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EU regulators grow tired of Samsung and Apple bickering in court

Europe has been a focal battleground in the international patent dispute between Samsung Electronics Comp., Ltd. (KS:005930) and Apple, Inc. (AAPL).  Of late, justices in EU member states seem to be growing tired of the discourse and have been throwing the cases out of court.  Samsung has seen this happen several times [1][2][3] and Apple has also been on the receiving end [1][2][3].

Further evidence of European regulators' growing frustration came today when Samsung was slapped with a formal antitrust investigation.  The investigation follows an information-gathering phase, in which EU officials reached out to both Samsung and Apple.

An EU executive commented to Reuters, "The (European) Commission will investigate, in particular, whether in doing so (seeking injunctions on patent infringements in 2011) Samsung has failed to honor its irrevocable commitment given in 1998 to the European Telecommunications Standards."

Cartman probe
Samsung is getting probed. [Image Source: South Park Studios/Comedy Central]

The sticky mess Samsung finds itself in comes courtesy of the "fair, reasonable, and non-discriminatory" (FRAND) rules, which the EU -- like the U.S. -- uses to govern patents on vital technology standards, such as 3G wireless communication technologies.    The FRAND rules mandate that the filer show willingness to license the patent.

The EU investigation will probe into whether Samsung broke the law by refusing to license these patents to Apple and suing it with them.  A key point of debate will perhaps be whether it is "fair" to deny a company that is trying to sue a firm out of business licensing.  Samsung may have a hard time making that case, given the offensive nature it took in the EU campaign, being the first to file in several regions.

The EU is fond of fines; it recently hit Microsoft Corp. (MSFT) and Intel Corp. (INTC) with fines of over a billion dollars [1][2].

Ballmer howling
Microsoft CEO Steve Ballmer knows the pain of EU antitrust fines.
[Image Source: OReilly Media]

Apple may relish its rival's misfortune, but it has cause for concern as well.  The initial EU probe also targeted it.  Given Apple's serial filings in Europe, and overly broad claims ("Samsung says Galaxy Tab 10.1, we say any tablet device" -- Apple counsel) there may be cause for the EU to pursue a formal intellectual abuse investigation against Apple as well.

The EU tends to practice a stricter brand of antitrust law than the U.S.  However, the U.S. has increasingly followed in the EU's line, which may spell trouble for both Apple and Samsung.

Samsung's smartphone operating system partner Google Inc. (GOOG) was recently the subject of an EU antitrust probe.  Shortly thereafter U.S. regulators opened a similar probe into its dominant positions (although its U.S. Android position has weakened of late in the face of unexpectedly strong iPhone 4S sales).

Apple vs Samsung
Apple and Samsung have been warring for market dominance, both in stores and in court. [Image Source: PhoneBuff]

Like Google and Apple, Samsung and Apple enjoy an awkward relationship as business partners-turned-business rivals.  Samsung continues to manufacture chips that are used in Apple's smartphone, which is by far the best selling smartphone globally, in terms of single-model sales.

Samsung has targeted Apple with a taste of its own medicine of late -- airing commercials mocking Apple "fanboys" (extreme fans).  The two companies were in a dead heat in terms of smartphone sales in Q4 2012, with Samsung moving 36.5m units and Apple moving 37m.

Source: EU [press release]



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long-term prognosis
By jwcalla on 1/31/2012 10:12:02 AM , Rating: 2
Aren't there far more pressing matters for the EU to deal with than this silliness?




RE: long-term prognosis
By JasonMick (blog) on 1/31/2012 10:20:17 AM , Rating: 2
quote:
Aren't there far more pressing matters for the EU to deal with than this silliness?

Maybe they can fine Apple and Samsung to pay of Greece's debt!

/sort of joking....


RE: long-term prognosis
By Motoman on 1/31/2012 11:13:42 AM , Rating: 3
I'm pretty sure either of those companies could buy Greece right about now.


