U.S. District Court dismisses Apple’s antitrust claims against Samsung

On 18 October 2011 the U.S. District Court for the Northern District of California dismissed Apple’s claims that Samsung violated Sections 1 and 2 of the Sherman Act by failing to disclose its patents that are essential to the Universal Mobile Telecommunications Standard (“UMTS”) or, alternatively, by not honoring its commitment to license the patents on fair, reasonable and nondiscriminatory terms (“FRAND”). The allegations concern Samsung’s conduct within the European Telecommunications Standards Institute (“ETSI”) and other standard-setting organizations (“SSOs”).

Apple argued that Samsung failed to disclose its essential patents in a manner that constitutes monopolization under Section 2 of the Sherman Act. However, while the court found that Apple sufficiently pled facts supporting Samsung’s alleged failure to disclose essential patents in accordance with SSO policies, Apple failed to provide sufficient facts for the proposition that had Samsung properly disclosed its patents, a reasonable possibility exists that either another viable technology would have been incorporated into the UMTS standard or the relevant feature would not have been incorporated into the standard at all. For instance, without factual allegations that SSOs considered other technologies when the standards were set, Apple could not meet the pleading standard. Thus, the court granted Samsung’s motion to dismiss Apple’s claim concerning Samsung’s alleged non-disclosure of essential patents.

Apple argued in the alternative that Samsung had made a false FRAND licensing commitment in violation of Section 2 of the Sherman Act. The court found that while Apple’s theory did not appear legally defective, Apple’s allegations still failed to meet the heightened pleading standard for fraud allegations as Apple did not specify when and who made the FRAND declarations and for which patents. Accordingly, the court granted Samsung’s motion to dismiss Apple’s claims that were based on a theory of false FRAND declarations.

Apple also argued that Samsung violated Section 1 of the Sherman Act by subverting the collaborative standard-setting process. The court found that Apple did not allege that any concerted action, necessary to state a claim under Section 1, occurred between Samsung and the SSO. Instead, the court found that Apple merely alleged Samsung’s unilateral conduct in a collaborative environment. The court distinguished Apple’s allegations of concerted action from cases in which courts found concerted action that involved an unwilling party to an alleged conspiracy.

The dismissal of Apple’s antitrust claims was not final; the court allowed Apple to amend its claims to address the identified deficiencies. Moreover, the court found that Apple did not fail to allege antitrust injury with respect to its Section 2 claims. [Juha Vesala]

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