by The Verge, Samsung explains how it had no choice but to commit to legal action against Apple as the iPhone maker was reportedly unwilling to negotiate licensing agreements for the patents in question.

Samsung has been and remains committed to licensing our standard essential patents (SEP) on fair, reasonable and non-discriminatory (FRAND) terms. Samsung had no choice but to seek injunctions based on SEPs due to Apple's unwillingness to enter into good-faith negotiations and to defend ourselves against Apple which sued us first.

No injunctions have been granted against Apple in any EU Member State and we already decided to withdraw our injunction requests against Apple on the basis of our SEPs pending in European courts. We will continue to fully cooperate with the Commission and are confident that in due course the Commission will conclude that we have acted in full compliance with EU competition laws.

The Commission will now wait for Samsung to review the complaint and offer a response. If the company refuses to negotiate with the regulatory body, or the parties fail to reach an amicable agreement, the EU could levy fines of up to ten percent of Samsung's annual "worldwide turnover" as well as other sanctions in a final decision.
post #2 of 31
Mail gauntlets are good for slapping.
post #3 of 31

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post #4 of 31
Simple - the iPad design patent isn't a standard essential patent.

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post #5 of 31
Quote:
Originally Posted by AppleInsider View Post


"Samsung has been and remains committed to licensing our standard essential patents (SEP) on fair, reasonable and non-discriminatory (FRAND) terms. Samsung had no choice but to seek injunctions based on SEPs due to Apple's unwillingness to enter into good-faith negotiations and to defend ourselves against Apple which sued us first."

 

So why the f*ck did Samsung seek to revoke the existing license agreements to the patents Apple already had with 3rd party chipmakers, you lying, sleaze bag f*cks?

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post #6 of 31

Apple: Once their motto was "To make a dent in the universe".

 

No Longer.

 

1000

 

 

post #7 of 31
Quote:
Originally Posted by GTR View Post

Apple: Once their motto was "To make a dent in the universe".

 

No Longer.

 

1000

 

 

 

From the industry wide, ``Follow the leader [Apple],'' I'd say they are making several dents in the universe.

post #8 of 31
Agree or disagree, it is really nice to see the antitrust and IPR leadership being shown by EU on a whole range of issues.

The US appears to be absolutely clueless about what's going on, at the Federal level. (A plea: Please don't get off on some sophomoric anti-Obama crap in response!).

Witness, for example, the ridiculous 'invalidations' from the USPTO. How is a company supposed formulate strategy in this country? Rely on the Judge Kohs for guidance?
post #9 of 31
Quote:
Originally Posted by GTR View Post

Apple: Once their motto was "To make a dent in the universe".

 

 

"If you wish to make an Apple pie from scratch, you must first invent the universe." -- Carl Sagan

post #10 of 31
Ask Microsoft how this will turn out. How much did they end up paying for the unpardonable sin of bundling Media Player or IE with Windows?

I have a feeling Samsung is going to pay dearly for this. As in hundreds of millions.

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post #11 of 31
Quote:
Originally Posted by EricTheHalfBee View Post

Ask Microsoft how this will turn out. How much did they end up paying for the unpardonable sin of bundling Media Player or IE with Windows?
 

The EU may slap Microsoft with another $B for breaking the agreement they already had. Samsung almost begged for the same attention by thumbing their nose at Mr Alumia when he issued the first warning.

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post #12 of 31
Quote:
Originally Posted by AppleInsider View Post

The European Union's illegitimateunelected, unaccountable, unwanted, etc. executive body on Friday formally accused Samsung of abusing its dominant market position to gain a foothold in legal disputes being waged against Apple, a complaint the South Korean electronics giant tried to avoid by pulling out of such litigation in Europe.

Fixed it for you.

post #13 of 31
Originally Posted by CGJ View Post
…illegitimate…

 

Not if they're allowed to operate unquestioned.

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post #14 of 31
Quote:
Originally Posted by Gatorguy View Post

The EU may slap Microsoft with another $B for breaking the agreement they already had. Samsung almost begged for the same attention by thumbing their nose at Mr Alumia when he issued the first warning.

