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Competition Law

Analysis - debate - current awareness

31 JAN 2012

Investigation against Samsung in relation to its infringement litigation

On 31 January 2012, the European Commission announced the opening of proceedings against Samsung Electronics (Samsung), relating to a suspected abuse of a dominant position prohibited under Art 102 of the TFEU. The Commission warned that its investigation relating to Samsung may mark the beginning of an industry-wide probe into strategic infringement litigation consisting in bringing proceedings against competitors for alleged patent infringements with a view to blocking certain products from entering the market.
Specifically, the Commission will determine whether, by seeking injunctive relief against competing mobile device makers for their alleged infringements of its patents, Samsung failed to honour the commitment it gave to the European Telecommunications Standards Institute (ETSI) in 1998 to license intellectual property rights (IPRs) that are essential to the implementation of European mobile telephony standards on fair, reasonable and non-discriminatory (FRAND) terms and whether such behaviour amounts to an abuse of a dominant position.
The ETSI is an official not-for-profit European Standards Organisation that produces global standards for information and communications technologies. IPRs are often incorporated into ETSI standards, and this gives rise to tension between IPRs, which are exclusive to their owners, and standards, which are intended for free, collective use. ETSI Members, which include manufacturers, are bound by the rules of the Institute, which require them to:
(1) disclose any IPRs they consider essential for the implementation of an ETSI standard; and
(2) commit to grant irrevocable licences to use such essential IPRs on FRAND terms ie, without discriminating between potential licensees or charging excessive fees.
Samsung and other patent holders gave commitments to the ETSI to grant licences for the use of their essential IPRs on FRAND terms when third generation (3G) mobile and wireless telecommunications system standards were adopted in Europe. Samsung subsequently sought injunctive relief in 2011 against competing mobile device makers globally, including Apple in Germany, the Netherlands, France and Italy to prevent Apple's alleged infringement of a number of its essential universal mobile telephone system (UMTS) patents. It claimed that Apple's products, complying with the applicable UMTS standards and therefore containing technology falling within the scope of Samsung's patents, infringed its patents. A judgment of 14 October 2011 dismissed Its claim, partly due to evidence of Samsung's failure to negotiate a licence agreement on FRAND which corroborated the view that its attempt to enforce its patents amounted to a misuse of its patents. Samsung's similar attempts against Apple in Germany, France and Italy have also failed. In contrast, Motorola Mobility is reported to have succeeded in obtaining an injunction against Apple in Germany to enforce its standard essential patent rights.

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