RE: long-term prognosis
By JasonMick (blog) on 1/31/2012 11:17:05 AM , Rating: 3
quote:
I'm pretty sure either of those companies could buy Greece right about now.

Could be the latest tax holiday scheme. :)

We've had "Double Irish" and "Dutch Sandwich"... they could call it "Greek Salad".


RE: long-term prognosis
By A11 on 1/31/2012 11:25:47 AM , Rating: 2
I must say I find it a bit ironic when Americans bring up EU fining corporations to finance itself seeing how your own justice department is doing the exact same thing, case in point the LCD cartel.

For the record my view on the EU fines is that the Intel one was perfectly valid but MS shouldn't have been fined or forced to create a browser choice in their OS.


RE: long-term prognosis
By JasonMick (blog) on 1/31/2012 2:07:39 PM , Rating: 2
quote:
I must say I find it a bit ironic when Americans bring up EU fining corporations to finance itself seeing how your own justice department is doing the exact same thing, case in point the LCD cartel.

For the record my view on the EU fines is that the Intel one was perfectly valid but MS shouldn't have been fined or forced to create a browser choice in their OS.

True, I think it's more the magnitude (in informed readers' case, at least).

I.e. The latest fallout of the LCD cartel fines make it look like the total will be around $1.5B... but that's from seven companies.

The Intel and Microsoft fines were ~$1.5B EACH for a single company.

I generally agree that Intel's price fixing tactics made it impossible to compete, and if the situation is as it sounds make it a textbook abusive monopoly.

That said, I think that the size of the EU fines is a bit foreign to the American mind. But to be fair America is following closer in the EU's line today.


RE: long-term prognosis
By michael67 on 1/31/12, Rating: -1
RE: long-term prognosis
By Reclaimer77 on 1/31/2012 3:35:46 PM , Rating: 1
quote:
True, I think it's more the magnitude (in informed readers' case, at least).


Also the situations. How can you sue a company for offering a free browser you don't even have to use? It's absurd and there's just no way to rationalize that. The EU is so backwards that "bundling" something for the consumer is now made to be sinister?

p.s. check your mail man?


RE: long-term prognosis
By FaaR on 1/31/2012 7:37:48 PM , Rating: 2
The point of the large size of EU fines isn't to be NICE to abusive multinational corporations, but rather to hurt them.

...You know, to hammer home the idea that crime does not pay, because they obviously didn't get the point the first time around. A good ol' kick right in the wallet usually corrects that, at least for a while though until these companies figure they can get away with some new mischief and try again.


RE: long-term prognosis
By etikka on 1/31/2012 10:23:43 AM , Rating: 2
Perhaps they're sending a message that they have better things to do than waste time on Apple and Samsung bickering.


RE: long-term prognosis
By michael67 on 1/31/2012 2:29:16 PM , Rating: 2
I know that i have, also read some ware that average legal cost on a iPad/iPhone and Android device is now around 1.7%.

Think that only the lawyers are really happy about all this bickering. >_<


RE: long-term prognosis
By drycrust3 on 1/31/2012 12:18:45 PM , Rating: 2
The entire existence of the EU is at stake, so yes, you are right, they do have better things to argue over than the an American patent squabble.
Knowing that people love power, and especially power over a billion or so people, I'd say the EU won't disappear entirely, but it will have to change from its current format.
After all, if a country doesn't care about having a weak currency, then that is entirely a matter for that country and its people to deal with. The problem with Euro is that countries that don't care if they have a weak currency are detrimental to countries that do care.


RE: long-term prognosis
By name99 on 1/31/2012 2:36:31 PM , Rating: 2
"Aren't there far more pressing matters for the EU to deal with than this silliness?"

Amazing as it may seem, "the EU" is not one person but many many people, all of whom have different jobs. Merkel and Sarkozy are not worrying about antitrust law, just like some anti-trust judge is not worrying about the Greek bailout.

Use some damn common sense, Do you think the courts shut down in the US during WW2 because there were more pressing matters for the US to deal with?


