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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