DOJ chastises Samsung over use of SEPs as litigious weapons

Posted:
in General Discussion edited February 2014
The U.S. Department of Justice on Friday said it will close an investigation into Samsung's use of deemed standard essential patents as a weapon against other corporations, but promises to monitor the company's ongoing patent litigation.

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While the Justice Department will not take action against Samsung at this time, it did admonish the company's use of declared essential patents as tools to more favorable licensing terms, reports Reuters.

In a statement released by the DOJ, the agency noted a number of issues arise when using SEPs to block competition from selling products. This brings up questions regarding anticompetitive strategies.

"While there are certain circumstances where an exclusion order as a remedy for infringement of such patents could be appropriate, in many cases there is a risk that the patent holder could use the threat of an exclusion order to obtain licensing terms that are more onerous than would be justified by the value of the technology itself, effectively exploiting the market power obtained through the standards-setting process."

The DOJ and U.S. Patent and Trademark Office said in January that companies owning SEPs should "rarely" use the properties in court.

Friday's announcement, and ensuing DOJ invetigation, stems from a successful Samsung patent infringement complaint leveled against Apple through the International Trade Commission. In that case, Samsung's U.S. Patent U.S. Patent No. 7,706,348 for UMTS wireless technology was leveraged to win an exclusion order against older iPhone and iPad models.

Apple was granted a reprieve from the injunction, however, as President Barack Obama vetoed the ITC decision in August 2013 over concerns that SEPs would be used to gain "undue leverage" over competitors.

Based on that decision, the DOJ said, "The Antitrust Division is therefore closing its investigation into Samsung's conduct, but will continue to monitor further developments in this area."

Samsung's use of SEPs in patent suits with Apple and other tech companies has raised concern in a number of regions over the strategy's legality. For example, the European Commission and South Korea's Fair Trade Commission initiated probes into Samsung's legal operations.
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Comments

  • Reply 1 of 24
    Perhaps the DOJ should assign a compliance monitor to Samsung. I hear that a guy named Bromwich is really good at that.
  • Reply 2 of 24
    So since the President vetoed the decision which allowed Samsung to illegally use Stardards Patents as a weapon against Apple, Samsung is free to go.
  • Reply 3 of 24
    dasanman69dasanman69 Posts: 12,985member
    genovelle wrote: »
    So since the President vetoed the decision which allowed Samsung to illegally use Stardards Patents as a weapon against Apple, Samsung is free to go.

    Huh?
  • Reply 4 of 24
    charlitunacharlituna Posts: 7,215member
    Quote:
    Originally Posted by genovelle View Post



    So since the President vetoed the decision which allowed Samsung to illegally use Stardards Patents as a weapon against Apple, Samsung is free to go.

     

    It's not really that simple. Obama had nothing to do with 'allowing' anything so much as he vetoed the attempt to ban the products in question before a court decision was made. Because, he feels, injunctions shouldn't be allowed on SEP issues before the court comes to a ruling. Afterwards is a different game. There might be cause for an injunction (if say the 'offending' company refuses to properly license even when a fair offer is made).

     

    The refusal to ban comes from the notion that the reasoning behind wanting the ban would be to stifle competition until such time as the item would very likely go off market anyway, be superseded by better tech and thus not wanted or at the least the other company was leagues ahead in the market because nothing else was offered. 

  • Reply 5 of 24
    Quote:

    Originally Posted by genovelle View Post



    So since the President vetoed the decision which allowed Samsung to illegally use Stardards Patents as a weapon against Apple, Samsung is free to go.

     

    Not quite. If Obama didn't veto the ban, then Samsung could have gone ahead to enforce it. Since it never got that far, the DOJ didn't need to go any further. So Obama sort of prevented Samsung from doing anything anti-competitive by taking away their ability to seek a ban.

     

    Samsung isn't off the hook, since the DOJ said it will continue to monitor Samsung in future patent cases. Which is interesting since 2 of the 4 patents in the March trial between Samsung and Apple are SEP's. Samsung never seems to learn.

