Wednesday, November 23, 2011

Samsung does not contest Apple's representations of the scope of the EU antitrust inquiry

In court filings, what is not said is sometimes more important than what is said. A few hours ago, Samsung filed a motion to dismiss Apple's amended FRAND counter-counterclaims in the litigation between those parties in the Northern District of California. That document has some really interesting content and I wouldn't be overly surprised if that motion succeeded at least in part, but what's particularly notable is that Samsung doesn't contradict Apple's representation of what the EU antitrust inquiry is about at this stage: the potentially anticompetitive use of FRAND-pledged patents, and not about non-FRAND patents such as the ones asserted by Apple.

Three weeks ago I reported on a couple of statements Apple made in a filing in California on an ongoing EU antitrust inquiry. The next day, the European Commission confirmed that it is conducting a preliminary investigation (which may or may not evolve into a full-blown investigation). Apple claimed that "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". At that time, Apple was still seeking the court's permission to amend its FRAND counterclaims subsequently to dismissal of certain claims. The Court granted leave (which Samsung never opposed), and on November 8, Apple indeed filed its amended counter-counterclaims including the sentence I just quoted.

I have uploaded to Scribd both Apple's amended counter-counterclaims and Samsung's motion to dismiss so everyone can easily verify that Samsung did not address Apple's claim that Samsung's behavior triggered an EU antitrust investigation.

A motion to dismiss is not an answer to a claim in a strict sense. If Samsung had not commented on Apple's representation in a direct answer, it would have accepted Apple's representations as true. But even in a motion to dismiss it would make a whole lot of sense to point out an inaccuracy, or anything that could be misleading if it's an incomplete picture.

If the EU investigation also targeted Apple's use of (standards-unrelated) patents at this stage, I believe Samsung would have pointed out that Apple's representation was one-sided and not the whole truth. Samsung's lawyers put a lot of effort into a French law professor's 31-page declaration claiming that Samsung doesn't have a standards-related contractual obligation vis-à-vis Apple under French law (which is actually also what a Dutch court concluded, but nevertheless Apple succeeded with its FRAND defense there). EU competition law can trump any EU member state's contract law, so if French law warrants a 31-page declaration, it should at least have been worth a couple of sentences to Samsung's lawyers to tell the court in California -- for psychological reasons if nothing else -- that Apple is also being investigated.

The European Commission does not formally accuse Samsung of anything at this stage. That's why its officials continue to point out that both Apple and Samsung received questionnaires. But as long as the EU describes the scope of the investigation as being related to the use of standards-essential patents, and as long as Apple does not assert any such patents in any way (so far it hasn't), the only reasonable assumption is that Samsung is the target and Apple a witness.

Samsung may not remain the only target. In my next blog post I'll explain why I think Motorola Mobility appears to be working hard to get the attention of EU competition enforcers as well. And even though Apple doesn't assert standards-related patents in litigation so far, it's not impossible that the Commission could at some point be concerned about the competitive impact of Apple's patent lawsuits -- but in that case there would be a need for a different legal theory (abuse of dominant market position), and for a different official description of the scope of the investigation.

Samsung had -- and intentionally missed out on -- two opportunities to correct Apple's representation. Even though Samsung saw no point in opposing Apple's motion for leave to file amended counter-counterclaims, it could have clarified that Apple's motion (not only the attached proposal for an amendment but also the text of the motion) misrepresented the EU situation. And the motion to dismiss was the next occasion on which Samsung could have corrected Apple, but it seems that Apple simply told the truth and didn't omit anything important.

All of this reaffirms my interpretation of the scope of the investigation, but I will certainly keep an eye on future statements and announcements by the European Commission.

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