updated 04:45 pm EST, Fri December 21, 2012
Step marks commencement of formal FRAND patent abuse investigation
Confirming reports from yesterday, the European Commission has in fact filed a formal Statement of Objections with Korean manufacturing giant Samsung. The filing is the latest step in the commission's investigation, which has been ongoing for over a year. After the notification, Samsung has an opportunity to reply, and request a hearing before a regulatory board.
The European Commission is an arm of the European Union responsible for proposing legislation, implementing judgements, and dealing with the day-to-day operation of the EU. Included in this mandate is the management of standards-essential patents by a body similar to the United States' International Trade Commission.
"Intellectual property rights are an important cornerstone of the single market. However, such rights should not be misused when they are essential to implement industry standards, which bring huge benefits to businesses and consumers alike," Competition Commissioner Joaquin Almunia said in statement regarding the filing.
Samsung has received the Statement of Objection and said in a statement that the company is "studying the statement and will firmly defend ourselves against any misconceived allegations. We will continue to fully cooperate with the Commission. Samsung is confident that in due course, the Commission will conclude that we have acted in compliance with EU competition laws."
Since 2006, the Commission has filed 12 Statement of Objections. Four ended in prohibition decisions and other enforcements, six resulted in binding commitments including licensing agreements, and two are still in progress. None have thus far resulted in exoneration of the target of the investigation. Of the four ending with enforcement, three resulted in fines exceeding €2 billion ($2.6 billion).
If the commission concludes that the Samsung is misusing its standards-essential patents to illicitly attempt sales embargoes on competitor's products, up to a 10 percent fine of the manufacturer's annual income could be assessed, which for Samsung would run into the billions of dollars. Most companies attempt to reach a settlement with the commission before a Statement of Objections is filed.