Apple Says Samsung Rigged the 3G Standards

A hearing in a Netherlands court yesterday was requested by Apple to clear the air before Samsung could proceed with its patent litigation to gain an injunction against the sale of Apple products.

The South Korean company claims that Apple has not paid for licences to Samsung’s intellectual property (IP) contained in the 3G wireless standard. It further added that it has made a request to Apple to pay for the various patents at 2.4 percent of the chip price for every patent.

Claim And Counterclaim

Apple protested at this. Any patented technology included in an international standard (such as 3G) should be available for anyone to use, under fair, reasonable, and non-discriminatory (Frand) terms. It argues that Samsung’s demands do not comply with Frand, and so to apply them would undermine the 3G standard, and ETSI (the European Telecommunications Standards Institute), the standards body which formally approved it.

Apple further claimed that it considers that it has already paid licensing fees for Samsung’s intellectual property, as part of the charges for the 3G chipset which was actually  supplied by Intel.

Countering this, Samsung confirmed that Intel has such a licence but prior to this it believes that Apple sourced its chipsets from Infineon. This can only be implied because Apple is highly secretive about its suppliers. If that is the case, Infineon does not have a licensing agreement with Samsung and, as Intel did not buy Infineon until January, 2011, Apple was guilty of infringement until that date.

If this is true, it does raise the question of Samsung’s intention to block sales of the forthcoming iPhone 5 that has been rumoured to be appearing next week. If the iPhone 5 has an Intel 3G chipset then it surely must also carry licensing with it, making Samsung’s effort to ban it unlikely to succeed. Despite this, Apple did state later in the hearing that it believed that Samsung was trying such a move.

Apple claims that if Samsung gets its way it will mean “the end of ETSI as we know it” because an injunction would shatter the trust of the whole industry in the standards-setting process.

It further claims that Samsung buried its IP in the 3G standards and only revealed its interests later, as a nasty surprise for anyone implementing 3G products. Samsung counterclaims that this is often the case when a standard is being formulated because what goes in the standard is not settled until ratification.

Apple contested that any injunction hearing should be held  in abeyance because the Frand talks are ongoing. Samsung denied this and insisted that talks have been exhausted.

Veiled Hints Of Antitrust Action

During the hearing Apple made comments about antitrust behaviour – suggseting Samsung was trying to block its product sales by being obstructive about Frand licensing issues. Apple wanted to bring this issue into the current hearing but the judge denied this. However, Apple’s comments may be a clear indication of its future tactics in the ongoing war of attrition between the companies.

Apple will hold off on antitrust action for now, because there are already over 20 claim and counterclaim hearings between the companies worldwide. These patent and prior art battles, if successful, would be more advantageous to Apple given that they are relatively short-term actions compared to an antitrust hearing that could take years.

Florian Meuller, an IP analyst wrote in his Foss Patents blog: “Apple’s lawyers compared Samsung to Rambus, a company whose demands in connection with patents gave rise to an EU antitrust proceeding. Since ETSI is a European organisation (operating under French law), I wouldn’t be surprised if Apple filed an antitrust complaint with the European Commission at some stage. At least, there were a couple of statements by Apple’s lawyers today that clearly accused Samsung of violating European competition law with its behaviour. But antitrust proceedings are slow and Apple wants a quick resolution of this.”

Apple also said that it believed Samsung was planning ex parte hearings (where the accused party, in this case Apple, is not present or informed of the action) – exactly what Apple did to Samsung in the initial German hearing that led to an injunction in that country. The two companies agreed not to entertain such behaviour.

The court will reconvene on the afternoon of 14 October to hear the judge’s ruling.

Summary

Samsung:

Samsung claims that Apple refuses to license the 3G patents and infringes “structurally and consciously” on its rights. Samsung maintains that any party can license its essential patents on FRAND terms. The company contests that Apple should have paid for licences before it launched the iPhone in 2007. It further accuses Apple of not seeking a licence, saying that “they cannot be trusted and an injunction is in order”.

Apple:

Apple contests that Samsung basically rigged the 3G standardisation by injecting its tech into the standard without disclosing its IP rights till later. It believes that ETSI standard rules can only function when patents are disclosed by members in time. An injunction will fundamentally undermine ETSI and frustrate the consumer markets. If incorrect about its belief that it has already licensed the technologies through chipset purchases, Apple would be happy to pay a “reasonable” sum to Samsung.