  • Reply 6 of 24
    jungmarkjungmark Posts: 6,718member
    I guess the last check from Sammy bounced.
  • Reply 7 of 24
    dasanman69dasanman69 Posts: 12,985member
    Samsung isn't off the hook, since the DOJ said it will continue to monitor Samsung in future patent cases. Which is interesting since 2 of the 4 patents in the March trial between Samsung and Apple are SEP's. Samsung never seems to learn.

    Samsung still has the right to take to court a licensee that it can't come to terms with, and Apple has the right to take them to court if it feels the rates are unreasonable.
  • Reply 8 of 24
    Quote:

    Originally Posted by dasanman69 View Post





    Samsung still has the right to take to court a licensee that it can't come to terms with, and Apple has the right to take them to court if it feels the rates are unreasonable.

     

    Samsung can take Apple to court to have a judge decide how much Apple needs to pay for SEP's (like the one in the recently vetoed case), but Samsung doesn't want that. A judge is going to give them a fraction of what they want (just like what happened in the Motorola/Microsoft case). This is why Samsung tried the injunction route first, hoping that the threat of an injunction would cause Apple to settle for their demands. Apple didn't, and Samsung lost big-time when the leverage of a possible injunction went up in smoke.

     

    Samsung has the same tactic as other patent abusers. Ask for a ridiculous sum knowing full well the other party (Apple or MS) won't accept. Then try to get an injunction by claiming the other party is an "unwilling licensee". The problem is that the "unwillingness" isn't the fault of the potential licensee - it's a "manufactured" situation created by the patent abuser and their extortionist demands.

     

    It's going to be funny when this recent patent case that got vetoed goes to a court and we find out how much Apple has to pay Samsung for use of their SEP. A simple comparison of that amount vs Samsung's initial request will shed light on how "reasonable" their offer to Apple was. I'd bet $$$ it wasn't reasonable at all.

  • Reply 9 of 24
    chris_cachris_ca Posts: 2,543member
    Quote:

    Originally Posted by EricTheHalfBee View Post

     

     

    Not quite. If Obama didn't veto the ban,


    He didn't.

    Michael Froman did.

    -> -> http://www.ustr.gov/sites/default/files/08032013%20Letter_1.PDF

  • Reply 10 of 24
    ruddyruddy Posts: 94member
    Injunctions for SEPs in the US is history now, like has already been decided in much of Europe (except Germany).
  • Reply 11 of 24
    tbelltbell Posts: 3,146member
    Not quite. If Obama didn't veto the ban, then Samsung could have gone ahead to enforce it. Since it never got that far, the DOJ didn't need to go any further. So Obama sort of prevented Samsung from doing anything anti-competitive by taking away their ability to seek a ban.

    Samsung isn't off the hook, since the DOJ said it will continue to monitor Samsung in future patent cases. Which is interesting since 2 of the 4 patents in the March trial between Samsung and Apple are SEP's. Samsung never seems to learn.

    It really is a different issue. Obama's Trade Representative vetoed the International Trade Commissions Exclusion Order, which only has the power to order injunctions. Samsung has every right to ask a federal court to determine whether Apple violated its SEP patents and if Apple did to ask the Court to set a rate. For standard essential patents that a party must license under FRAND terms a Court should never issue an injunction and the only issue should be setting a rate if the parties can't agree to terms.
  • Reply 12 of 24
    tbelltbell Posts: 3,146member
    chris_ca wrote: »

    Technically true but Froman works for the President carrying out his wishes.
  • Reply 13 of 24
    With this DOJ decision in effect does it mean the SEPs in the March trial have to be discarded if they are being used for injunctions?
  • Reply 14 of 24
    ruddyruddy Posts: 94member
    Quote:

    Originally Posted by leavingthebigG View Post



    With this DOJ decision in effect does it mean the SEPs in the March trial have to be discarded if they are being used for injunctions?

    Nope. A real court trial (unlike an ITC judgment) can decide damages for SEP infringements, but except for Germany, US and European courts haven't been granting anyone injunctions for SEPs. Theoretically a US Court could, unlike the ITC, they are not bound by the President's policy, but the President's policy really comes from the courts having already rejected the idea of injunctions for SEPs.