RE: long-term prognosis
By name99 on 1/31/2012 2:36:41 PM , Rating: 2
"Aren't there far more pressing matters for the EU to deal with than this silliness?"

Amazing as it may seem, "the EU" is not one person but many many people, all of whom have different jobs. Merkel and Sarkozy are not worrying about antitrust law, just like some anti-trust judge is not worrying about the Greek bailout.

Use some damn common sense, Do you think the courts shut down in the US during WW2 because there were more pressing matters for the US to deal with?


RE: long-term prognosis
By name99 on 1/31/2012 2:36:51 PM , Rating: 2
"Aren't there far more pressing matters for the EU to deal with than this silliness?"

Amazing as it may seem, "the EU" is not one person but many many people, all of whom have different jobs. Merkel and Sarkozy are not worrying about antitrust law, just like some anti-trust judge is not worrying about the Greek bailout.

Use some damn common sense, Do you think the courts shut down in the US during WW2 because there were more pressing matters for the US to deal with?


RE: long-term prognosis
By FaaR on 1/31/2012 7:32:38 PM , Rating: 2
Yes of course there are more pressing matters for the EU to deal with right now (there are always more pressing matters in EVERY country), but the people that deal with these sort of matters aren't the same people that deal with the more pressing matters so one thing does not preclude the other.

In essence, the EU can both walk AND chew gum at the same time. Impressive, huh?


Nice
By Amedean on 1/31/2012 9:40:51 AM , Rating: 2
Clean, decent article. Maybe EU tech should be your mainstay Jason.

I don't understand international patent laws very well, can someone enlighten me?




RE: Nice
By JasonMick (blog) on 1/31/2012 9:48:33 AM , Rating: 2
quote:
Clean, decent article. Maybe EU tech should be your mainstay Jason.

I don't understand international patent laws very well, can someone enlighten me?

I'm not a lawyer and certainly not an EU lawyer, but most of its is covered in Articles 101 and 102 of the Treaty of the Function European Union. Article 103 deals with punishment and Article 104 deals with member state compliance.

The wording is pretty simplistic and left to court interpretation, but the general message is that if you have a dominant position and use to anticompetitively, you can and will be fined.

FRAND is largely a court precedent, but the rulings that instituted it reference TFEU 101 and 102.

Source:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?...

pg. 88-90

Text:

Article 101
(ex Article 81 TEC)

1. The following shall be prohibited as incompatible with the internal market: all agreements
between undertakings, decisions by associations of undertakings and concerted practices which may
affect trade between Member States and which have as their object or effect the prevention, restriction
or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing
them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary
obligations which, by their nature or according to commercial usage, have no connection with the
subject of such contracts.
2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:
— any agreement or category of agreements between undertakings,
— any decision or category of decisions by associations of undertakings,
— any concerted practice or category of concerted practices,
which contributes to improving the production or distribution of goods or to promoting technical or
economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:
(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment
of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part
of the products in question.

Article 102
(ex Article 82 TEC)

Any abuse by one or more undertakings of a dominant position within the internal market or in a
substantial part of it shall be prohibited as incompatible with the internal market in so far as it may
affect trade between Member States.
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby
placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary
obligations which, by their nature or according to commercial usage, have no connection with the
subject of such contracts.

Article 103
(ex Article 83 TEC)

1. The appropriate regulations or directives to give effect to the principles set out in Articles 101
and 102 shall be laid down by the Council, on a proposal from the Commission and after consulting
the European Parliament.
2. The regulations or directives referred to in paragraph 1 shall be designed in particular:
(a) to ensure compliance with the prohibitions laid down in Article 101(1) and in Article 102 by
making provision for fines and periodic penalty payments;
(b) to lay down detailed rules for the application of Article 101(3), taking into account the need to
ensure effective supervision on the one hand, and to simplify administration to the greatest
possible extent on the other;
(c) to define, if need be, in the various branches of the economy, the scope of the provisions of
Articles 101 and 102;
(d) to define the respective functions of the Commission and of the Court of Justice of the European
Union in applying the provisions laid down in this paragraph;
(e) to determine the relationship between national laws and the provisions contained in this Section
or adopted pursuant to this Article.


