The European Commission is known to have a preference for announcing important antitrust announcements right before the Holiday Season or the general summer vacations. This way, the parties concerned and everyone else have the opportunity to digest the announcement at relatively slow times of the year, and the Commission does not have to deal with countless questions on the following days.
Yesterday European Commission Vice President Joaquín Almunia already indicated that the adoption of a Statement of Objections (SO) against Samsung over its pursuit of injunctions against Apple based on standard-essential patents (SEPs) was imminent. The announcement validated what I wrote two days earlier about the only plausible motivation for Samsung's withdrawal of its European SEP-based injunction requests against Apple being pressure from the EU.
At close of business today the Commission issued a press release announcing that Samsung has been served an SO, which is a preliminary ruling. This means we're past the stage of Samsung merely being suspected of abuse of a dominant market position (this theory is not based on Samsung's smartphone market share but on the leverage that SEPs give their owners), but that the Commission has preliminarily determined, after almost a year of formal investigations (which followed several months of preliminary ones), that Samsung has indeed committed abuse and should be sanctioned. Samsung gets to reply in writing and is entitled to a hearing prior to any sanctions, with a hearing typically taking place about a year after an SO. The final ruling could be different from the SO. Theoretically, Samsung could still come away unscathed.
In addition to the press release, the Commission also published a Q&A. The Commission previously explained its positions on FRAND licensing, such as in connection with the Google-Motorola merger review. Today's Q&A addresses a number of key questions. Several of them relate to the question of whether the Commission is intervening in a private patent dispute or changing the rules for patent enforcement, and the document makes it clear that there is generally no problem with intellectual property enforcement through injunctive relief but "the Commission takes the preliminary view that the seeking of an injunction for SEPs can constitute an abuse of a dominant position in the exceptional circumstances of this case - where the holder of a SEP has given a commitment to license these patents on FRAND terms and where the company against which an injunction is sought is willing to negotiate a FRAND licence".
What I just quoted also implies that Samsung's well-documented 2.4% royalty demand was considered excessive. Otherwise the Commission would expect Apple to meet that demand, and would not refer to Apple as a company that is "willing to negotiate a FRAND licence". One of the items in the Q&A says that the Commission does not "take a position on what a reasonable royalty rate is", but "in the specific circumstances of the case, the seeking of injunctions may unjustifiably distort FRAND licensing negotiations", which implies that Apple's refusal to pay 2.4% of the full handset price is considered a reasonable negotiating position and does not provide Samsung with an excuse to seek what it's really after: sales bans in order to have maximum leverage for comprehensive cross-licensing negotiations involving Apple's non-SEPs.
The Q&A contains a reaction to Samsung's hasty, unilateral withdrawal of its European SEP injunction requests that is less than lukewarm:
"The Commission takes note of Samsung's announcement. This does not alter the Commission's preliminary conclusions about the anti-competitive nature of Samsung's conduct thus far."
This could be paraphrased in four words: too little, too late.
Toward the end, the Commission mentions its "close contact with both the US Department of Justice and the US Federal Trade Commission on issues relating to SEPs" and the fact that it is "investigating a number of other cases relating to SEPs but cannot divulge details at this stage". In this context, the Q&A mentions ongoing formal investigations of Google subsidiary Motorola Mobility's SEP assertions. As I wrote yesterday, I believe Google (Motorola) will also receive an SO soon unless there's a comprehensive EU antitrust settlement that also involves Google's search engine issues. The fact that Motorola asks for "only" a 2.25% royalty (as compared to Samsung's 2.4%) won't be outcome-determinative, I'm sure.
If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.
Share with other professionals via LinkedIn:
