updated 08:07 pm EDT, Sun May 18, 2014
Demand for sales ban and high royalties over SEPs deemed illegal
Samsung, which has often used Standards-Essential Patents (SEPs) or patents purchased from other companies in an effort to mount some kind of countersuit in cases where Apple has accused the Galaxy maker of stealing Apple's technology, was found guilty again in a Japanese appeals court of illegally using SEPs as legal weapons and not honoring its obligation under Fair, Reasonable And Non-Discriminatory (FRAND) guidelines.
When the owner of a patent declares it to be "standards-essential" -- meaning a modern device such as a smartphone couldn't perform its primary function without it -- the standards governing body insists that the holder license the patent at reasonable rates relative to the cost of the device, and to do so for any "willing licensee." Many (but not all) of the legal issues that Motorola Mobility and Samsung have sued Apple and others over involve attempts to obtain disproportionally high royalities or sales bans based on "infringement" of the SEPs.
This particular legal strategy has not worked out well for either company, and both Google and Samsung have been forced to drop some lawsuits against Apple and Microsoft due to pressure from governments and regulatory agencies who considered the actions illegal or anti-competitive. The Tokyo Court of Appeals, in the latest case, ruled that Samsung was guilty of abusing its SEPs and using them as legal and anti-competitive weapons rather than licensing them fairly.
In the Japanese case, reports AppleInsider, Samsung was attempting to use its patents relating to the 3GPP mobile standard against Apple, asking for a sales injunction against the iPhone 4 and non-SEP royalty rates. The case was very similar to the lawsuit Samsung brought against Apple at the US International Trade Commission in 2013. The ITC, contradicting its own previous judgements, found in Samsung's favor -- but the sales injunction was overturned by the Obama administration, citing the anti-competitive nature of the ruling and other flaws.
Similarly, Samsung was forced to drop SEP-related sales ban requests against Apple and other competitors in Europe after the European Union Court of Justice launched an investigation into Samsung's abusive behavior. As with other courts, the Japanese appeals court ruled that sales injunctions are not a legal remedy to the use of SEPs by parties that are negotiating in good faith.
In the first judgement in the case, the court found that Samsung was not negotiating in good faith, that it was illegally trying to win a sales ban over an SEP, and that Samsung had not been honest in reporting that its patent was an essential part of the 3GPP standard until two years after it was adopted. The court of appeals in this new finding, which held two hearings and solicited public comment, upheld the original ruling.
As a result, the court said that Apple should pay Samsung a maximum amount for the use of the 3GPP-related patent of $95,000 -- in line with what Apple would have expected to pay for a FRAND-guided royalty. In a statement on the case, Apple Japan praised the court's ruling and thanked it for protecting "the integrity of the international patent system," which the iPhone maker said Samsung had "recklessly ignored" in lawsuits around the globe.
Thus far, the only country that has agreed with Samsung that a sales ban is an appropriate remedy for SEP infringement has been the company's "home court" of South Korea.