 

I've been thinking this as well. I was actually surprised it took them this long. Plus, based on Samsung's court history, they're not one to earn court favors. I wonder how they will handle this initially.

post #15 of 31
Quote:
Originally Posted by hill60 View Post

 

So why the f*ck did Samsung seek to revoke the existing license agreements to the patents Apple already had with 3rd party chipmakers, you lying, sleaze bag f*cks?

Because everyone thinks that Apple paid a big pile of cash to Nokia to reward the latter's shenanigans in the 2007-2010 period. Except that Nokia probably lost money on the deal.

 

Cheers

post #16 of 31
Quoting CGJ:
Originally Posted by AppleInsider View Post

The European Union's illegitimateunelected, unaccountable, unwanted, etc.

 

Oh great.  Who invited the UKIP member along...  There's a separate politics thread y'know...

post #17 of 31
Quote:
Originally Posted by webweasel View Post

 

Oh great.  Who invited the UKIP member along...  There's a separate politics thread y'know...

Haha - It's funny that I actually like what the EU does. I just can't stand the European Commission. It just created a huge democratic deficit. And UKIP? No thanks :)

 

Returning to the subject...

 

I find this is actually good news, especially if it means Samsung can't sue for use of FRAND patents.

post #18 of 31
Quote:
Originally Posted by EricTheHalfBee View Post

Ask Microsoft how this will turn out. How much did they end up paying for the unpardonable sin of bundling Media Player or IE with Windows?
I have a feeling Samsung is going to pay dearly for this. As in hundreds of millions.

 

Agreed. The EU doesn't set its fines based on what is fair; they're set based on how much money it needs. Hundreds of millions? That's where it will start, and each time Samsung appeals, the fine will be increased by about twenty million until Samsung gets the message and pays up.

 

That's what happens when you're facing an organisation that is both your judge and jury.

post #19 of 31
Quote:
Originally Posted by CGJ View Post

Returning to the subject...

 

I find this is actually good news, especially if it means Samsung can't sue for use of FRAND patents.

No patent holder will be prevented from suing over FRAND patents. They still own the patents and still have the right to be paid for their use.

 

Going even further the same authority filing these objections doesn't go so far as to claim that injunctions over SEP's are off the table altogether. They indicate it may still be appropriate penalty for an unwilling licensee. IMO it leaves the waters still a bit muddied as someone would be tasked with determining who's willing and who isn't, likely some legal authority. I'd expect more clarification on the subject, tho perhaps that part just wasn't reported yet.

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post #20 of 31

It looks like the EU had clarified their injunction stance, but I had just overlooked it. From their Q&A position paper:

 

 

Is the Commission generally questioning the use of injunctions by patent-holders?

No. Recourse to injunctive relief is generally a legitimate remedy for patent-holders in case of patent infringements. The case is therefore not about eliminating the use of injunctions by patent-holders. Rather, the Commission takes the preliminary view that the seeking of an injunction for SEPs can constitute an abuse of a dominant position in the exceptional circumstances of this case - where the holder of a SEP has given a commitment to license these patents on FRAND terms and where the company against which an injunction is sought is willing to negotiate a FRAND licence. (Bold mine)

 

The entire document can be found here:

http://europa.eu/rapid/press-release_MEMO-12-1021_en.htm?locale=en

 

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post #21 of 31
Quote:
Originally Posted by Gatorguy View Post

It looks like the EU had clarified their injunction stance, but I had just overlooked it. From their Q&A position paper:

 

 

Is the Commission generally questioning the use of injunctions by patent-holders?

