Standard-Essential Patents – Apple v. Samsung
For the last few years, Apple and Samsung have been involved in a series of lawsuits regarding their designs of smartphones and tablets. One of the latest cases decided by the US International Trade Commission (ITC) banned the importation of Apple’s older iPhones and iPads into the United States based on a Samsung patent that was necessary for the devices to connect to a cellular network. Certain Electronic Devices, Including Wireless Communication Devices, Portable Music and Data Processing Devices, and Tablet Computers, Inv. Nos. 337–TA–794 (June 2013). How was Samsung able to ban these products based on a single patent?
Samsung won this judgment by enforcing a standard-essential patent, or SEP. Standard-setting organizations help create standards to simplify the adoption of a particular technology. In some instances, the best standard chosen by the organization uses an existing patent thereby making it an SEP. When SEPs are involved, most standard-setting organizations have policies to facilitate the use of the patented technology. For example, once an SEP is adopted, the standards organization may require the patent holder to agree to license his patent on fair, reasonable and non-discriminatory (FRAND) terms. For those users who do not obtain a license, the law gives patent holders the ability to seek a remedy for the infringing use.
- How do you infringe an SEP?
A product infringing an SEP may be difficult to decipher. In a recent case before the U.S. Court of Appeals for the Federal Circuit, the Court affirmed that besides infringing a patent directly, a device practicing an industry standard can be the basis for finding infringement of an SEP. Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321 (Fed. Cir. 2010). In this case, three companies were part of a group that licensed patents required for implementing WiFi in a product. Netgear did not have a license to use the patents licensed by the group, but their products conformed to the WiFi standards. The companies argued that by complying with the standard, Netgear necessarily infringed their patents. While finding only one patent infringed, the Federal Circuit stated that if the patent claims includes any device that practices a standard, then this would be enough to find infringement. In addition, to prove infringement by showing only standard compliance, the patent must cover every possible implementation of that standard.
- Injunctions and Implied Licenses
Returning to the ITC decision, one reason Apple lost was because the ITC concluded that Apple was an unwilling licensee engaging in a hold-out where they refused to take the FRAND license terms from Samsung. Although the ITC decision can be vetoed by President Obama, it stands as a landmark case, being the first ITC exclusion order based on the infringement of an SEP with FRAND licensing terms attached to it. The ITC decision has been appealed by Apple to the Federal Circuit Court.
While a patent holder can prove infringement of an SEP and collect damages, he will most likely not receive injunctive relief or exclusion as in the ITC decision. Before the Apple and Samsung lawsuits began, Apple was involved in suits with other companies, such as Motorola. In one Motorola case, Apple and Motorola failed to negotiate licensing terms and both filed patent infringement lawsuits against each other. Apple, Inc. v. Motorola, Inc., 869 F. Supp. 2d 901 (N.D. Ill. 2012). Parts of the suits were consolidated in a case before Judge Posner in the North District of Illinois. Apple claimed that Motorola infringed claims of four non-SEPs, and Motorola claimed that Apple infringed claims of one SEP. Motorola and Apple failed to convince Judge Posner that either party was entitled to damages or injunctive relief. Specifically regarding the SEP, Judge Posner stated that the FRAND licensing terms would provide all the relief Motorola would be entitled to for proving infringement.
Most cases dealing with standard-setting organizations involve private organizations. The organization involved in the Samsung case was a European standards organization that previously standardized aspects of cellular networking. A few cases involve government mandated standards, but Courts seem to treat standards created through the government similarly to those created by private organizations. For instance, the United States previously mandated that all televisions sold in the US incorporate program blocking technology. In one case, Sharp claimed that the United States government granted it an implied license to use any blocking technology due to the mandate. Sony Electronics, Inc. v. Soundview Technologies, Inc., 157 F. Supp. 2d 172, 175 (D. Conn. 2001). At the time, the industry chose V-chips as the appropriate blocking technology, but any use of V-chips would infringe Soundview’s patents. Sharp was unable to identify any case where an implied governmental license was found besides cases involving government contractors or subcontractors. The Court found that although the government mandated blocking technology in televisions, the mandate did not imply any license to use such technology.