On 31 January 2012, the European Commission ("Commission") announced that it had opened a formal investigation into Samsung Electronics ("Samsung") to investigate whether Samsung had:
- abused its dominant market position in contravention of Article 102 of the Treaty on the Functioning of the European Union ("TFEU"); and/or
- acted in breach of the 1998 commitment it gave to the European Telecommunications Standards Institute ("ETSI").
The announcement of this investigation follows an earlier announcement by the Commission on 4 November 2011 that it had sent requests for information to both Apple and Samsung concerning the enforcement of standards-essential patents in the mobile telephony sector.
Standard setting and context of the investigation
Standard setting can foster innovation and enhance competition
by ensuring that products from multiple manufacturers are
compatible and interoperable. However, standard setting can also
raise competition concerns. The Commission's investigation
arises in the context of the on-going global patent dispute between
Samsung and Apple. In 2011, Samsung sought injunctions in several
EU Member States to block the sale of certain mobile devices on the
grounds that the devices infringed certain patents it owned. Most
notably, Samsung sought to block the sale of Apple's iPhone 4S
in France and Italy. However, both the French and Italian courts
have since found against Samsung and refused to grant the
injunctions.
It appears that Apple has also recently complained to the
Commission about Motorola Mobility's ("Motorola") use
of essential patents. This is also part of a wider battle. Last
December, Motorola won a preliminary injunction in Germany,
accusing Apple of infringing its patents. This new Apple complaint
also follows hot on the heels of the Commission's approval of
Google's acquisition of Motorola's patent portfolio.
The particular patents at issue in the present case are known as standards-essential patents. Such patents are necessary for devices to conform to industry standards (e.g., the 3G mobile standard). Under its Horizontal Co-Operation Guidelines, adopted in 2010, the Commission, amongst other things, requires owners of standards-essential patents to licence them to competitors on "fair, reasonable and non-discriminatory terms" ("FRAND"). In 1998, Samsung gave an irrevocable commitment to ETSI that it would licence its standards-essential patents on FRAND terms.
Conclusion
The actions by Samsung in the present case, not merely to refuse to licence but to actively seek pre-emptive injunctions raise interesting questions vis-à-vis the application of the competition rules. The announcement by the Commission means that it will now examine this case as a matter of priority, but does not prejudge the outcome of the investigation. If found in breach of Article 102 TFEU, the Commission can fine Samsung up to 10 per cent of its total worldwide turnover. In a similar case in 2008, the Commission fined Microsoft €899 million for non-compliance with a Direction to licence its interoperability information to downstream competitors.
This particular topic at the IP/antitrust interface, highlighted by past cases such as Rambus and Qualcomm, has sparked much debate on both sides of the Atlantic. Standard-setting activities are inherently global in scope. Accordingly, it is of some importance that licensors and licensees of IP essential to standards are cognisant of the legal regime and process of enforcement which apply in the different jurisdictions in which they operate.
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