Legal action is taken by Ericsson against Samsung for alleged Patent Infringement of the rules for Standard-Essential Patents under Fair, Reasonable, and Non-Discriminatory terms and conditions. The lawsuit is about positioning for the 5 G standard – and with Samsung and Ericsson, the giant organizations in mobile telecommunications are also ready to cross their swords.
Ericsson (Sweden) sued Samsung (South Korea) on Friday for violating the rules for FRAND conditions and Standard-Essential Patents (SEP).
FRAND, ETSI and SEP
This system FRAND, ETSI and SEP was developed with the emergence of mobile telephony in the late 80s at the commencement of the European Commission. Ever since 1998, ETSI has joined services with five other standardization bodies to form the global 3rd Generation Partnership Project (3GPP), mainly for the standardization of UMTS. The political initiative is that competitors’ technology must be made available to other network companies or mobile phone companies.
Therefore, particularly in the mobile communications sector, standard essential patents (SEPs) are reported by the patent possessor as vital to the standardization organization “European Telecommunications Standards Institute” (ETSI). By doing so, they embark on to license these patents to rivals on reasonable, non-discriminatory and fair (FRAND) terms in harmony with ETSI’s Intellectual Property Right (IPR) Directive. This has led to many licensing contracts in the mobile sector for the 2G, 3G and 4G standards, as well as between Samsung and Ericsson; who have both registered several patents related to mobile telecommunications as SEP with ETSI.
Read our article:Patent in India: Registration and Filing Process
FRAND and SEPs Conditions in Court
The European Union & the ECJ verdict Huawei/ZTE of 2015 is influential in this case. The USA has just a year ago distanced itself from its own affirmation of principles of 2013 and it wants to make it easy for patent holders to take legal action in case of a denial of a license agreement.
Now a court case has been filed regarding the forthcoming 5 G standard. Legal action initiated by Ericsson against Samsung on Friday before the District Court of EASTERN DISTRICT OF TEXAS in US. Ericsson against Samsung stated for not complying with its obligations in view of FRAND rules for SEP and requests the court to assert that Ericsson itself has acted in compliance with FRAND.
What is the Issue of case- Ericsson against Samsung?
The background to this is the fact that, even though there were wide-ranging licensing agreements for the preceding standards (2G, 3G and 4G), for the new standard 5G these licenses will have to be renegotiated or they will expire anyway.
In 2019, proposal hence started negotiations for new license contracts. As per Ericsson, the Swedes made a FRAND-compliant proposal, which included a compensation payment. Though, Samsung rejected this proposal. Samsung, in turn, asked that Ericsson agree to a compensation payment in a worldwide cross-license, which the Swedes said was considerably lower than Ericsson’s SEPs under the FRAND provisions.
Therefore, Ericsson against Samsung have already shown willingness to negotiate. This is not insignificant with regard to competition law rules. For abuse in the sense of Art. 102 TFEU (with the right to claim for damages and injunctive relief) take place when the user looking for a license makes a proposal in accordance with FRAND but the patent holder does not agree to it. In this context, the patent holder is also anticipated to make a counter-offer.
Permanent Dispute: FRAND Conditions
The FRAND conditions are always the point of conflict because ETSI is a politically preferred compromise. European Telecommunications Standards Institute neither controls whether intellectual property rights are legally applicable for an SEP nor whether they are even important. Also, every patent holder decides for himself regarding Patent Registration with ETSI as an SEP. Above all, nevertheless, the term “license under FRAND conditions” is not explicated by ETSI.
Conversely, there is still no consistent legal clarity and obligatory force in many questions regarding SEPs and FRAND conditions from the courts.
What are “fair” license conditions? To what degree may patentee’s agreements with third parties be used for assessment purposes? Or may nationalized courts determine what is to be measured “fair”? The same applies to the issue: Who has the burden of proof for FRAND conformity? Who is accountable for the FRAND obligation if an SEP is reassigned to another holder? And how is compensation calculated in case of violation?
Does it come to a Judgment at all?
In this respect, it will be very fascinating to observe the lawsuit filed by Ericsson against Samsung in the further course of the discussions. Ericsson claims that Samsung has dispossessed Ericsson of its right to an equal worldwide license to Samsung’s vital patents on reasonable and fair terms.
However, it is just as likely that a contract between the parties will be done, this can without doubt be seen as a trend in the sector of mobile telecommunications: Apple vs. Samsung, Huawei vs. Qualcomm, Apple vs. Qualcomm, Nokia with Xiaomi and Unwired vs. Huawei (in DE).
Anyway, this year, Samsung contributes approx. 22% of the global sales of 5G smart phones with its models of the Galaxy S20 series and hence leads the competition by far. Samsung is also a supplier and manufacturer of network infrastructure. With Ericsson against Samsung, the big names in mobile telecommunications and network technology are crossing swords – by 5G.
A court case has been filed regarding the forthcoming 5 G standard. Legal action initiated by Ericsson against Samsung on Friday before the District Court of EASTERN DISTRICT OF TEXAS in US. Ericsson against Samsung stated for not complying with its obligations in view of FRAND rules for SEP. It requests the court to assert that Ericsson itself has acted in compliance with FRAND. Ericsson against Samsung have already shown willingness to negotiate. This is not insignificant with regard to competition law rules.
Read our article:Detailed Process of Patent Registration in India