Samsung Proposes a Patent Pledge to Settle EC FRAND Investigation

Guest post by Jorge L. Contreras.  Prof. Contreras is an Associate Professor of Law at American University Washington College of Law.

As part of the global smartphone litigation between Apple and Samsung, the European Commission has been investigating Samsung’s use of injunctive relief to address infringement of standards-essential patents (SEPs).  Last December, the Commission informed Samsung that its attempts to obtain injunctions against Apple based on SEPs covering the European Telecommunications Standardisation Institute's (ETSI) 3G UMTS mobile wireless standard constituted an abuse of dominant position under EU competition law.  One of the key elements in the claim against Samsung was that it sought injunctions after having committed to license its SEPs to implementers of the UMTS standards on fair, reasonable and non-discriminatory (FRAND) terms, a common requirement within the standards-development world. 

Last week the Commission announced  that it has received a preliminary settlement proposal from Samsung.  Under this proposal, Samsung would commit not to seek injunctions in Europe on the basis of SEPs covering a broad range of wireless telecommunications and networking standards (i.e., well beyond the UMTS standard at issue in the Apple case), so long as the alleged infringers agreed to comply with a specified process for determining appropriate FRAND royalty rates.  This process would include good faith negotiations for at least 12 months, followed by arbitration at the International Chamber of Commerce (ICC) or litigation in the English High Court.  Samsung’s commitment with respect to its SEPs would become the most recent in a growing number of public commitments being made voluntarily by patent holders to limit the enforcement of their patents covering standardized technologies.

For those following the smartphone wars, Samsung’s proposal should sound familiar, as it bears a striking resemblance to the terms on which Google settled an investigation by the U.S. Federal Trade Commission this summer.  The FTC’s investigation of Google’s subsidiary Motorola Mobility also focused on the use of SEPs to seek injunctive relief against implementers of industry standards, and was based on the potential anticompetitive impact of this behavior.  There are, however, several notable differences between the FTC’s Google settlement and what Samsung has proposed.  Some of these are summarized in Table 1 below:

Table 1

Comparison of Google and Samsung (Proposed) Injunction Settlement Terms

 

FTC-Google Order (Jul. 23, 2013)

Samsung Proposal to EC (Oct. 17, 2013)

 

 

 

Scope of Non-injunction commitment

Worldwide

European Economic Area (EEA)

Duration of Commitment

10 years

5 years

Standards covered

Any standard published by a standards-setting organization (SSO)

Mobile Device* standards published by SSOs

Mandatory negotiation period

6 months

12 months

Designated arbitral tribunals

AAA, JAMS, WIPO

ICC

Designated courts

Any tribunal worldwide

English High Court or EU Unified Patent Court

* Mobile devices include smartphones and tablet devices but exclude desktop, notebook, subnotebook and laptop computers.

As Table 1 indicates, Samsung’s proposal is (not surprisingly) a bit less burdensome than the terms that Google agreed with the FTC.  To wit, the proposed geographic coverage is narrower (the EEA rather than the whole world) and the duration is half as long (5 rather than 10 years).  Interestingly, however, Samsung has proposed a mandatory negotiation period, during with it would be required to negotiate FRAND terms with a potential licensee, that is twice as long as the period agreed by Google (12 versus 6 months).  As patent holders typically want to get to court as quickly as possible, it is not clear why Samsung has proposed a longer period, and this may simply be a function of private signaling made by the Commission.  Samsung’s choice of arbitral tribunals is also interesting, inasmuch as it designates the private International Chamber of Commerce (ICC) over the UN-chartered World Intellectual Property Organization (WIPO), which has actively been seeking to get into the SEP arbitration business.

Just as the FTC did prior to finalization of the Google settlement, the EC has solicited public comments on the proposed Samsung settlement.  The FTC received 25 submissions in response to its solicitation, and made several adjustments to the final Google order as a result.  The EC has allowed 30 days for the submission of comments (through Nov. 16, 2013) and it is likely that many of the same issues that were raised in the comments to the FTC will surface again.

For those who are generally interested in voluntary patent pledges like the one proposed by Samsung, the Program on Information Justice and Intellectual Property (PIJIP) at American University’s Washington College of Law has established a new public web resource listing and describing non-SDO patent commitments.  The site, which was launched last week, already includes 63 different non-SDO patent commitments covering thousands of patents.  These pledges have been made by industry leaders such as Google, Microsoft, Apple and Intel, as well as small entities and, should its proposal to the EC be accepted, Samsung.  We hope to continue to add information to this site, and invite the submission of additional non-SDO patent commitments by the public.

13 thoughts on “Samsung Proposes a Patent Pledge to Settle EC FRAND Investigation

  1. Of course all these “standards” and “regulations” are just manifestations of Big Government’s inate tendency to squelch truly awesome technological advances which threaten its ability to control everybody.Let’s take a moment to consider these recent gems handed down from on “high” by one Balaji Srinivasan:”We didn’t securitize mortgages, order bailouts, start wars, or refuse to write movies or articles on this until too late,” read one of Srinivasan’s slides on where the blame lies and what the real problems are that are holding technology back. [...]With 3D printing, regulation is being turned into DRM. With quantified self, medicine is going mobile. With Bitcoin, capital control becomes packet filtering. All of these examples, Srinivasan says, are ways in which technology is allowing people to exit current systems like physical product production and distribution; personal health; and finance in favor of spaces of their own creation.Srinivasan even went so far as to point out — perhaps with a bit of tongue-in-cheekiness — that Silicon Valley … must design these processes for exit peacefully, as combating current systems like the US government would result in violent failure.LOL. I wonder where patents fit in into that fantasy world? Do really really rich people really need them? Or are they just something for their less rich friends to play with?