RE: Nice
By drycrust3 on 1/31/2012 11:41:31 AM , Rating: 2
quote:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;

Many countries have laws which prohibit the establishment of maintenance of a monopoly, yet the approach of Apple to ban Samsung (and vice versa) is exactly that: an attempt to establish a monopoly.


RE: Nice
By JasonMick (blog) on 1/31/2012 2:10:18 PM , Rating: 2
quote:
quote:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;

Many countries have laws which prohibit the establishment of maintenance of a monopoly, yet the approach of Apple to ban Samsung (and vice versa) is exactly that: an attempt to establish a monopoly.


Apple could certainly run afoul of this part of Article 101:

quote:
...limit or control production, markets, technical development, or investment;"


That sounds like precisely what Apple is hoping to do... ban its rivals from making modern smartphones.


RE: Nice
By testerguy on 2/1/2012 3:49:05 AM , Rating: 2
quote:
That sounds like precisely what Apple is hoping to do... ban its rivals from making modern smartphones.


Or, more accurately, and with less bias - Apple is trying to stop rivals COPYING their products. Did you even see the packaging of the Galaxy Tab? It could not be any more blatant at an attempt to copy Apple customer experience, and their lawyers couldn't tell the difference either.

The German Court clearly agreed.

If Samsung don't want legal cases, they shouldn't copy a product so blatantly.


RE: Nice
By Cheesew1z69 on 2/1/2012 8:22:42 AM , Rating: 1
If ONLY they WERE copying....

But as usual, in your blind faith, it's oblivious to you.


RE: Nice
By michael67 on 1/31/2012 2:15:45 PM , Rating: 2
Hence the the EU probe in to Samsung and naybe also Apple.

Not saying what system is better, but EU rules are more costumer protection oriented then US rules, think i prefer it that way personally.


RE: Nice
By testerguy on 2/1/2012 3:53:10 AM , Rating: 2
I wouldn't read too much into Jason's unfounded opinion that 'maybe' Apple will also be targeted by anything related to this - there is no evidence whatsoever that this is the case.

That was just the only way to soften this headline which shows that Samsung is in fact often the aggressor and has far less of a right to be, since their patents are covered by FRAND and Apple's designs are not.

Very much in the same way that when Apple is ahead, 37m vs 36.5 is a 'dead heat' but if the numbers were the other way around, there would be a sensationalist article claiming Samsung were number one.


RE: Nice
By BZDTemp on 1/31/2012 9:54:00 AM , Rating: 2
Since we are reviewing the article. I'm a bit unhappy about the term "recently" as it used in the article.

For sure recently may apply to years or even many years when the matter isn't tech but when used in an article about mobile phone tech the term recently should not be used about something that took place in 2008 (especially when the term is also used about something that happened in the last month or two).


RE: Nice
By JasonMick (blog) on 1/31/2012 10:19:28 AM , Rating: 2
quote:
Since we are reviewing the article. I'm a bit unhappy about the term "recently" as it used in the article.

For sure recently may apply to years or even many years when the matter isn't tech but when used in an article about mobile phone tech the term recently should not be used about something that took place in 2008 (especially when the term is also used about something that happened in the last month or two).

I sort of understand where you're coming from, but typically antitrust court proceedings take years, if not decades to wrap up, hence the term "recent" stretches a bit farther.

For example the EU antitrust was running since 1993, and only wrapped up with the 2008 fine. So yes, something that happened 4 years ago is relatively "recent" in EU antitrust law terms.

I welcome suggestions (and I do make mistakes, certainly!), but in this case I feel the usage was correct... let me know your thoughts on the matter.


OK so...
By Motoman on 1/31/2012 10:28:26 AM , Rating: 1
...clearly IANAL and I don't know anything more about this than the article above...

