Global Patent War Between Samsung & Apple Continues On FRAND-ly Terms

Global Patent War Between Samsung & Apple Continues On FRAND-ly Terms

Sara Hlobil is a student of Dutch Law at the University of Amsterdam on exchange at Osgoode Hall Law School and is enrolled in Professor Ikechi Mgbeoji’s Patents class in Fall 2011. As part of the course requirements, students are asked to write a blog on a topic of their choice.

[IP Osgoode:  We have previously reported on this story in the IPilogue, but thought it worthwhile to include another perspective from this exchange student whose home institution is in the Netherlands, where some of the patent litigation is being fought.]

Known as ‘The titans of smartphone technology’, Samsung and Apple are currently engaged in a so-called global patent war. The two companies, as their moniker suggests, are both significant producers of smart phones with world-wide market shares of 17,5 (Samsung) and 18,5 (Apple) respectively as of July of 2011.

The phrase patent war denotes world-wide hostilities, which consisted of 22 lawsuits concerning infringements as of September 2011, and it is predicted that this number will only grow in the future. Because of their leading positions in the field of smart phones the judgments are predicted to be of great consequence to how countries deal with related patents, as well as how other companies will approach later, alleged infringements.

One interesting case with regards to this patent war is the recently decided case of Samsung vs. Apple in The Netherlands concerning the prohibition of the Samsung Galaxy smartphones S, S II and Ace. As the distribution of these smartphones to Europe flows largely through the Netherlands, this case was of pivotal nature. Apple claimed that Samsung was infringing on 3 of their patents. In the end the court ruled that Samsung was infringing on only one of the patents (EP 2.058.868) of Apple, and prohibited the sale of the Samsung Galaxy smartphones Galaxy S, S II and Ace from 13 October 2011 onwards. However, Samsung was able to prevent the ban of the sale of the smartphones in question by ‘a simple software’ update.

Some argue that this patent-battle is damaging the consumers, and are of the school of thought that patents should stimulate inventions, rather than holding back on readily available techniques and innovations. However, the quickness to litigate may effectively prevent other businesses from being innovative. In another recent Dutch court proceeding, Samsung filed a case against Apple stating that based on their infringement of Samsung-held patents, the iPhone and iPad should be banned. Before the case could proceed however, the judge pointed out that Samsung had neglected to comply with the FRAND terms. Samsung, as a holder of standards-essential patents, is obligated under these terms to make licenses available to others in the industry. FRAND, an acronym for Fair, Reasonable And Non-discriminatory is a commonly used criterion in Europe (source). The underlying goal behind FRAND is to prevent a monopoly (‘fair’), as the holder of the standards-essential patents has to offer the license for the use of the patents for an acceptable price (reasonable), equivalently to others (including competing companies such as Apple). In the USA similar norms apply, known as the RAND terms, although FRAND can be used as well, while their use in Canada seems to be more uncommon.

Furthermore, due to the use of these FRAND terms some argue that the power balance – the patentee was previously literally holding all the cards, -- is shifting, namely favorably towards the licensee. Other scholars argue that may not be the case, and that such a supposed shift may even be highly undesirable. In conclusion, the existence of the FRAND terms may prove to be significant to the outcomes of future cases between Apple and Samsung as 13 of Samsung’s strongest patents concerning 3G appear to fall under the FRAND-regime, while the same does not apply to Apple.