No. Recourse to injunctive relief is generally a legitimate remedy for patent-holders in case of patent infringements. The case is therefore not about eliminating the use of injunctions by patent-holders. Rather, the Commission takes the preliminary view that the seeking of an injunction for SEPs can constitute an abuse of a dominant position in the exceptional circumstances of this case - where the holder of a SEP has given a commitment to license these patents on FRAND terms and where the company against which an injunction is sought is willing to negotiate a FRAND licence. (Bold mine)

 

The entire document can be found here:

http://europa.eu/rapid/press-release_MEMO-12-1021_en.htm?locale=en

 

 

They said you can't ask for injunctions for FRAND patents, it's that simple, and utterly clear. Don't even think of trying to spin this. No one has ever been unwilling to negotiate a FRAND license. Samsung is being sued because they weren't offering FRAND licenses.

post #22 of 31
Originally Posted by anonymouse View Post
No one has ever been unwilling to negotiate a FRAND license.

 

This might be too broad a statement.

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post #23 of 31
Quote:
Originally Posted by Tallest Skil View Post

 

This might be too broad a statement.

 

No one related to this antitrust action. The point is that Samsung wasn't offering FRAND licenses, they were attempting to gouge for licenses to SEP patents.

post #24 of 31
Originally Posted by anonymouse View Post
No one related to this antitrust action.

 

Ah, carry on, then.

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post #25 of 31

Samsung knows that they have been abusing their FRAND patents in the EU and that's why they are dropping their cases against Apple now but it's too late.  Samsung should be punished if only to remind other FRAND owners of their responsibilities.  I don't believe Samsung's story that Apple refused to negotiate on FRAND terms.

 

The sooner that Samsung, HTC, LG, Nokia and others realize that they must own their own base platforms in order to succeed in the mobile industry the better.

They will need to fork Android and gradually create their own platforms.  Android hardware will become a commodity with too low margins for hardware vendors.

 

Apple has realized that they must provide their own core services.

Google has realized that they must provide their own hardware.

Microsoft has realized that they must provide their own hardware and services.

 

So what are the next major battles?  There will be a platform wars on many different fronts.

 

Google will try to kill Apple's hardware business with Motorola.

Apple will try to kill Google's search business with Siri.

Samsung will try to differentiate their own mobile platform.

Microsoft will fight to keep the Windows' platform advantages.

All of the above will compete with their entertainment, mobile automotive and mobile payment platforms amongst others...

 

Time will tell the winners and losers.


Edited by AppleSauce007 - 12/23/12 at 12:19pm
post #26 of 31
Quote:
Originally Posted by anonymouse View Post

They said you can't ask for injunctions for FRAND patents, it's that simple, and utterly clear. Don't even think of trying to spin this. No one has ever been unwilling to negotiate a FRAND license. Samsung is being sued because they weren't offering FRAND licenses.

 

It doesn't sound like you've read the Commission's statements.   First off, it's not a lawsuit.  It's an investigation.

 

The EU Commission is NOT accusing Samsung of not offering FRAND licenses.  In fact, the EU Commission stated that they are not going to figure out what a FRAND rate is.  That's not their purpose.  

 

The EU Commission has stated that they are ONLY investigating whether or not an injunction request is an abuse in what they called these "exceptional circumstances":

 

1) If the patent is FRAND committed

     and

2) the licensee was willing to negotiate FRAND terms.

 

-

 

Nor is the answer absolutely clear:

 

A German judge has recently ruled that such an injunction is okay.   The International Trade Commission of the US has also allowed such injunctions in the past.   On the other hand, a UK judge said he preferred negotiations to injunctions. 


Edited by KDarling - 12/23/12 at 8:48pm
post #27 of 31

Unlike in South Korea, Samsung can't buy off the EU. Samsung should just suck it up. The more they try the more butthurt they seem.

post #28 of 31
Quote:
Originally Posted by KDarling View Post

 

It doesn't sound like you've read the Commission's statements.   First off, it's not a lawsuit.  It's an investigation.

 

The EU Commission is NOT accusing Samsung of not offering FRAND licenses.  In fact, the EU Commission stated that they are not going to figure out what a FRAND rate is.  That's not their purpose.  

 

The EU Commission has stated that they are ONLY investigating whether or not an injunction request is an abuse in what they called these "exceptional circumstances":

 

1) If the patent is FRAND committed

     and

2) the licensee was willing to negotiate FRAND terms.

