Violators of competition laws often get away with a slap on the wrist. This has been repeatedly the case with respect to the abuse of FRAND-pledged standard-essential patents (SEPs). Years ago the European Commission missed out on major opportunities to set the FRAND record straight by letting alleged offenders off the hook all too easily. This leniency proved to have been a strategic mistake when SEP holders like Samsung and Motorola Mobility tried to get Apple's gadgets banned in key European markets and Motorola additionally attempted the same against Windows and the Xbox gaming console. Those were symptoms of a lack of clear guidance from Brussels.
The EU has still made more of an effort in this area than its U.S. counterparts (the DoJ and the FTC). The FTC's consent decree in the Motorola case has not stopped Google from pursuing SEP-basd injunctive relief at least against Apple. Two FRAND-related Motorola-Apple cases are pending before the United States Court of Appeals for the Federal Circuit, and U.S. bans of the iPhone and the iPad are still a possibility.
Last week there were three statements on FRAND antitrust cases by EU and U.S. regulators that I'd now like to comment on:
- On Friday, the United States Department of Justice (DoJ) announced its decision to close its investigation of Samsung's use of standard-essential patents against Apple. The DoJ said it would continue to monitor further developments in this area but felt that it was no longer necessary to pursue this case in light of last summer's veto of a U.S. import ban sought by Samsung. I can easily see the political reasoning here: the veto was (even though incorrectly in my view) portrayed by some as an act of protectionism, and if the U.S. government had now additionally imposed fines on Samsung for what it attempted to do, those voices would only have become louder. However, the timing of this announcement is odd. The DoJ could have done so shortly after the veto. But now we're very close to a California trial (scheduled to stat on March 31) in which Samsung will assert two SEPs against Apple (and two non-SEPs, which don't raise antitrust issues. Samsung's prayers for relief in that litigation include a request for an injunction.
I mentioned in my commentary on Judge Koh's Friday decision to deny a retrial but to criticize Apple's counsel's national-interest type of argument to a jury in November that the court in California has always been, and continues to be, very concerned about not appearing to favor Apple. That makes sense and is a good thing per se, but only within reason. Too much of this can actually result in the opposite of a level playing field.
Also on Friday, European Commission Vice President Joaquín Almunia said that the EU feels Samsung's amended proposal for a settlement of the antitrust matter appear acceptable, though there will be a market test giving stakeholders a chance to comment. I had commented very negatively on Samsung's initial proposal. In December it became known that the Commission saw room, or even a need, for improvement. I don't know anything about Samsung's new proposal and will comment on it after I've seen it.
The EU-Google-Motorola antitrust situation is complex and potentially confusing. There are four different antitrust matters in the EU involving Google. Last week Mr. Almunia said the EU would settle the antitrust matter relating to how Google's search engine treats competitors. However, this is separate from a preliminary investigation of Google's Android licensing practices and two parallel investigations of how Google's Motorola Mobility used and continues to use SEPs against Apple and Microsoft in Europe. In the Apple-related case, a Statement of Objections (SO), a preliminary antitrust decision, came down last May. I'm not aware of an SO over Motorola's attempt to get certain Microsoft technologies banned in Europe. Last week it was said that a "prohibition decision" would issue in the Apple case. For now I don't know what to make of this -- and I mean this nonjudgmentally at this stage.
In my observation, the strategies of aggressive SEP holders increasingly shift to the pursuit of damages and supra-FRAND royalties. Billion-dollar claims can be a similar threat to companies as injunction bids. I believe EU and U.S. antitrust regulators should make clear that an overbroad royalty base, for example, is also anticompetitive. It's obviously difficult for competition regulators to get into the patent valuation business, but some demands are so outrageous that they could, if they politically wanted to do this, find some demands to have been far outside the FRAND ballpark and provide guidance on such issues as the proper royalty base. Unreasonable demands that alleged SEP infringers sign far-reaching non-disclosure agreements prohibiting them from coordination with their chipset makers are another issue that has nothing to do with injunctions but should nevertheless have regulators concerned. If U.S. and EU authorities continue to turn a blind eye to those issues, it could very well happen that future landmark decisions will increasingly come from Asia, particularly India.
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