Europe investigates Samsung in Apple iPhone wars

By Jonny Evans

An Apple [AAPL] court filing in California suggests the European Commission has launched an anti-trust investigation against Samsung [005930.KS] to investigate the company's abuse of FRAND patents in its war against Apple. (UPDATE: Reports that both Apple and Samsung are being checked aren't quite true, it is Samsung that faces the tough questions.)

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Apple v Samsung stakes get higher

This is yet another blow for Samsung, underlining what seems to be an emerging judicial opinion that more or less supports Apple's allegations against its frenemy in court jurisdictions worldwide.

Foss Patents tells us that Samsung's attempts to "shut down Apple products" using patents that are essential to the 3G industry standard have given rise to a an antitrust investigation," by the EC.

FRAND (fair, reasonable and non-discriminatory) licensing commitments are granted by companies as part of their work on industry standards. Samsung has been attempting to use its ownership of some standard-issue 3G patents as weapons in its war with Apple.

Be reasonable

What's important about this is that in doing this, Samsung seems to say only firms it approves of can use the 3G standard. Standards can't work in such a way.

"In my view, FRAND patent holders can ask for reasonable compensation, but they are not allowed to overcharge or to shut down products as long as an alleged infringer is willing to take a license on FRAND terms (if there actually is an infringement of valid patents). That view was also shared by a judge in The Hague, Netherlands, who dismissed a Samsung request for a preliminary injunction and held that Samsung had failed to honor its FRAND licensing commitment," writes Foss patents.

FRAND licensed patents are technologies which have been "declared essential" to open industry standards such as 3G and WiFi. Any attempt to use these patents against a competitor can easily be seen as anti-competitive.

It looks like regulators are watching the court discussions, as a recent court filing by Apple in California states:

"Samsung's efforts to coerce Apple into tolerating Samsung's imitation have not been limited to the counterclaims here [in California]. Samsung has launched an aggressive, worldwide campaign to enjoin Apple from allegedly practicing Samsung's patents. Samsung has sued Apple for infringement and injunctions in no fewer than eight countries outside the United States. Indeed, Samsung's litigation campaign and other conduct related to its Declared-Essential Patents is so egregious that the European Commission recently has opened an investigation to determine whether Samsung's behavior violates EU competition laws. Apple brings these Counterclaims In Reply to halt Samsung's abuse and protect consumers, the wireless telecommunications industry, and Apple from further injury."

Is Samsung in trouble?

An investigation hasn't yet been announced by the European Commission's Directorate-General for Competition, but Apple's filing suggests that should such an event transpire it could impact Samsung's cases in multiple countries and see the Galaxy-maker hit with large fines and other punitive and restorative measures.

The 3G standard was developed by ETSI, the European Telecommunications Standards Institute. Samsung's attempt to use its ownership of FRAND standard technologies in its war with Apple could be construed as running contrary to the way standards work.

Further, the report explains, the patents Apple wields in its battle with Samsung have been developed extrinsic to standards-setting bodies, meaning the firm, "owns valuable patents that are not subject to FRAND licensing commitments". Or, in plain English, the patents it is protecting have never been offered as open industry standards, and are proprietary, and therefore not open to use.

Who is David? Who is Goliath

My take? The steady unraveling of Samsung's case in courts worldwide should surely be seen as some evidence that Apple's position in the iPhone/iPad patent wars is justified.

This isn't just a playground discussion. According to IDC, Samsung's global smartphone shipments hit the number one slot in the third quarter, beating Apple into number two position. With stakes so high it is no surprise regulators are moving to ensure the smartphone wars are indeed fought in the spirit of fair and open competition.

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