Sunday, January 27, 2013

Standard Essential Patent Strategy: Lesson from Samsung’s ITC Litigation against Apple

Generally, it is not presumed that holding a patent means its owners have market power in the context of antitrust violation analysis (35 U.S.C. Section 271(d); Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006)). However, a standard locks in a specific industry because the products should be compatible with the standard specifications. Thus, holding a standard essential patent can be considered as having a market power because all products compatible with the standard specifications should infringe the standard essential patents.

To avoid the antitrust issue with the standard essential patents, therefore, a patentee should license the patents on ‘fair, reasonable and non-discriminatory (FRAND)’ terms. Furthermore, a patentee should be careful when he or she tries to obtain an injunction from courts or ITC for enjoining potential infringers of the standard essential patents. For example, the European Commission recently announced its preliminary view that Samsung's seeking of injunctive relief basis on its 3G standard essential patents can be considered as abuse of exclusive IPRs prohibited by EU anti-competition laws.

In recent Samsung’s ITC case, Samsung sued Apple for 3G iPhones’ infringement of Samsung’s 3G standard essential patents.  Samsung insisted that, because Apple’s iPhones use Intel’s standard compatible baseband modem chip, Apple’s iPhones should infringe Samsung’s 3G standard essential patents. Considering the fact, however, that injunction is the only relief for ITC litigation it would be better bring a suit in a district court exploiting standard essential patents’ easy-of -proof characteristic (patentee should demonstrate to a preponderate degree that the accused products meet every limitations of the claim at issue) and the monetary damage options.

Furthermore, a patent used by Samsung in the ITC litigation turned out to be not a 3G standard essential patent: it was proposed and accepted during the standardization process, but never included in the final standard specifications. This fact shows the importance of alliance in standardization and IP creation processes.  Samsung should have checked the status of proposal during the standardization process and/or the essentiality of related patents afterward for amending the relevant claims during the patent prosecution process.

For more information, please contact Alex Lee at .

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