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Samsung's court action against Apple over standard-essential patents breached competition rules, says EU regulator

EU regulators have come to the preliminary conclusion that Samsung acted in breach of competition rules by seeking court orders that would have banned Apple from selling products that relied on standard-essential patents (SEPs).03 Jan 2013

The European Commission said that Samsung abused a dominant market position because it had sought to obtain injunctions against Apple despite the US software giant being "willing to negotiate" paying a licence fee in order to use the patents on fair, reasonable and non-discriminatory (FRAND) terms.

"Today's Statement of Objections sets out the Commission's preliminary view that under the specific circumstances of this case, where a commitment to license SEPs on FRAND terms has been given by Samsung, and where a potential licensee, in this case Apple, has shown itself to be willing to negotiate a FRAND licence for the SEPs, then recourse to injunctions harms competition," the Commission said in a statement. "Since injunctions generally involve a prohibition of the product infringing the patent being sold, such recourse risks excluding products from the market without justification and may distort licensing negotiations unduly in the SEP-holder's favour."

"The preliminary view expressed in today's Statement of Objections does not question the availability of injunctive relief for SEP holders outside the specific circumstances present in this case, for example in the case of unwilling licensees," it added.

Standards are agreed technical specifications to ensure that a single technology is used across an industry, often with the goal of achieving interoperability of products regardless of the manufacturer. Companies can opt to send experts to help develop standards but, in return, most standards setting organisations insist that companies agree to license any intellectual property they own that is essential to implementation of that standard on FRAND terms.

Samsung had worked under the framework of standard-setting body the European Telecommunications Standardisation Institute (ETSI) to develop 3G mobile and wireless technology for use in the industry. The company committed to licensing the use of the standard-essential patents relating to the technology when the standard was adopted in Europe, the Commission said.

However, Samsung sought injunctions against Apple in a number of EU member states after claiming that Apple had infringed on its patent rights. The Commission said that companies can seek injunctions in order to end patent infringement, but said that in this case it had taken the view that Samsung's actions were anti-competitive. The regulator, however, refused to offer guidance on what licence terms would be considered to be FRAND. It said that courts and arbitrators were "generally well equipped" to make those kind of judgments.

"The Commission's preliminary view is that in the specific circumstances of the case, the seeking of injunctions may unjustifiably distort FRAND licensing negotiations where a commitment to license the SEPs in question on FRAND terms has been given," the Commission said.

EU Competition Commissioner Joaquín Almunia said: "Intellectual property rights are an important cornerstone of the single market. 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," Almunia added.

Last month Samsung announced that it had withdrawn all requests for injunctions against Apple "on the basis of our standard essential patents pending in European courts, in the interest of protecting consumer choice," according to a report by the BBC.

The Commission said it had taken note of the company's announcement but that it had not altered its "preliminary conclusions about the anti-competitive nature of Samsung's conduct thus far".

The issuance of a 'Statement of Objections' by the Commission against Samsung follows a near year-long investigation by the regulator into the case. Samsung will have an opportunity to present its views on the findings of the Commission before the Commission makes a final decision on what action, if any, it wishes to take.

The Commission can levy fines of up to 10% of a company's global turnover if it finds that it has acted in breach of competition law. 

Apple and Samsung have been embroiled in a number of legal battles around the world over intellectual property rights in recent times.

Last year the Court of Appeal in England and Wales ruled that Apple should have to publicise the fact that it had lost a legal battle with the South Korean company over the design of some Samsung tablet devices. Apple had claimed that Samsung had infringed its Community design rights, but the High Court and Court of Appeal both rejected the claims.