DOJ Slaps Samsung’s Wrist for FRAND Patent Abuse Against Apple

| Analysis

The U.S. Department of Justice (DOJ) has slapped Samsung's wrist, warning the South Korean company not to use standards-essential patents (SEPs) to try and get import bans on competitors' products. The warning caps an investigation into Samsung patent abuse by the DOJ, but it didn't include any penalties for the company.

Samsung Timeout

Samsung Gets a Timeout

The DOJ is an arm of the executive branch in the U.S., and the Obama administration has targeted patent abuse and reform of the patent system as a priority. In August, White House Trade Representative Michael Froman overturned an import ban on Apple's iPhone 4 that Samsung had won from the International Trade Commission (ITC) because that ban was based on an SEP.

The DOJ investigation was based in part on the same ITC case, and Friday's report said that it was conducted by working closely with counterparts in the European Commission, suggesting that the EU will also be clamping down on SEP patent abuse.

"While there are certain circumstances where an exclusion order as a remedy for infringement of such patents could be appropriate," the DOJ wrote, "in many cases there is a risk that the patent holder could use the threat of an exclusion order to obtain licensing terms that are more onerous than would be justified by the value of the technology itself, effectively exploiting the market power obtained through the standards-setting process."

That's been the party line on this issue for some time, and it's bad news for Samsung. The company has a long history of developing patented technologies that get included in various standards, but the company has no track record of software and design patents that set its products apart from its competitors.

Apple, on the other hand, seldom contributes to standards—an ongoing effort to advance SIM trays is a recent notable exception—but has a long history of patenting design, software, and other technologies that it uses exclusively to set its products apart from every other competitor.

It's that gulf between the two companies that led to the DOJ's investigation. When Samsung willfully copied Apple's patented inventions and designs in order to peddle its otherwise me-too Android devices, Apple sued for infringement.

In the world of big business, most patent infringement suits between practicing entities—companies that actually make stuff—result in a settlement based on who has the stronger patent portfolio. In the smartphone market, Samsung didn't have a patent portfolio outside of its SEPs, so it asked for unfair and unreasonable licensing terms for those SEPs so that it could counter sue when Apple refused those terms.

The DOJ's warning could be another nail in the coffin of that strategy, though to be fair the lid was already fairly well secured. Aside from the one ITC ban vetoed by the White House, Samsung has found zero success in the courts or in front of regulatory bodies outside of South Korea, and not always even there.

Image made with help from Shutterstock.

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