Wednesday, June 5, 2013

Samsung's win in ITC against Apple could adversely affect to Samsung

ITC finally determined that Apple’s products infringed Samsung’s 3G mobile standard essential patent (SEP) US7706348 (for an infringement analysis, please refer  ITC’s determination was rather surprise because its decision was contrary to recent decisions in the federal district courts banning injunctive relief for SEPs.

When Apple accused Samsung of infringement of its user interface software and design patents, Samsung counter-attacked utilizing its SEPs. SEPs encompass intellectual property rights (IPRs) for an essential aspect of standardized technologies. Usually, all the essential aspects of standardized technologies are specified in standard specifications. Thus, SEPs can be defined as patents that include one or more claims that are infringed by the implementation of certain standard specifications.  Consequently, Apple’s standard-compatible products that implement the standard specifications for mobile communications may infringe SEPs of Samsung. As incumbents in mobile communication industry and holders of strong mobile patent portfolios, SEPs were a natural choice for Samsung to counter-attack Apple, which is the computer industry incumbent, and thus, lacks in SEPs for mobile communications. The outcomes, however, were different than expected.

Standards are often developed and set-up through the standardization process by the standard setting organizations (SSOs). A majority of SSOs require that the members participating in the standardization process to agree to license their SEPs under fair, reasonable, and nondiscriminatory (FRAND) terms to any implementers of the standard.  The members’ agreements to license their SEPs under FRAND terms and conditions are usually called FRAND commitments.  In general, FRAND commitments are interpreted as enforceable contractual obligations between a member and an SSO.

In Apple, Inc. v. Motorola, Inc., No. 1:11-cv-08540 (N.D. Ill.), the court interpreted FRAND commitments such that the patentee “implicitly acknowledged that a royalty is an adequate compensation for a patent license.”  Thus the patentee of SEPs is not entitled to an injunctive relief because “the inadequacy of monetary relief” is required for the entitlement of the injunctive relief and FRAND royalty would provide the adequate remedy. In Microsoft, Co., v. Motorola, Inc., No. 2:10-cv-01823-JLR (W.D. WA), the court also ruled that FRAND royalty provide an adequate compensation because a patentee “has always been required to grant a license” to an implementer at FRAND royalty for its SEPs and the patentee has never irreparably harmed.

In Motorola v. Apple, Inv. No. 337-TA-745 (International Trade Commission), however, the Administrative Law Judge ruled that FRAND commitments do not preclude the exclusion order for SEPs in ITC.  ITC reasoned that its investigations to determine exclusion order banning importation of infringing product for violations of section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) have a wider scope because its interests include public interest in addition to private interest.  

In response to ITC’s ruling of availability of exclusion order for SEPs two US government agencies- Department of Justice (DOJ) and Patent & Trademark Office (PTO) -jointly announced that in some instances the remedy of an exclusion order may be inconsistent with the public interest.  The agencies insisted that SPEs cannot be used for block sales or imports of infringed products in cases that the patentee tries to exploit the SEPs’ market power through exclusion order for pressuring an implementer to accept unreasonably high royalty against its FREND commitments. The agencies reasoned that such activity and resulting exclusion order may be anti-competitive, and thus, harm consumers. Recently some leaders of the US Congress intellectual property and antitrust subcommittees submitted a letter to the ITC expressing similar concerns regarding exclusion order for SEPs.

Having understood the background and issues surrounding injunctive relief for SEPs, let’s think about the implications of this ITC’s determination to Samsung itself. Symbolically, this is a victory to Samsung because it was the only win in patent battles against Apple. This can show to consumers that Samsung is a innovator in mobile communications and Apple is a copycat. Economically, the gain to Samsung from this ITC’s decision will be limited because all the affected Apple’s products are old models, and thus, have diminishing market share. On this other hand it could adversely affect to Samsung.

This ITC’s decision affirms that FRAND commitments do not preclude the exclusion order for SEPs in ITC. So what to Samsung? Samsung itself could be subject to banning importation of its products – in this case its flagship smartphones, Galaxy S3 and S4. Samsung Galaxy S3 and S4 all support LTE communications. In other ITC pending cases Ericsson (337-TA-862) and InterDigital (337-TA-868) claimed that Samsung Galaxy S3 infringed their LTE SEPs (for details about LTE SEPs, please refer

Actually, TechIPm’s essentiality analysis confirms that three patents claimed in the ITC lawsuits are LTE SEPs:

US6445917 (Mobile station measurements with event-based reporting): this patent provides a perfect mapping between the claims at issue and the LTE standard specification. It relates to measurements in the process of handover operation as described in TS 36.331 Sec. 5 and TS 36.300 Sec. 10.1.3.

US8169992 (Uplink scrambling during random access): this patent relates to contention based random access procedure utilizing CRC scrambling for RNTI as described in TS 36.213 Sec. 6, TS 36.300 Sec. 10.1.5, TS 36.321 Sec. 5.1, and TS 36.212 Sec 5.3.

US7941151 (Method and system for providing channel assignment information used to support uplink and downlink channels): this patent relates to providing channel assignment information to support uplink and downlink transmissions utilizing the DCI and CRC scrambling for RNTI as described in TS 36.213 Sec. 7 & 8, TS 36.300 Sec. 11.1, and TS 36.212 Sec

As the market share of Galaxy S4 increases, it also could be included in the list of infringing products.

For more information, please contact Alex Lee at . 

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