Friday, November 22, 2013

German court stays Samsung patent lawsuit against Apple: patent of doubtful validity

Bad news for Samsung, again. Approximately eight hours after the $290 million jury verdict concluding the Apple v. Samsung limited damages retrial in the Northern District of California, the Mannheim Regional Court just announced a decision in a German Samsung v. Apple case (September trial report) over a (declared) 3G standard-essential patent (SEP), EP1679803 on a "method for configuring gain factors for uplink service in radio telecommunication system". Judge Andreas Voss ("Vo├č" in German) and the panel he presides over stayed this litigation pending a parallel nullity (invalidation) action before the Federal Patent Court of Germany. The court has identified an infringement but doubts that the patent is valid. Furthermore, standing has not necessarily been established, but if the patent is declared invalid, this question won't have to be resolved definitively anyway.

At this stage Samsung was suing only for damages, not pursuing an injunction. It wanted to finally win a German case over one of its SEPs against Apple, but for the time being its SEP assertions in Germany have a 100% dropout rate, a fact that stands in stark contrast to its huge royalty demands.

Samsung's SEP assertions against Apple have raised concerns by antitrust agencies on three continents. In December 2012, Samsung withdrew its European SEP-based injunction requests against Apple in an (unsuccessful) attempt to dissuade the European Commission from issuing a Statement of Objections (SO), a preliminary antitrust ruling. It continued to sue Apple over SEPs for damages (and did not withdraw injunction requests over non-SEPs). Samsung brought three German SEP assertions against Apple in April 2011 (all three were dismissed because Samsung failed to prove an infringement) and two more in December 2011, including today's case. The other December 2011 case was already stayed in January 2013 over doubts concerning the validity of the patent-in-suit.

Last month the European Commission announced a market test of settlement terms proposed by Samsung that I consider absolutely insufficient. Today's outcome shows once again that SEP holders must be required to prove an alleged infringer's actual use of valid patents in a court of law. Allowing them to force an implementer of a standard into an opaque arbitration proceeding is terrible policy that I hope the European Commission won't adopt. Arbitration gravitates toward a "middle ground", which is appropriate in certain contexts but would reward SEP holders for overdeclaration and harm competition and innovation. The middle between a reasonable royalty of a very few tenths of a percent and 2.4% is still tantamount to holdup. Courts of law are more willing than arbitrators to hand down sharp rulings reflective of the merits.

On a personal note, I am going to take the remainder of this month off. I will, however, do a preview post on the forthcoming Oracle v. Google appellate hearing and will also blog in the event of major unforeseen news. The first week of December will be eventful in several ongoing patent disputes. I expect interesting news on a daily basis during that week. Thereafter, the publishing rhythm of this blog may change significantly.

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