Samsung pledge not to seek mobile standard essential patent injunctions against rivals includes some caveats

The European Commission has launched a one month long consultation on the proposals in a bid to gauge rivals' views. It previously stated its provisional view that Samsung abused a dominant market position, in breach of EU law, by seeking court orders that would have banned Apple from selling products that relied on SEPs.

Under the proposals made by Samsung (27-page / 483KB PDF), the company would not file an application before a court in the EU asking that court to grant an injunction against a potential licensee of their mobile SEPs if those potential licensees agreed to sign up to a set framework it has outlined for determining licensing terms that are fair, reasonable and non-discriminatory (FRAND).

In general, Samsung and a potential licensee of its SEPs would have 12 months to negotiate licensing terms in line with the framework, according to the proposals, with courts or an arbitration body stepping in after this timeframe to set the licensing conditions instead in the event the companies fail to agree on the terms themselves.

Samsung’s commitments appear to leave a door open for potential licensees to challenge the validity, essentiality or infringement of Samsung’s patents in a separate process to the determination of FRAND terms, although this is not entirely clear. It may be that a judge or arbitrator in any FRAND setting proceedings would take any challenge into account and build in provisions to reduce the level of royalties if any asserted patents are found to be invalid, inessential or not infringed. 

Samsung's proposals would give it the freedom to apply for injunctions against rivals' products, without being said to have acted in breach of its commitments, if those businesses do not agree to negotiate on the basis of Samsung's suggested framework or if they fail to comply with the framework rules.

Samsung could also seek an injunction if rivals file for an injunction against them, without that action being a breach of its commitments, according to its proposals. Samsung would also be free to seek damages or other relief against the infringement of their patent rights, under the commitments.

If the Commission accepts the proposals as resolving its competition concerns, Samsung would be legally bound to observe them for five years. A monitoring trustee would be appointed, on an independent basis, to check that Samsung is compliant with the commitments.

"Enforcing patents through injunctions can be perfectly legitimate," EU Competition Commissioner Joaquín Almunia said in a statement. "However, when patents are standard-essential, abuses must be prevented so that standard-setting works properly and consumers do not have to suffer negative consequences from the so-called patent wars. If we reach a good solution in this case, it will bring clarity to the industry."

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 fair, reasonable and non-discriminatory (FRAND) terms.

Often, technology companies dispute whether the licensing terms being offered or sought are FRAND.

A court in Germany earlier this year asked the Court of Justice of the European Union (CJEU) to rule whether SEP holders, having agreed to licence to others the use of their patents on FRAND terms, can automatically be said to be abusing a dominant market position by initiating legal action in pursuit of an injunction against those infringing their patents where those infringers have declared a willingness to negotiate a licensing deal for the use of their patents.

The German court is trying to assess whether legal action pursued by SEP holder Huawei was in line with EU competition law which prohibit companies from abusing a dominant market position without objective justification to do so.

In a separate case currently under scrutiny by the European Commission, the Commission provisionally determined that Motorola had abused a dominant market position by seeking and enforcing an injunction against Apple on that basis that Motorola had agreed to licence the use of its SEPs, for technology used in mobile and wireless communications, on FRAND terms and because Apple had shown that it was "willing" to agree a licensing deal on such terms.

The Commission said that SEP rights holders would not be precluded from seeking and enforcing injunctions against companies that were "unwilling" FRAND licensees.

The Commission said that Apple's willingness to accept a German court's setting of licensing terms for Motorola's patents had demonstrated that the company was suitably willing to enter into a FRAND arrangement. In addition, the Commission said that companies could still be determined to be willing FRAND licensees even if they took out a challenge against the validity of the patents at issue.