Samsung loses in Australia – FRAND Explained

Samsung loses in Australia – Temporarily

Question: So Apple wins in Australia and Europe but Samsung is also suing in Europe against the new iPhone 4s, aren’t they both stealing from each other? And if so, then what is the point?

 The simple answer is NO, these are not equivalent cases. Whereas Apple is bringing suit on “unencumbered” patents,  Samsung, according  to Florian Mueller,  “largely relies on standards-essential, FRAND-pledged patents against Apple.”  HUH? What is this?

FRAND Explained

To understand the claims and counter claims of these law suits, it is imperative that you understand this one concept. It really is not difficult.  For cell phone systems to work (and other systems as well) there needs to be agreement in advance as to the technicalities of how they all will work, e.g. the electronic protocols by which the phone will communicate with the tower and back again. All these methods of electronic communications involve various inventions by many companies. In order to create one and only one methodology, the companies participate in Standards Committees, which decide on the definition of a particular communications system – the technical details of how it will work. These Standards Committees look over various proposals for a given technology (such as the new fourth generation LTE) and create a set of definitions that all agree on to make the new system work.

 This set of technological  definitions typically uses inventions or Intellectual Property (IP) from several different companies. Obviously, once the standard is implemented (towers are built, communications chips are designed and built) any user will need to license each of the patented technologies that is part of the new system. There is a potential problem here. Theoretically, any single company that has patented technologies could turn around and “hold hostage” any other company that wanted to use the new standard. This would cause chaos in the industry, which would not be good for anyone.

 Therefore, to make sure that this does not happen, the standards committees have a policy. If you own patented technology that you want incorporated into the standard, then you must agree to license that technology, that IP, according to FRAND:

 On a Fair, Reasonable And Non-Discriminatory basis.

 In other words, you cannot gouge one customer just because you do not like them. The technology needs to be licensed to all on an equal footing.

 So, Apple is saying: “You Samsung, have infringed our patents that have to do with totally independent inventions that have nothing to do with any standards agreements,” but Samsung is saying “You Apple are refusing to pay our outlandish, and illegal demands on patents that we have already agreed to license on FRAND terms.” (At least this is Apple’s contention.)

 So, basically, Apple’s contention is that Samsung is trying to use FRAND patents to extort free usage of Apple’s unencumbered patents. Or in Apple’s words:

• “[The rules of a standard-setting organization] are designed to protect the telecommunications industry from the sort of anticompetitive ambush Samsung has perpetrated here.”

Other Issues

1. It is important to be aware that there are both design issues and technological issues. Designs are also protected to different degrees in different countries. But these issues are quite different from core technology issues (“Utility Patents” in the U.S.).
2. The legal technicalities differ in different countries.
3. There are “fast-track” or preliminary injunction portions of law suits, and also more detailed, though slower to come to court “main proceedings.” Often the request for a preliminary injunction does not include all the infringement claims of the main proceedings.