    1. MM, your record of prediction of technology and understanding of technology is so abysmal that it is a wonder you have the nerve to use a keyboard. So put a lid on it David.

  2. Also off-topic, but speaking of PAEs, here’s claim 1 of a patent being asserted in several new filings by “Alex is the Best LLC.” 1. An Internet direct device comprising an imaging system to capture still or video images; a microprocessor to transmit said captured still or video images to an account associated with the Internet direct device on a website archive and review (WSARC) upon image capture, and receive still or video images from said WSARC over a communications network; and wherein the Internet direct device automatically connects to said communications network on power-up using one of a plurality of available modes of connection, which is designated as a primary mode of connection, and wherein the Internet direct device automatically switches to another available mode of connection when the Internet direct device detects that said primary mode of connection to said communications network is unavailable.The priority date is July 2005. What we have here is a camera-phone that automatically reverts to a secondary mode of connection (e.g., cellular) when a primary mode (e.g., Wi-Fi) is not available. But what’s really cool is that this thing sends images to a server upon image capture. Imagine that!Here’s a 2001 patent discussing devices that automatically switch between two different modes of wireless communication, in the context of a connection to a remote server: US 6,198,941. I’m sure there are lots of others that disclose at least this much. Since camera phones have been around since 2000, it was certainly obvious to apply this to camera phones as of 2001. Here’s another patent, filed in 2001, that discusses the automatic uploading of images from a camera to a user account on a server, using any of several different wireless technologies: 6,914,695.And 6 thinks that examiners aren’t getting paid enough.

    1. “And 6 thinks that examiners aren’t getting paid enough.”On the contrary, I think it may well be enough. I simply think that many of them subjectively do not think that it is fair (note that they may feel that it is enough though, and it may objectively be fair and enough) amount with respect to what they are being asked to do.

      1. In fact, I might would go one further and say that in the context of the office, since most SPEs and management are just old examiners they’re likely “down” with the game of sabotaging mentioned in the article and accept it as a way of life. Which would explain why the management is on board.

    2. Here’s a 2001 patent discussing devices that automatically switch between two different modes of wireless communication, in the context of a connection to a remote server: US 6,198,941. I’m sure there are lots of others that disclose at least this much. Since camera phones have been around since 2000, it was certainly obvious to apply this to camera phones as of 2001.B…b….b…but…. that’s visual information! Totally different kind of information, at least as different as the difference between copyrighted content and non-copyrighted content, which is a pretty huge difference as everybody knows.I’m still waiting for smell-o-vision to go huge. When the molecular vaporizer gets cheap enough, computers that can handle scent information are going to become extremely valuable. Mere video? Hahaahahhah. If you can’t smell it, you can’t sell it.

  3. A little off topic, but I found this to be an interesting theory. Indeed one that may go a long way towards explaining why many examiners just aren’t putting 100% effort in. link to cnbc.com

      1. I don’t see how this theory explains the location of the PTO being smack dab in the center of one of the most expensive places to live.

        1. Seriously you don’t? Theory if you don’t get what you feel you have coming to you, you don’t work as hard. PTO area cost of living very high. Ergo, people are going to expect more. That is why engineering research areas are usually located in areas where cost of living low. PTO should move to low cost area.

          1. So premise is: 1. theory says that if you don’t get what you feel you have coming to you, you don’t work as hard 2. the pto area cost of living is very highThe conclusion is:Therefore people will expect more. And this explains why the pto is smack dab in the center of one of the most expensive places to live? I’m starting to think I just didn’t read your first post in the way you intended me to. You just meant that the pto being where it is would just be another premise in explaining why they would expect more. I can agree with that.

  4. Dear Jorge, I find this post very interesting and a really good summary and comparison, thank you! One point in your analysis was a bit surprising for me. Youstate “As patent holders typically want to get to court as quickly aspossible, it is not clear why Samsung has proposed a longer period, and this may simply be a function of private signaling made by the Commission.” While I do not know the reasoning of Samsung, my experience ofpatent holder’s behavior in this industry is different. There might be patent holders with this behavior, but the normal practice in our industry so far is a very clear preference of negotiation instead of litigation! We normally prefer portfolio licensing, which is not something a court is very well suited to handle. This has been confirmed by several judges from different jurisdictions. Litigating your portfolio is also extremely expensive and is not at allthe preferred way.

    1. Dirk — you make a very good point. I should have been clearer. I meant that a patent holder who is currently engaged in patent ligitation wants to get to court as quickly as possible. So, for example, Motorola in its disputes with Apple and Microsoft sought injunctive relief quite early. Samsung did the same. I agree, however, that the more normal case is for patent holders to negotiate rather than litigate. Jorge

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