Samsung could be fined billions for trying to ban Apple products in Europe

Samsung is facing a potential fine of 10% of its revenue, or billions of British Pounds, for failing to license its standards-essential patents to Apple using fair and reasonable terms. When Apple refused to pay what it considered to be an unfair licensing fee, Samsung sought a sales ban on the Apple iPhone and Apple iPad in Europe,a request that has been rejected by the EC. The potential fine could be as high as 9.3 billion GBP or $15 billion USD based on Sammy's 2011 revenue of $148.9 billion. The EC Competition arm made a formal statement on Friday, objecting to Samsung's actions.

Google's wholly owned Motorola subsidiary is also being looked at by the EC for using its standards-essential patents for Wi-Fi and the H.264 video standard to seek a European sales ban on Microsoft's Xbox 360 and Windows Phone handsets. Both Samsung and Motorola could face fines in the U.S. where the FTC this month ruled that Motorola was using its FRAND patents to "hold up" Microsoft. Samsung is being investigated in the U.S.as the Justice Department is examining the Korean tech giant's actions toward Apple with its FRAND patents.


There is a big difference between the patents Apple has been trying to protect with its law suits, and the FRAND patents owned by Samsung and Motorola. Apple seeks to defend the illegal use of patents it owns which are not essential to a product such as the "pinch-to-zoom" gesture, and certain design patents that are in in Apple's IP portfolio. The patents being used by Samsung and Motorola are considered standards-essential which means that because they are essential to the production of a product, the owner of the patent must license it at a fair and reasonable basis to all who request it. If a price cannot be agreed on, both sides must accept the licensing fee determined by the court. Apple said it would pay Samsung for the rights to use the patents in question, but both parties could not agree on the price.

Just before the EC's Competition arm made its statement on Friday, Samsung withdrew its request for the European sales ban on the Apple iPhone and Apple iPad, but has continued its lawsuit against Apple for using Samsung's patent without licensing it. European commissioner for competition Joaquin Almunia says that allowing companies like Samsung that own FRAND patents to ban sales when licensing cannot be agreed on, is akin to a "hold-up" since these patents are essential for a company to operate in a particular market. The EC also decided that since Apple had offered to pay a licensing fee to use the patents, a ban on its products was not warranted''.The commission added, "Recourse to injunctions harms competition." Now it will be up to Samsung to reply after which the EC will announce a fine or take some other action.

source: Guardian