Bloomberg News

Samsung Sent EU Antitrust Complaint Over Apple Injunctions

December 21, 2012

Samsung Electronics Co. (005930), the world’s biggest maker of smartphones, was sent an antitrust complaint from the European Union for allegedly abusing its dominant market position in legal disputes with Apple Inc. (AAPL:US)

Samsung’s use of court injunctions seeking to block Apple’s products in relation to so-called standard-essential patents violates antitrust rules in the 27-nation bloc, the European Commission said today in an e-mailed statement. Samsung said earlier this week it would drop such actions in Europe.

Intellectual property rights “should not be misused when they are essential to implement industry standards, which bring huge benefits to businesses and consumers alike,” EU Competition Commissioner Joaquin Almunia said in the statement.

Samsung and Apple have traded victories in their patent disputes fought over four continents since Apple, based in Cupertino, California, accused Asia’s biggest electronics maker of “slavishly copying” its devices. The companies, competing for dominance of the global smartphone market estimated by Bloomberg Industries at $219 billion last year, are fighting patent battles even as Apple remains Samsung’s biggest customer.

While such injunctions can generally be challenged fairly in court, Samsung may be violating EU rules by seeking them in relation to essential patents when Apple has “shown itself to be willing to negotiate,” the Brussels-based commission said in the statement. Almunia signaled yesterday that he would send the complaint by the end of this year.

‘Misconceived Allegations’

Samsung said it has been willing to license its patents on fair terms and sought a ban on sales “due to Apple’s unwillingness to enter into good-faith negotiations and to defend ourselves against Apple, which sued us first.”

“We are studying the statement and will firmly defend ourselves against any misconceived allegations,” Samsung, based in Suwon, South Korea, said in an e-mailed statement. “We will continue to fully cooperate with the commission.

The company is ‘‘confident that in due course the commission will conclude that we have acted in compliance with European Union competition laws.’’

In cases like this, companies are given a chance to respond and the regulator may negotiate steps the company can take to allay concerns. If an agreement isn’t reached, there may be a hearing before the EU makes a final decision or issues fines.

Samsung failed to deflect the EU complaint when it announced on Dec. 18 it plans to withdraw injunctions in Europe that seek to block sales of Apple products.

Almunia said yesterday that such a move wasn’t enough to prevent regulators from sending a so-called statement of objections to the company, a formal charge sheet that may precede antitrust fines of as much as 10 percent of yearly sales.

Key Patents

The EU is probing whether Samsung violated agreements to license key patents to other mobile-phone manufacturers on fair terms.

Under phone industry agreements on standards, companies owning the rights to essential technology must usually license it to competitors on fair, reasonable and non-discriminatory terms, known as FRAND.

When the disputed mobile-phone technology was adopted in Europe as a standard, Samsung ‘‘gave a commitment that it would license the patents which it had declared essential to the standard on FRAND terms,” the commission said today.

Samsung began seeking injunctions against Apple in courts in EU member countries in 2011, based on alleged infringement of patents for 3G technology, according to the Commission’s statement.

Alan Hely, a spokesman for Apple in London, declined to comment on the EU complaint against Samsung.

‘Thermonuclear War’

Samsung is withdrawing injunction requests against Apple in Germany, U.K., France, Italy and Netherlands involving key patents it holds for wireless communications, citing “the interest of protecting consumer choice.” The company will continue litigation that seeks damages in intellectual property disputes.

Google Inc.’s (GOOG:US) Motorola Mobility Holdings Inc. is also being investigated by the EU for seeking and enforcing injunctions against Apple’s iPhone and iPad and Microsoft’s Windows operating system and Xbox gaming console, following complaints by the two companies.

The patent disputes began when Samsung released its Galaxy smartphones in 2010. Apple co-founder Steve Jobs vowed before his death last year to wage “thermonuclear war” to prove that phones run on Google Inc.’s Android operating system copy the iPhone.

To contact the reporters on this story: Aoife White in Brussels at awhite62@bloomberg.net; Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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