Wednesday, April 10, 2013

Apple wins invalidation of 3G 'standard-essential' Samsung patent in Germany

Long after office hours on Wednesday, Germany's Bundespatentgericht (Federal Patent Court) ruled in Apple's favor and invalidated in its entirety (including any proposed amendments) the German part of Samsung's EP1005726 on a "turbo encoding/decoding device and method for processing frame data according to QoS", a patent Samsung had declared essential to the third-generation wireless standard, UMTS. Dr. Ariane Mittenberger-Huber, the Munich-based court's spokeswoman, confirmed this outcome of the nullity proceeding.

Samsung can appeal this decision to the Bundesgerichtshof (Federal Court of Justice).

Samsung was originally seeking injunctions against Apple over this patent as well as other wireless standard-essential patents (SEPs). According to a preliminary antitrust ruling by the European Commission -- a Statement of Objections (SO) issued in December 2012 -- the pursuit of injunctive relief against Apple, a willing licensee, was abusive conduct. A few days before the SO, Samsung withdrew all of its European SEP-based injunction requests against Apple, but it keeps suing for damages (it's also trying to win injunctions, as well as damages, over non-SEPs).

In January 2012 the Mannheim Regional Court ruled that Apple did not infringe this patent. Under Germany's bifurcated patent litigation system, defendants challenging the validity of a patent have to bring a separate nullity action before the Federal Patent Court. Infringement is adjuged by regional courts (district courts), which stay cases if they deem a patent (that is, unlike this one, found infringed) "highly probable" to be invalidated by the Federal Patent Court. Nullity actions typically take longer. In this case, almost fifteen months passed between the infringement ruling and the validity decision.

On June 26, 2013 the Karlsruhe Higher Regional Court, to which Samsung had appealed the Mannheim decision, will hold a hearing on the infringement case. If it does not affirm the Mannheim finding of non-infringement anyway, it's a given that it will under these circumstances stay the case until the Federal Court of Justice has ruled on the validity of this patent (assuming that Samsung appeals today's ruling).

In March 2013 the England and Wales High Court declared the UK part of this patent as well as two other Samsung declared-essential patents invalid -- another recent victory for Apple.

Samsung originally asserted the U.S. equivalent of this patent in California but withdrew it shortly before the jury trial in the summer of 2012. There have also been assertions in Italy, where a preliminary injunction was denied, and Australia.

In a recent filing with the United States Federal Trade Commission, Apple pointed out that Samsung and Google's Motorola Mobility have lost the vast majority of their SEP cases against Apple. Google has won only one case out of ten, and Samsung approximately one out of eight. With every favorable ruling Apple strengthens its argument that the royalty rates demanded by these companies are excessive and that any FRAND rate determination by a court (or arbitrator) must take into consideration the enormously high rate of overdeclaration. For the standards at issue in these disputes there's no independent vetting and companies tend to declare patents standard-essential that actually aren't infringed by implementations of the standard, and/or aren't valid. Apple argues that Samsung overdeclares at twice the average rate in the industry.

An Apple filing with the United States International Trade Commission, published last week, revealed that Samsung had recently reduced its wireless SEP royalty demand. Whatever Samsung's latest demand may be, Apple considers it to be irreconcilable with Samsung's FRAND licensing commitment, and rulings such as the one Apple won today add pressure on Samsung to go further down.

Last Thursday Samsung, alongside Google's Motorola Mobility, won a nullity case at the Federal Patent Court against Apple, achieving the (also appealable) invalidation of the famous slide-to-unlock patent.

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