Samsung Reprimanded Over Use of Standards-Essential Patents for Import Ban

Friday February 7, 2014 3:30 PM PST by Jordan Golson
DOJ LogoSamsung has been reprimanded by the U.S. Justice Department for using its standards-essential or FRAND patents to seek an import ban against some older Apple products into the United States. The DoJ investigated the case after concerns were raised about companies unfairly wielding their standards-essential patents to hamper competition.

As part of their extensive legal back-and-forth over patents, Samsung and Apple went before the U.S. International Trade Commission which ordered an import ban on several older Apple products saying they had violated a particular standards-essential Samsung patent. Apple argued that Samsung was asking an unfair licensing fee, but the ITC ruled that the Samsung's claims could proceed nonetheless.

The Obama administration ended up vetoing the import ban, the first time since 1987 that the President of the United States had interfered with an ITC decision. A number of companies had lined up support for Apple, asking the President to veto the ban because the patent in question was deemed essential for 3G wireless functionality and Samsung was asking for inappropriately large licensing fees in violation of patent rules.

The DoJ said that it would not take action against Samsung because of the Presidential veto, but warned the firm against taking similar actions in the future:
In many cases, there is a risk that the patent holder could use the threat of an exclusion order to obtain licensing terms that are more onerous than would be justified by the value of the technology itself, effectively exploiting the market power obtained through the standards-setting process.
FRAND patents are supposed to allow companies to cross-license so-called "essential" patents at reasonable rates to avoid having companies with one necessary patent from extorting an entire industry with extreme licensing requirements.

Top Rated Comments

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Posted: 11 months ago

How is this different than Apple wanting to ban Samsung products?

Read the damn article.
Rating: 19 Votes
Posted: 11 months ago

How is this different than Apple wanting to ban Samsung products?

Research: standards-essential or FRAND patents, and see if Apple's request to ban was based on it. Short answer, no, it wasn't, it was blatant rip off which warranted it. Samsung had nothing, so they resort to these illegal methods, and got caught.
Rating: 16 Votes
Posted: 11 months ago
Somehow these Samsung cats always seem to escape from any real consequences for their actions.
Rating: 12 Votes
Posted: 11 months ago
Because you're confusing standards-essential patents with non-standards-essential patents. Hence FRAND. Best do some research...
Rating: 9 Votes
Posted: 11 months ago
I'm sure Samsung has learned their lesson and won't do it again. :rolleyes:
Rating: 5 Votes
Posted: 11 months ago
Jesus, just how many times do they have to be "reprimanded" over this? How about some fines?
Rating: 5 Votes
Posted: 11 months ago
My favourite Samsung patent claim "Wireless video transmission & reception to and from a portable device."

I was thinking I might be able to patent "breathing air by a human" as well. :p
Rating: 4 Votes
Posted: 11 months ago

Screw all these idiotic patent wars. More competition is good in this industry. We don't want one player to own it all.

Except when it comes to Google, then people seem perfectly fine with one player owning it all.
Rating: 4 Votes
Posted: 11 months ago
The coverage and debate on this topic is often too simplistic.

For one thing, Samsung did nothing illegal requesting the ITC import ban over FRAND patents, otherwise the request would not even have been accepted. It has been a standard legal move for decades. It's only in the past year that the DOJ began to push for not allowing them.

The main article also left out a critical beginning phrase from the DOJ statement:

"While there are certain circumstances where an exclusion order as a remedy for infringement of such patents could be appropriate, in many cases there is a risk ..."

What are the "certain circumstances"? Well, when the US Trade Representative overruled the ITC ban, he noted that a failure to negotiate was a valid reason for an import ban request:

Attachment 460065

And in fact, a lack of Apple good faith negotiation is what the ITC used as its main basis for the import ban:

Attachment 460064

Thus the ITC import ban decision was actually in line with the DOJ's public stance. So why overturn their ruling? Was it a legal turf war between the DOJ and ITC? A Presidential fear of iPhone buyer backlash? That's for history to decide.

One good outcome of all this, is that the DOJ has come up with clearer guidelines for the future. In particular, these rules spell out time limits. If a potential licensee fails to negotiate within a certain time period, the patent holder can then ask for arbitrated rates. If the licensee still fails to pay those, then an injunction is allowed.

If used, such time limits and forced arbitration will hopefully prevent long, drawn out court battles, and be fairer to all parties.
Rating: 4 Votes
Posted: 11 months ago

The difference is that Samsung agreed to and is legally bound by the terms of FRAND for the patents in question.

Yes, they are. However, the FRAND terms they signed are not as complicated as people think. Here are the actual ETSI rules for licensing:

Attachment 460091

That's it. The rates and other contract details are left up to the patent holder. (This works out, because if the rates are too high, the other members will find another method to use.)

Note that the rules explicitly allow reciprocal licensing to be a basis for rates. It's extremely common to do this. As a major example, years ago when cellular first began, Motorola... who owned over half the SEPs at the time... had no cash license rate at all. They only accepted full cross-licensing.

More importantly in this case, Apple is also a member of ETSI, and is bound by the same rules.

In fact, a major reason why the ITC imposed the ban was because Apple failed to follow the same set of rules that they demanded Samsung follow.

(One of the rules was that Apple should've at least gone to ETSI for help finding arbitration. But they did not.)
Rating: 3 Votes

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