 

-

 

Nor is the answer absolutely clear:

 

A German judge has recently ruled that such an injunction is okay.   The International Trade Commission of the US has also allowed such injunctions in the past.   On the other hand, a UK judge said he preferred negotiations to injunctions. 

 

Without them addressing the 'meat' of the FRAND system this is a little bit like having a commission for the sake of having a commission.  They issue 'fair and reasonable' patents but don't want to touch what constitutes 'fair and reasonable rates' with a 10 foot pole.  The courts and patent office argue they are not market experts so it needs to be decided by the industry.

 

That leaves us in the current situation.  Samsung gives Apple a laughably high price.  Apple (rightly) laughs, and then gives an equally laughable low price.  I think Apple offered something along the following:

"We will give $1 per device as fair and reasonable.  EU courts if you step in we will suck up your entire court system with our army of lawyers.  Don't bother, with your stretched resources we'll only make you look bad.  There, we've satisfied the 'tried to negotiate' criteria by stepping in and dictating our terms"

Samsung of course laughs at Apples laughable terms.

End result:  Apple didn't *really* ask Samsung to negotiate terms- they dictated unreasonably low terms knowing Samsung would refuse.  Since Samsung refused to their terms, Apple claims Samsung is unreasonable and has paid a whopping $0.00 to date while using Samsungs FRAND patents on nearly every device they make.  Apple fans seem quite content with that.

 

Apple is certainly happy with that status quo and will continue paying $0 as long as it can.  No problems there.

Samsung files for an injunction.

 

If Samsung gets the injunction I think that's possibly the only solution that is worse than the existing one.  They  now would have Apple racing to the negotiating table- but now it would be Samsung who'd be happy to stonewall and refuse terms as long as they could.  Nothing can really beat a good injunction to stifle competition.

 

The real loser I think is going to be FRAND patents.  Despite them being far more beneficial to everyone, they have less value than the plethora of cheeseball utility and design patents being issued.  Without the teeth of an injunction, companies are going to be less willing to put design resources and dollars toward anything that ends up yielding a FRAND patent over a proprietary one.

 

Example:

Google is (semi) quietly trying to buy up bandwidth.  They already have Google fiber which gives customers in many cases faster speeds than their providers.

Is it a stretch to say they are probably looking to become a wireless carrier as well?  Suppose another factor in their drive to acquire Motorala was their wireless expertise in being instrumental in developing wireless standards to date (3G/4G etc).  They push hard and are first to develop a standard that is substantially faster than the current 4G. 

What is their motivation to file their inventions as '5G' FRAND patents and let everyone benefit (including Apple at the continued cost of $0)?  Wouldn't it make more sense to patent them as utility patents if the courts are going to render FRAND meaningless?  That would leave Apple in the uncompetitive position of being on 'dialup' speeds while Android zooms ahead.  Who would use a wireless technology if it wasn't a standard?  Google, for one.  All the other carriers as well, since Android is @80% of the market and by definition a standard in and of itself.

 

Switch the shoes around.  Apple has $150b in the bank.  They could just as easily do the same thing (although they'd have difficulty justifying using their wireless system infrastructure costs anywhere outside the US).  

 

Without having the sack to define 'fair and reasonable' its a lose/lose outcome.

post #29 of 31
Quote:
Originally Posted by Frood View Post

Samsung of course laughs at Apples laughable terms.

End result:  Apple didn't *really* ask Samsung to negotiate terms- they dictated unreasonably low terms knowing Samsung would refuse.  Since Samsung refused to their terms, Apple claims Samsung is unreasonable and has paid a whopping $0.00 to date while using Samsungs FRAND patents on nearly every device they make.  Apple fans seem quite content with that.

 

Apple is certainly happy with that status quo and will continue paying $0 as long as it can.  No problems there.

Samsung files for an injunction.

 

 

So why did Samsung attempt to revoke the licenses of third party chipmakers specifically when chips were sold to Apple?

 

Samsung was already collecting license fees for these patents, why did they stop accepting them?

