European Commission sends Samsung Statements of Objections regarding its alleged abuse of mobile phone standard-essential patents

On 21 December 2012, the European Commission sent a Statement of Objections to Samsung, based on concerns that Samsung’s conduct in seeking injunctions against Apple in various Member States on the basis of its mobile phone standard-essential patents (“SEPs”) amounts to an abuse of a dominant position in breach of Article 102 of the Treaty on the Functioning of the European Union. The Samsung SEPs in question relate to the European Telecommunications Standardisation Institute’s (“ETSI”) 3G UMTS standard, in relation to which Samsung started to seek (in 2011) injunctive relief before courts in various Member States against Apple based on claimed infringements of certain of its 3G UMTS SEPs.

In a separate communication, the Commission stated that it takes note of Samsung’s announcement of 18 December 2012 that it is withdrawing its claims for injunctions in Europe, although such a decision would not alter the Commission’s preliminary conclusions about the anti-competitive nature of Samsung’s conduct thus far.

The present investigation derives from the specific standardization context and the associated commitment by Samsung to license SEPs on Fair Reasonable and Non-Discriminatory (“FRAND”) terms. Standard-setting organizations generally require that members commit ex ante to license their SEPs on FRAND terms. Access to those patents which are standard-essential is a precondition for any company to sell interoperable products in the market. At the same time, the FRAND commitment allows SEP holders to be fairly remunerated for their intellectual property.

Competition Commissioner Joaquin Almunia commented that “When companies have contributed their patents to an industry standard and have made a commitment to license the patents in return for fair remuneration, then the use of injunctions against willing licensees can be anti-competitive”. In particular, according to the Commission, while recourse to injunctions is a possible remedy for patent infringements, such conduct may be abusive where SEPs are concerned and the potential licensee is willing to negotiate a license on FRAND terms. Since injunctions generally involve a prohibition on the sale of the product infringing the patent, such recourse risks excluding products from the market without justification and may unduly distort licensing negotiations in the SEP-holder’s favour. Besides, the Commission further recalls that “the right of access to a tribunal does not constitute an unfettered prerogative. According to the EU Charter of Fundamental Rights, it may be restricted, provided that the restriction (i) corresponds to objectives of general interest, (ii) is proportionate, and (iii) does not infringe upon the very substance of the right.” The Commission’s preliminary view is that these conditions are fulfilled in the case at hand.

The current investigation protects the public interest that commitments given during a standard-setting process are respected so that consumers and businesses can enjoy the benefits of standardization, while the validity or infringement of the patents in question shall be determined by national courts (which may assess whether it is necessary to stay its proceedings). As such, no position will be taken on what a reasonable royalty rate might be, and Samsung’s right to seek damages and other corrective or alternative measures for an infringement of its SEPs remains untouched.

It is recalled that Apple also launched injunctions against Samsung on the basis of non-SEPs, i.e. patents for which no commitment to license on FRAND terms had been given in a standardization context. [Gabriele Accardo]