Bloomberg News

Samsung Shuns Patent Injunctions to End EU Antitrust Probe

October 17, 2013

Samsung Electronics Co., the world’s biggest smartphone maker, pledged to avoid legal injunctions in Europe for key phone patents as it sought to end a European Union antitrust probe triggered by a dispute with Apple Inc. (AAPL:US)

Samsung won’t seek injunctions to block sales of smartphones and tablets using its standard-essential patents for five years against companies willing to seek fair licensing terms, according to proposals outlined by the European Commission in a statement today.

“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,” EU Competition Commissioner Joaquin Almunia said in the statement. “If we reach a good solution in this case, it will bring clarity to the industry.”

The EU is cracking down on patent abuses as Google Inc. (GOOG:US)’s Motorola Mobility unit, Microsoft Corp. (MSFT:US), Apple and Samsung trade victories in divergent court rulings across the world on intellectual property. Almunia has said he’s targeting “rules of the game” to prevent companies from unfairly leveraging their inventions to thwart rivals.

The proposed commitments “will not affect Samsung’s distribution practices or production capabilities in any way,” Rhee So-eui, a company spokeswoman in Seoul, said by e-mail.

‘Balanced Approach’

“Samsung is committed to fair and reasonable licensing of our technologies and believes a balanced approach to patent licensing will promote innovations to the benefit of consumers and the industry,” she said. “We are confident that the proposed commitments are a constructive reflection of this.”

Seeking an injunction on a patent used in a standard agreed by an industry may break EU antitrust rules if the patent-holder previously promised to license the patents on fair, reasonable and non-discriminatory terms and a licensee is willing to pay a fair fee, the commission said in its statement.

Almunia said forthcoming decisions on other standards cases will give more guidance, including two involving Motorola Mobility (MMI:US) Holdings. “There are some other elements that will come in the next ones,” he told reporters in Brussels today.

Samsung must negotiate licenses for up to 12 months and agree to terms set by a court or an arbitrator if no agreement can be reached. Samsung and a potential licensee will have to accept arbitration if they can’t agree on a court or arbitrator.

Reduced Choice

Consumers are harmed by increased prices, reduced product choice and less innovation when companies seek royalty rates or broad cross-licenses that a competitor won’t agree to, the EU said.

If Samsung’s rivals and customers agree that the company’s offer allays antitrust concerns, regulators can make the offer binding on Samsung and end the EU probe as well as any threat of a fine. Samsung’s commitments would be monitored by an independent trustee. Samsung would risk fines of as much as 10 percent of yearly revenue if it breaks its pledge.

The EU began probing Samsung last year on injunctions it took in 2011 to block sales of Apple products using Samsung’s 3G UMTS patents. Regulators say Apple was willing to license the patents on fair terms and Samsung’s injunctions violated competition rules. Samsung withdraw injunctions in December, before the EU sent it an antitrust complaint.

In a separate probe by the EU, Google’s Motorola Mobility unit responded at an oral hearing on Sept. 30 to EU accusations that it used key technology patents to hinder Apple.

The commission in May sent a formal complaint to Motorola Mobility saying it suspects the company is abusing its dominant position by “seeking and enforcing” injunctions against Apple in Germany based on standard-essential patents.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net

To contact the editor responsible for this story: Peter Chapman at pchapman10@bloomberg.net


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