updated 04:08 pm EST, Sat March 8, 2014
Case shrinks dramatically as Apple, Samsung agree to avoid SEP disputes
The second patent trial between Apple and Samsung, scheduled to start on March 31, took a dramatic turn late on Friday as the two companies filed a stipulation with the court dropping some of the claims and counter-claims to be debated in the second trial. Samsung, perhaps fearing further investigations over its improper use of standards-essential patents (SEPs) as legal weapons and bargaining tools, has agreed to drop all SEP claims from the case, leaving it with only two claims on two patents, down from its original five.
In all of the legal matters between the two giant electronics firms, there are two types of patents in dispute: SEPs, which are a class of patents that are vital to create modern devices (for example, patents covering how 3G or LTE works), and non-SEPs -- unique patents that others do not need to emulate in order to create working devices. Apple has never resorted to litigation against companies infringing on its SEPs, preferring to negotiate agreements using the FRAND (Fair, Reasonable and Non-Discriminatory) principle, which means it will offer low-cost licenses to all competitors, even direct rivals like Samsung.
In many of the lawsuits that involve mobile device technology companies, the crux of many of the cases has been that one company -- mostly Samsung or Google-owned Motorola -- will refuse to negotiate its SEPs by FRAND guidelines it committed to when declaring certain patents standards-essential, instead demanding a much higher licensing rate or demanding licenses for non-SEPs with an SEP agreement as a condition, both of which are violations of the FRAND commitments. The entity then uses the threat of expensive legal action as a bargaining chip in negotiations, or demands that the International Trade Commission (ITC) impose a sales ban on the products alleged to be infringing. Despite its own recommendations to the contrary, the ITC will sometimes go along with sales injunctions against products that have tried but failed to negotiate a license over SEPs -- this indeed happened to Apple last year in a case brought by Samsung, though the sales ban was ultimately overturned by the Obama administration for its faulty legal basis.
Likewise, the infringing party can countersue, or attempt to get the patent invalidated through the ITC or the courts. In its history of fights against Apple, Samsung has pursued both lines of defense, but has been mostly unsuccessful when using legal action over SEPs. Apart from one win (the subsequently-overturned ruling) from the ITC, Samsung has only been able to win on SEP litigation in its home country of South Korea, where the courts recently ruled that, contrary to international rules, Samsung could continue to litigate SEPs. Apple, for its part, has only ever resorted to litigation over the infringement of non-SE patents.
Under the deal filed late Friday, Apple has agreed to drop its counterclaims on those SEPs and FRAND counterclaims, reports patent analyst Florian Mueller, but Samsung is agreeing to dismiss its SEP claims without prejudice -- meaning it could bring those matters up again in some future litigation. Samsung has been under investigation by the European Union over its abuse of FRAND guidelines, and was recently being investigated by the US Department of Justice, though the agency later strangely closed the investigation with a promise to continue "monitoring" Samsung for FRAND abuse.
It may be that promise that moved Samsung to dispose of its SEP claims in the new trial, or perhaps it was influenced by a review of its track record in the US on such matters. In pre-trial hearings, Judge Lucy Koh has already found Samsung guilty of copying one Apple patent (which Apple will be allowed to mention in court) and had previously thrown out one of Samsung's SEP patents as invalid based on prior art. During the first patent trial in the US (which covered a different set of patents), the jury invalidated all of Samsung's claims (most of which were SEPs) based on prior art, and awarded Samsung nothing while finding for Apple's claims, to the tune of nearly $1 billion in damages.
With the upcoming trial now focused only on charges by Apple that Samsung infringed on its non-SE patents and Samsung's now two-patent defensive counter-claims that Apple infringed on non-SEP Samsung IP, the work ahead for Judge Koh and the jury is considerably lessened. The trial is scheduled to last 14 days, with a ruling likely to come shortly afterwards. Samsung on Friday also filed for an appeal of the first trial's verdict, which will likely be scheduled for some time next year at the earliest.