For the last few years, Apple and Samsung have been on a legal battle over smartphone patents, demanding massive cash settlements and attempting to ban the sale of each other’s devices. According to the European commission, Samsung might now be issued fines for attempting to use standard-essential patents in its lawsuits, unlike Apple’s, which refer to less restrictive patents.
Standard-essential patents refer to technologies or inventions that have to be used in order to comply with a standard: usually, the companies that own these patents license them to other companies, on a “fair, reasonably and non-discriminatory”, basis so that they can implement such standards, for a fee.
Licensing these patents is essential since they are a pre-condition to bring viable products to market, therefore filing lawsuits on this basis alone can seriously harm competition in the thriving mobile sector. European commissioner for competition has pointed out that Apple has attempted to obtain a license from Samsung to use some of its patents, and from his reasoning, there’s no reason for the South Korean company to keep denying the license to Apple. Samsung could be facing fines from the United States government as well, on the same basis.
Samsung has been given a week to respond to the European Commission’s objections. The Commission will then review this response once again, who will then decide if the fine should be applied. How hefty can this fine be? According to European law, it can be as high as 10% of the company’s worldwide turnover. In 2011, Samsung reported revenues of $148.9 billion, therefore the fine could be very close to $15 billion.
Samsung has since withdrawn the request to ban the sale of Apple devices in Europe, issuing a statement:
Samsung remains committed to licensing our technologies on fair, reasonable and non-discriminatory terms, and we strongly believe it is better when companies compete fairly in the marketplace, rather than in court. In this spirit, Samsung has decided to withdraw our injunction requests against Apple on the basis of our standard essential patents pending in European courts, in the interest of protecting consumer choice.
Samsung remains, however, pressing for bans in other countries, such as Australia, the United States and some Asian countries.