Samsung’s patent war backfires into antitrust investigation

Posted on : 2011-11-07 15:00 KST Modified on : 2019-10-19 20:29 KST
Following more than 20 patent suits, Samsung now faces fines of up to 10% of global sales for antitrust violations
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By Koo Bon-kwon, Senior Staff writer

A sharp spear thrown to bring down an enemy has instead turned into a boomerang that is attacking its owner. Such is the situation faced by Samsung Electronics, currently locked in an intense patent legal battle against U.S. firm Apple.

The European Commission (EC) stated on Oct. 4, “We have requested information on standard patents for mobile communications from both Samsung Electronics and Apple. This is a standard procedure in antitrust investigations in order to determine whether an investigation should be conducted.”

Although the commission also requested a date from Apple, this was only for reference purposes. Observers say the key target was Samsung Electronics, which possesses third-generation communication standards patents.

This decision by the EC serves as notice that the battle between Samsung Electronics and Apple has entered a new phase in earnest. Samsung, which has filed more than 20 patent suits against Apple in 10 states around the world, is now being scrutinized on yet another front: the question of whether or not it has violated antitrust laws. If an antitrust investigation begins in earnest, Samsung must prove to the European Union, separately from its cases against Apple, that it has not obstructed competition.

Until now, the EC has strictly regulated action obstructing competition by firms. Unlike in the United States, the EC has charged companies such as Microsoft and Intel huge fines, making them cease practices such as tie-in sales, and is currently investigating Google. If violation of antitrust laws is confirmed, firms may face fines of up to 10% of their global sales.

Samsung’s investigation for antitrust law violation by the EU has brought accusations from some that its strategy of concentrating on standard patent-based counterattacks against Apple, which claims Samsung is in violation of design patents, is an “error of judgment.” German patent expert Florian Mueller, who first made it known that an investigation was underway on his blog “FOSS Patents,” said that Samsung Electronics‘ use of excessive methods in order to have sales of Apple products banned had ended up bringing about the intervention of antitrust law, and that this investigation was very important to their legal cases.

In fact, Samsung Electronics’ strategy of placing hope in standard patents started going wrong around the middle of last month. The first signal of this was on Oct. 14, when a Dutch court in The Hague rejected Samsung Electronics‘ application for an injunction banning the sales of Apple’s iPhone and iPad. At the time, the court asserted that Samsung‘s communications patents had become industry standards, and anybody had the right to use such standards in a fair manner. Effectively, Samsung’s strategy of brandishing standard patents as a weapon ultimately provided the pretext for an antitrust investigation.

“In the IT sector, patents carry great strength and product lifetimes are short, so most cases are ended through negotiation,” said patent attorney Jeong U-seong, who recently published a book on “patent wars.” “[Samsung Electronics] should have responded forcefully when Apple first attacked, but it failed to do so, failed to take revenge in the form of getting an injunction banning sales, and made fatal moves such as asserting communications standards.” .

It appears the EU‘s investigation will concentrate on whether Samsung has provided standard patents in a “fair, reasonable and nondiscriminatory” (FRAND) manner. “The EU investigation is a preliminary one with no binding force,” said one Samsung Electronics official. “Samsung holds more than 100,000 patents, but has always refrained from obstructing industrial competition, in ways such as not filing suits first but holding on to the patents for defensive purposes.”

  

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