...but if Samsung is disputing the validity of said patents, for what reason would they demonstrate a "willingness" to license them? It seems to me that Samsung is trying to get the patents invalidated...ultimately if those patents are held up in court I'm sure they'd have to capitulate and license them. But why seek to license something you're pretty sure is abusive to start with?




RE: OK so...
By JasonMick (blog) on 1/31/2012 11:05:24 AM , Rating: 2
quote:
...clearly IANAL and I don't know anything more about this than the article above...

...but if Samsung is disputing the validity of said patents, for what reason would they demonstrate a "willingness" to license them? It seems to me that Samsung is trying to get the patents invalidated...ultimately if those patents are held up in court I'm sure they'd have to capitulate and license them. But why seek to license something you're pretty sure is abusive to start with

??

Methinks something was lost in translation.

Basically:
1. Samsung helped develop key 3G technologies (1990s).
2. These technologies were part of standards work (1990s).
3. These patents were thus placed into mandatory FRAND licensing terms.
4. Samsung believes these patents to be valid.
5. Samsung has sued Apple using these patents, in response to Apple initiating the conflict with various design and technology patents on its iDevices. (present)
6. Apple's lawyers argued Samsung's suit was invalid due to the FRAND licensing mandate (but generally did not argue with the validity of the patents themselves).
7. Samsung felt it should be able to sue Apple with them, despite the FRAND.
8. EU courts disagreed, striking down 3 cases thus far.
9. EU opens antitrust inquiries (informal) into Samsung and Apple
10. EU follows up with formal inquiry into Samsung's use of FRAND patents in lawsuit (this article).

Samsung believes these patents are valid.

It will likely get licensing fees from Apple, even if it is fined by the EU for non-compliance with FRAND. The validity of these patents has generally not been disputed.

What is the topic of debate is whether Samsung should be forced to license its FRAND patents to Apple, or whether the extenuating circumstances constitute fair cause under FRAND's "fair"/"reasonable" provisions to argue a hostile atmosphere and hence justification not to license.


RE: OK so...
By Motoman on 1/31/2012 11:13:11 AM , Rating: 2
Oooooohhhh...I get it. Somehow I got it in my head that Samsung was disputing some of Apple's patents. When what they're really doing is trying to sue Apple accusing them of violating some patents they own.

Nevermind me. Apparently I need more coffee.


RE: OK so...
By JasonMick (blog) on 1/31/2012 11:15:36 AM , Rating: 2
quote:
Oooooohhhh...I get it. Somehow I got it in my head that Samsung was disputing some of Apple's patents. When what they're really doing is trying to sue Apple accusing them of violating some patents they own.

Nevermind me. Apparently I need more coffee.

:)

Don't feel bad. If I don't have mind crazy crazy typos happen. My brain has a bad habit of homophonizing when its tired.


RE: OK so...
By testerguy on 2/1/2012 3:59:07 AM , Rating: 2
quote:
5. Samsung has sued Apple using these patents, in response to Apple initiating the conflict with various design and technology patents on its iDevices. (present)


The motivations behind Samsung instigating legal proceedings in numerous countries is irrelevant, both here and to the legal system, it is subjective, unprovable, and misleading, and to effectively excuse Samsung's anti-competitive behaviour because 'Apple started it' is ridiculous. Samsung was just as much trying to get iPhone 4S banned as Apple got the Galaxy Tab banned. The difference being, the courts saw that Apple had a case, and Samsung didn't. If anything, Samsung is more the troll..

Either way, Samsung is clearly guilty of breaching the FRAND terms - you can't start suing people over them, so this inquiry against Samsung is entirely justified.


Nice
By alpha754293 on 1/31/2012 10:26:32 AM , Rating: 3
I always like reading articles from DailyTech. Well researched, well written, clean, clear, precise - the way that journalism is meant to or supposed to be. Well done, Jason!




But ACTA
By toyotabedzrock on 2/1/2012 5:22:31 PM , Rating: 2
Does ACTA change the way this 3g patent issue is prosecuted?




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