 

A big hole in your and Samsung's flawed argument.

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post #30 of 31
Quote:
Originally Posted by KDarling View Post

 

It doesn't sound like you've read the Commission's statements.   First off, it's not a lawsuit.  It's an investigation.

 

The EU Commission is NOT accusing Samsung of not offering FRAND licenses.  In fact, the EU Commission stated that they are not going to figure out what a FRAND rate is.  That's not their purpose.  

 

The EU Commission has stated that they are ONLY investigating whether or not an injunction request is an abuse in what they called these "exceptional circumstances":

 

1) If the patent is FRAND committed

     and

2) the licensee was willing to negotiate FRAND terms.

 

 

The problem with your "argument" is that your two "points" are exactly what I said. And they are accusing them of not offering FRAND licenses, what else does abuse of SEP patents mean? Offering a license to a patent pledged to FRAND licensing isn't the same as offering a FRAND license to that patent. They are accused of trying to extort non-FRAND licenses using SEP patents. And they are guilty, and, no, we don't need to wait for the results of the investigation, we know they've been doing this, it's public and common knowledge. This is just a formal process that has to be gone through before Samsung gets their smackdown for being lying, cheating, unprincipled, dishonest, dishonorable thugs.

 

(Remember, the accused aren't "innocent until proven guilty" they are "assumed innocent under the law until proven guilty". The proving doesn't change their guilt or innocence, it just sets them up for their punishment.)

post #31 of 31

FRAND is a voluntary agreement type that companies go into, in order to create a new standard that they all can benefit from.

 

Since it's a private arrangement (in this case, administered by the ETSI group), courts don't like to get involved with the specifics of rates.   This is why several judges have thrown out Apple's FRAND lawsuits with prejudice, because they've realized that Apple is simply trying to use them to leverage lesser payments.

 

As long as every potential licensee gets access to the same offers (with appropriate changes for credit, quantity, length of contract, etc, of course), then FRAND requirements are met.   For example, if Samsung had offered others a rate structure like, oh say:

 

- 2.5% for a straight license

- 1.5% for a license with some patent sharing

- 0.5% royalty with full cross licensing

 

And Apple was offered the same rates, then the offer is FRAND, no matter how much Apple doesn't want to pay a high rate OR cross license.    Apple can, of course, try to negotiate downward, but it doesn't mean they get to say no forever.

 

Thus the question that  the EU Commission is taking up:   IF the licensee has engaged in negotiations, should an injunction be available to the SEP holder?  Or does this give them too much power to force acceptance of the highest (but still FRAND) rate?

 

Coincidentally, in October an ITC administrative judge upheld such injunctions:

 

Quote:

 

He ruled that injunctions are definitely available at the ITC for standards-essential patents, and that there is zero evidence of any wrong behavior by Samsung. 

 

Furthermore, the judge told Apple, which had claimed that the amount Samsung asked for licensing was too high to be a FRAND offer, that Apple can't unilaterally decide what is or is not a fair price. 

 

If it had objections, it could negotiate, which Apple failed to do, or there is a mediation process at ETSI it could have used, which it also apparently failed to do. Instead, the ruling says, the court battles are about negotiating a lower price.   

 

- Groklaw

 

A German judge also ruled that injunctions were a right of any patent holder, SEP or not.

 

OTOH, a Netherlands judge ruled that you couldn't ask for an injunction while negotiations were going on.   A UK judge ruled similarly.

 

Basically, we have different decisions between all the different courts and countries.   So the EU Commission wants to define the EU rule once and for all.   It could end up going either way.

 

Quote:

Originally Posted by hill60 View Post

So why did Samsung attempt to revoke the licenses of third party chipmakers specifically when chips were sold to Apple?

 

The "why" is obviously to use the patents as weapons in court.

 

The "how" is that such chipmaker agreements often include an exception for defensive actions.   In other words, if a licensee sues the patent holder for any reason, then the chipmaker agreement is invalidated, and now the licensee must deal with the patent holder directly.

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