Apple accuses Samsung of violating RAND obligations; Samsung doesn’t quite deny it

Wed, Aug 31, 2011

Legal, News

Samsung last Tuesday filed a motion seeking to dismiss Apple’s counterclaims. Since this case involves so many different motions, here’s a super quick recap to get you up to speed.

Apple first sued Samsung in April for copying the look and feel of iOS. Samsung fired back with its own lawsuit claiming that Apple’s iOS products infringe on Samsung patents. Apple then filed a motion which claims, in part, that the patents Samsung asserts against Apple should be dismissed and at the very least dealt with on a separate track. And now Samsung is asking the court to, you guessed it, dismiss Apple’s motion to have Samsung’s claims dismissed.

Got that? Okay, let’s dive in.

Apple argues that 7 of the 12 patents asserted by Samsung are essential parts of technology standards as laid out by Standards Setting Organizations (SSO).

Samsung has improperly used patents that it claims to be essential to the Universal Mobile Telecommunications Standard (‘UMTS’) in an attempt to disadvantage Apple.

Samsung has abusively asserted patents in this action that it claims are standards-essential to further its strategy of copying Apple products. Apple has repeatedly demanded that Samsung put a halt to its persistent pattern of copying. In retaliation, and to deflect from its own copying and to pressure Apple to allow Samsung to continue to imitate, Samsung asserted counterclaims alleging that Apple infringes Samsung patents that are purportedly essential to the UMTS standard.

In other words, Apple argues that Samsung is suing Apple over patents that should otherwise be made available for licensing on reasonable and non-discrimanatory terms.

After Apple informally sought and eventually sued to halt Samsung’s ongoing pattern of imitation and infringement regarding the iPhone and iPad, Samsung retaliated by bringing litigation and then counterclaims seeking to enjoin Apple from selling products that comply with the UMTS telecommunications standard. Samsung has done so notwithstanding that Apple is licensed or, in the alternative, has the irrevocable right to a FRAND license to Samsung’s Declared-Essential Patents by virtue of Samsung’s commitment to license those patents on FRAND terms.

Thus, Samsung is seeking, unlawfully and in breach of its FRAND commitments, to leverage the monopoly power it wrongly obtained in the Input Technologies Markets (defined below) from its untimely disclosures and/or its false FRAND commitments to ETSI in a discriminatory manner to try to coerce Apple into tolerating Samsung’s pattern of repeatedly infringing Apple’s designs, trademarks and non standards-essential patents or licensing to Samsung its proprietary technology (to which Samsung is not entitled). Left unaddressed, this conduct will chill innovation, quality, and price competition for end products that comply with the UMTS standard by allowing Samsung to free ride on Apple’s massive investments in innovation and product development rather than invest in its own distinctive products that consumers desire.

Again, Samsung’s reply to Apple’s initial lawsuit included 12 patents it asserts Apple’s iOS products infringe upon. These patents all relate to mobile devices and encompass technologies such as UMTS, user interface design, and W-CDMA cellular communications.

And as a quick primer, here’s why SSOs exist, how they work, and why they’re important.

Technologies need to be standardized so that varying devices call all communicate with each other. For example, there is a CD-ROM standard that companies can adhere to ensure that their devices can play any CD-ROM disc. Without that standardization, we’d live in a fragmented hell.

That said, if a company wants its technology included in a standard, it must make the corresponding patents that cover said technology available for third party licensing at a reasonable and non-discrimantory price (RAND). This prevents a standard from being built upon a patented technology that the owning company can then unfairly keep from competitors.

To that end, some of the patents Samsung is asserting against Apple are essential parts of standards such as UMTS meaning that Samsung is obliged to license them to Apple at a fair price, something Apple claims Samsung has refused to do.

Further, Apple claims that Samsung did not disclose all of the patents it owns that contribute to the standard. Specifically, Apple claims that Samsung did not tell the European Telecommunications Standards Institute (ETSI).

In its brief, Samsung passionately argues that Apple’s brief lacks a sufficient basis on which to rest its claims. Samsung cites case law which holds that a plaintiff must make a “showing” and not merely a blanket assertion to be entitled to relief. In short, Samsung asserts that Apple has failed to do so and therefore asks the court to strike down Apple’s motion to dismiss as an insufficient pleading.

