IPR – The weakness of essential Part III

The clipping of Samsung’s wings by the EU clearly shows the problems associated with prosecuting standard essential IPR.

• Samsung announced yesterday (Dec 18^th 2012) that it was withdrawing from all of its actions against Apple in Germany that were seeking an injunction as a remedy for the infringement of its standard essential IPR.
• It is worth noting that Samsung has only backed off from seeking an injunction. It has not stopped seeking compensation from Apple for infringement, it just won’t ask for an injunction.
• I suspect that this announcement has nothing to do with Apple’s failure to get Samsung’s devices banned in the US and everything to do with the EU’s investigation into Samsung’s legal practices when it comes to standard essential patents.
• The EU announced about a year ago that it had launched an anti-trust investigation into Samsung’s legal practices as they refer to standard essential IPR. I suspect that it has concluded that Samsung is behaving badly.
• The situation is quite simple. Standard essential IPR is intellectual property that has to be used to correctly implement a standard such as 3G or LTE. It can’t be worked around.
• When the standard is set, the holders of the IPR to be used have to give an undertaking to the standards body (ETSI in this case) to licence the IPR on FRAND terms.
• In practice this means that the holder has to licence it to anyone that wants it, at a fair price and the holder is not supposed to seek injunctions.
• However, Germany is particularly friendly to plaintiffs as it does not rule out the grant of injunctions for infringement of standard essential IPR.
• This is combined with the fact that it is one of the biggest EU markets is why many IPR related actions have been based there.
• This again shows the weakness of essential IPR.
• It is relatively easy to prove infringement but the remedies are substantially watered down.
• Samsung has been asserting, what it claims, is standard essential IPR against Apple and at the same time seeking an injunction as a remedy.
• Under the FRAND principle, this qualifies to me as bad behaviour and I suspect that Samsung has been informed as such by the EU.
• Hence, in order not to completely prejudice its case for asserting these patents against Apple, I think it has withdrawn the application for injunctive relief.
• This should keep the EU happy and prevent it from complaining to the relevant judge which could have resulted in the whole case being thrown out.
• Samsung will continue to pursue Apple but will seek royalties instead of an injunction
• Google, via its acquisition of Motorola is in a similar boat and I suspect that the same result will follow especially as the US is less friendly to standard essential based injunctions.
• To me, this further underlines the weakness of Samsung’s patent portfolio and its inability to protect its owner from legal assault.
• However, I think that recent events will have made Apple more willing to negotiate with Samsung which I believe will end up in a royalty based licence with Samsung is a significant net payer.
• The biggest question is when. I am hopeful that 2013 might prove fruitful in that regard.