  • Reply 15 of 24
    Quote:
    Originally Posted by leavingthebigG View Post



    With this DOJ decision in effect does it mean the SEPs in the March trial have to be discarded if they are being used for injunctions?

     

    No.

     

    1) SEP holders can still still injunctive relief, but they raised the bar for SEP related lawsuits.  Accord to the policy statement dated January 8, 2013 (p. 6):

     

    "... An exclusion order may still be an appropriate remedy in some circumstances, such as where the putative licensee is unable or refuses to take a F/RAND license and is acting outside the scope of the patent holder’s commitment to license on F/RAND terms. For example, if a putative licensee refuses to pay what has been determined to be a F/RAND royalty, or refuses to engage in a negotiation to determine F/RAND terms, an exclusion order could be appropriate. Such a refusal could take the form of a constructive refusal to negotiate, such as by insisting on terms clearly outside the bounds of what could reasonably be considered to be F/RAND terms in an attempt to evade the putative licensee’s obligation to fairly compensate the patent holder. ..."

     

     

    In the last USITC case, the Commission did find Apple not only (a) infringed, but also (b) refused to negotiate in good faith or pay -- or what is typically identified as patent "reverse hold-up."  Obama ignored the Commission's finding, contradicting his own policy statement on SEPs, and vetoed the import ban.

     

    2) The Policy statement unfortunately won't have much influence on the next trial and there isn't really any legal precedence or legislative actions that prevents injunctions on SEP related cases (yet) in the US or elsewhere.

     

    3) Obama's veto really has no bearing on any future court cases.  Obama can veto any USITC ban just because "he feels like it."  His decision doesn't have to meet any legal standard nor can it be challenged -- it can't be appealed.

     

    4) Contrary to ruddy's misleading comment, no court ruled anything out on SEP cases. Most federal judges are in fact quite reluctant to set any specific FRAND rates for SEP cases or prohibit sales ban on SEP cases.  And that's partly why Judge James Robart's recent, historic decision on Motorola vs Microsoft received so much attention.

  • Reply 16 of 24
    gatorguygatorguy Posts: 21,255member
    tbell wrote: »
    It really is a different issue. Obama's Trade Representative vetoed the International Trade Commissions Exclusion Order, which only has the power to order injunctions. Samsung has every right to ask a federal court to determine whether Apple violated its SEP patents and if Apple did to ask the Court to set a rate. For standard essential patents that a party must license under FRAND terms a Court should never issue an injunction and the only issue should be setting a rate if the parties can't agree to terms.

    What about a party that knows it's infringing on FRAND-pledged IP yet announces it won't accept any judicial royalty finding in excess of some specific amount. In my view that would make the company an unwilling licensee and subject to an injunction. What's your view on that? If you don't think even this situation should potentially quality for a product injunction what would you suggest for another remedy that would pull the unwilling licensee into the fold?
  • Reply 17 of 24
    Quote:
    Originally Posted by tooltalk View Post

     

    4) Contrary to ruddy's misleading comment, no court ruled anything out on SEP cases.


    Yet another AI poster who makes up his own information to suit his bias and blow a lot of hot air around. US courts are denying injunctions for SEPs left and right. Most of them follow Judge Posner's reasoning when he threw out Motorola's seeking of injunctions for SEPs against Apple, to wit:

    Quote:

    To begin with Motorola's injunctive claim, I don't see how, given FRAND, I would be justified in enjoining Apple from infringing the '898 unless Apple refuses to pay a royalty that meets the FRAND requirement. By committing to license its patents on FRAND terms, Motorola committed to license the '898 to anyone willing to pay a FRAND royalty and thus implicitly acknowledged that a royalty is adequate compensation for a license to use that patent. How could it do otherwise? How could it be permitted to enjoin Apple from using an invention that it contends Apple must use if it wants to make a cell phone with UMTS telecommunications capability -- without which it would not be a cell phone." 