As for Apple’s claims that Samsung failed to disclose owned patents essential to technological standards, Samsung scoffs at Apple’s allegation that they committed fraud.

Samsung articulates that in claiming fraud, Apple is subject to a heightened pleading requirement and that it must “state with particularity the circumstances constituting fraud.”

Citing case law, Samsung writes, “The party alleging fraud must specifically plead “the ‘who, what, when, where, and how’ that would suggest fraud.”

But that’s the thing with fraud, the details are hidden by nature. All Apple has to go on are the “neutral facts” that Samsung claims are insufficient to establish fraud.

But Samsung is resolute and argues that Apple must provide the time, place, and content of any alleged misrepresentations and “the identities of the parties to the misrepresentation.”

Specifically, Apple fails to identify, for each asserted standards-essential patent, who from Samsung should have, but did not, disclose the patent, or made an allegedly false FRAND commitment; or when the patents should have been disclosed, or when the allegedly false FRAND commitment was made. Because Apple’s counterclaim does not satisfy the heightened pleading requirements of Rule 9(b), it must be dismissed.

But Apple does mention the who and where in their counterclaim. Apple’s own motion on the matter reads:

In fact, in some cases, a named inventor on the application for the concealed patent or other Samsung personnel participated in the relevant working group, championed Samsung’s technical proposal, and affirmatively steered the SSO to standardize technology that Samsung now claims to be covered by its patents. Samsung disclosed certain of its IPR only after the relevant standard or standard specification was finalized.

Apple also argued that Samsung didn’t follow ETSI protocol and isn’t honoring its RAND obligations:

Time and again, however, Samsung deliberately and deceptively failed to disclose its purported intellectual property rights (‘IPR’) to ETSI before its members decided to incorporate into the standard technologies purportedly covered by Samsung’s patents, in violation of the ETSI’s IPR policy. Furthermore, Samsung committed to license its Declared-Essential Patents on fair, reasonable, and non discriminatory (‘FRAND’) terms. In breach of those commitments, Samsung now seeks to enjoin Apple from selling its end products because those products contain UMTS chipsets – which Apples purchases from third parties – that are allegedly covered by Samsung’s Declared-Essential Patents.”

The third parties here is in reference to Qualcomm, which Apple says its covered under.

Countering that, Samsung argues that Apple’s brief doesn’t present any facts which demonstrate anti-competitive behavior.

But oddly enough, Samsung all the while does not ever deny that the patents it asserts against Apple are essential parts of pertinent standards. It also doesn’t deny that it failed to inform the SSO that the patents in question were essential components of a technological standard.

Rather, Samsung takes the position that courts have historically not found companies liable “based solely on deception or misrepresentation before a standard-setting body.”

It really seems that Samsung here is conceding that what Apple is arguing may be true, but that even so, Samsung’s actions do not rise to the level of wrongdoing. Indeed, Samsung also cites a circuit court ruling where it claims that Apple needs to show that the SSO that was duped and that it would have included another technology into the standard “but for the defendant’s misrepresentation.”

Translation? Yeah, maybe we weren’t forthright with the SSO, but they were going to choose our patented technology anyways.


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3 Comments For This Post

  1. Bazz Says:

    Ah to be a technology patent lawyer!

  2. yet another steve Says:

    This is going to make interesting business history.

    Samsung is leaving no stone unturned for its right to skin Android to make it look like iOS and to make similar packaging. I love iOS and Apple to death but are they that special.

    And outside of the legal story if I’m Apple I am absolutely positively looking to reduce my supplier business with Samsung as much as I can (and imagine if Samsung actually wins one of these things.) And I’ve got $70+ billion in the bank to invest in alternate suppliers.

    That’s a lot of war just for 4 x 4 icons on the home screen plus a shelf at 4 on the bottom.

    On the other hand they’re gaining a lot of share… maybe Apple’s design really is that important.

  3. Mr Geevs Says:

    Ahh, Another reason NOT TO BUY Samsung products.

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