A few new blows have exchanged this month in the on-going worldwide battle between Samsung and Apple discussed in previous newsletters.
At the end of February, Samsung lost a case in the Tokyo District Court of Japan in which Samsung had attempted to show that Apple’s iPhone infringed JP 4,642,898 relating to 3G technology. In this case, Judge Ichiro Otaka ruled that Samsung had abused its position and had not acted in good faith.
Firstly, the court noted that Samsung had made the patent in question essential by submitting it for the 3G (Universal Mobile Telecommunications System - UMTS) standard. The body (European Telecommunications Standards Institute - ETSI) which oversees the UMTS Standard requires that companies reveal any IPR that they have that may be essential to the adoption of a standard. This must be done in a timely manner. In the current case, Samsung had three patents that related to the UMTS standard. However, Samsung had only disclosed those patents to ETSI at one, two, and four years after ETSI had agreed to adopt Samsung’s technology as part of the standard. Judge Otaka ruled that, consequently, Samsung could not have been said to have acted in the required “timely manner”.
Secondly, in accordance with the rules set down by ETSI, Samsung must agree to license its technology in a ‘fair, reasonable and non-discriminatory’ (FRAND) manner in relation to these essential patents. However, the court ruled that Samsung was breaking this pledge by requesting a preliminary injunction against Apple in relation to the same technology.
Thirdly, the court ruled that Samsung’s attempt to license the technology to Apple was not carried out in good faith. Samsung had offered to license its patents to Apple for a “royalty of 2.4% for each end product”. However, Samsung had not explained why this offer met the FRAND criteria, nor was it clear that Samsung’s offer was a bona fide attempt at negotiation.
In view of the conduct of Samsung, the court ruled that the patent was unenforceable. This prevented Samsung from seeking damages or other relief.
Whilst the decision by the Japanese Court was a blow for Samsung, better news for them came from the US. In the US, District Court Judge Lucy Koh decreased the damages awarded to Apple from $1.05 billion. Although the jury had found that several different intellectual property rights had been infringed (including both design and utility patents) relating to 28 products, it was not clear what level of award had been made by the jury for the infringement of each right. In reviewing the award, Judge Koh ruled that although it was possible to determine that the jury had miscalculated the award given for 14 of the infringing products, there was insufficient information available to correct the award. Accordingly, Judge Koh overturned the award and ordered a retrial to recalculate the damages in relation to those 14 products. The award given to Apple was therefore cut to $599 million, which relates to the remaining products. It is expected that a new trial will result in a new final award value between $599 million and $1.05 billion.
In her ruling, Judge Koh blamed Apple for the need for a re-trial for damages. Judge Koh commented that “[I]t was Apple’s strategic decision to submit an expert report using an aggressive notice date for all of the patents.”
Judge Koh went on and said “The need for a new trial could have been avoided had Apple chosen a more circumspect strategy or provided more evidence to allow the jury or the Court to determine the appropriate award for a shorter notice period.”
It is interesting that the conduct of the parties in both the Japanese and US actions had such a fundamental impact on the outcome of the Decisions. In Japan, the conduct of Samsung in respect of the use of Standards essential patents meant that the Japanese Court found the patents to be unenforceable and in the US, the conduct of Apple meant that their damages have been cut. This message highlights the importance of negotiation and conduct deemed reasonable by a Court in disputes.
Meanwhile, the battle between Samsung and Apple rumbles on.