     

    The steam building against the abuse of seeking injunctions for SEPs is worldwide, not just from courts, but from regulators, academics, business, and policymakers. It's really just a few companies with a long history of abusing SEPs like Motorola and Samsung, who are against this rising tide, and it's only a matter of time before legislation puts it into statutes. The FTC has ordered Google to stop pursuing injunctions over its SEPs. The European Commission has accused Samsung of abuse for seeking injunctions over SEPs, and to avoid huge sanctions Samsung has dropped all SEP lawsuits seeking injunctions against Apple in Europe. All the European courts (except Germany) are denying injunctions for SEPs 

     

    But some folks are in abject denial of the emerging global consensus that injunctions aren't appropriate for SEPs, when an exchange of money based on a FRAND rate can always remedy any infringement. They bluster away and shout down their opponents hoping that no one will challenge their pre-chewed baloney.

     

    Quote:

     Most federal judges are in fact quite reluctant to set any specific FRAND rates for SEP cases or prohibit sales ban on SEP cases.


    Another assertion made up of hot air, with no support whatsoever in the real world, considering the FRAND rates recently set by Judge Robart in the Google v Microsoft case was the first time that a court had ever been asked to set a FRAND rate. BTW, that was another court case where an injunction for infringement of Motorola's SEPs was also denied. Injunctions being granted for the infringement of SEPs is history. It's no surprise some will remain in denial, despite all the evidence to the contrary.

  • Reply 18 of 24
    Quote:

    Originally Posted by ruddy View Post

     

    Yet another AI poster who makes up his own information to suit his bias and blow a lot of hot air around


     

    I stopped reading right there.

  • Reply 19 of 24
    gatorguygatorguy Posts: 21,255member
    ruddy wrote: »
    The steam building against the abuse of seeking injunctions for SEPs is worldwide, not just from courts, but from regulators, academics, business, and policymakers.
    http://www.fosspatents.com/2014/02/us-and-eu-antitrust-enforcers-take.html

    BTW, have you considered whether "They bluster away and shout down their opponents hoping that no one will challenge" could apply to some of your own posts? :rolleyes:
  • Reply 20 of 24
    Quote:
    Originally Posted by ruddy View Post

     

    Yet another AI poster who makes up his own information to suit his bias and blow a lot of hot air around. US courts are denying injunctions for SEPs left and right. Most of them follow Judge Posner's reasoning when he threw out Motorola's seeking of injunctions for SEPs against Apple, to wit:


     

    @ruddy: Sure, but neither left or right cases you cited support your claim. In the former, Judge Posner states:

     


    To begin with Motorola's injunctive claim, I don't see how, given FRAND, I would be justified in enjoining Apple from infringing the '898 unless Apple refuses to pay a royalty that meets the FRAND requirement.

     

    In this particular case, Motorola had to prove that Apple was not a willing licensee to get an injunction, consistent with common FRAND practices and the DOJ/USPTO policy statement -- but Motorola failed to demonstrate that Apple was not a willing licensee.  In the USITC case involving Samsung and Apple, however, the Commission found that Apple not only infringed, but also refused to pay (ITC Opinion p. 63):

     


    "... Apple's position illustrates the potential problem of so-called reverse patent hold-up, a concern identified in many of the public comments received by the Commission. In reverse patent hold-up, an implementer utilizes declared-essential technology without compensation to the patent owner under the guise that the patent owner's offers to license were not fair or reasonable. The patent owner is therefore forced to defend its rights through expensive litigation. In the meantime, the patent owner is deprived of the exclusionary remedy that should normally flow when a party refuses to pay for the use of a patented invention."

     

     

    In the latter case ("preliminary injunction against USITC injunction"), neither Realtek (plaintiff), Agere/LSI (defendant), or Judge Whyte questions whether an injunction is an appropriate remedy for Realtek's SEP violation.  As Judge Whyte's decision states, the decision isn't about that at all:

     


    For the purposes of these motions, the reasonableness of defendants' June 20, 2012 post-litigation license

    proposal is not at issue. Rather the issue is limited to whether defendants' initiation of the ITC Section 337

    action naming Realtek as a responde
    before offering a RAND license to Realtek is a per se breach of defendants'

    obligation to license its declared IEEE 802.11 standard-essential patents on RAND terms.



    Likewise in the EU, Samsung offered/proposed not to seek injunction for a period of 5 years and a negotiation period of 12-months as a settlement. Neither the EU anti-trust authority or Samsung is interested in doing away with injunctions in SEP cases outright. 

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