Clarification: Samsung, not Apple, subject to EU probe

November 04, 2011 12:25 PM EDT

Reports that both Apple and Samsung are being probed by EU anti-trust regulators aren't entirely correct: while they have been approached for information, it is Samsung that's under the microscope.

Levelling the field

In a statement today, Europe confirmed previous reports of an anti-trust investigation, saying requests had been sent to both Samsung and Apple. News media have taken this to mean that Apple is also being probed, this is not correct.

The investigation is exploring the "enforcement of standards-essential patents," according to the EC statement on the matter.

However, Apple has no patents which are included within the 3G standard; only Samsung has these.

Regulators are exploring to find out if Apple is correct in its accusation that Samsung is demanding unreasonable fees and terms for use of its patents, patents which are meant to be made equally available under FRAND licenses.

Samsung should be FRAND-friendly

Florian Mueller at FOSS Patents "definitively" says that neither the EC statement, Samsung's reaction nor Apple's court filing, "provide any reasonable statement that Apple's own behavior is being probed." More background one what is going on is available here.

Think back to development of the UMTS/3G standard and you can see that Apple was not involved in wireless devices or development o f mobile payments. Only Samsung owns patents which relate to these technologies, and it is that company's alleged way of handling Apple's licensing of these patents which is in question.

What this means:

Apple makes a phone with 3G support. To deploy 3G in its phones it must secure licenses for the various technologies included within the 3G standard. Some of these technologies come from Samsung, and have been made available for license by friends and competitors alike -- that's the point of the standard.

Apple says Samsung has been demanding onerous terms for use of these technologies -- this is in contravention of the standards agreement.

[AT ISSSUE: Does Samsung offer RIM and others the same 3G licensing terms it is attempting to agree with Apple?]

Open for business

Mueller notes: "In my view, FRAND patent holders can ask for reasonable compensation, but they are not allowed to overcharge or to shut down products as long as an alleged infringer is willing to take a license on FRAND terms (if there actually is an infringement of valid patents). That view was also shared by a judge in The Hague, Netherlands, who dismissed a Samsung request for a preliminary injunction and held that Samsung had failed to honor its FRAND licensing commitment."

This is important. If Samsung is able to overcharge competitors for use of patented technologies rolled inside the 3G standard, then it will corner the market for devices running 3G. This could see Microsoft or RIM targeted in such a way in future, effectively limited evolution of the mobile market.

If competitors cannot deploy these standardized technologies in their devices then their phones will no longer be phones.

The 3G standard was developed by ETSI, the European Telecommunications Standards Institute. It is interesting to note that European regulators have previously investigated ETSI to ensure the organization is not involved in such preferential licensing schemes.

Interesting times

My take? With products banned in several territories and primarily negative judgments or findings in so many of its cases worldwide, Samsung appears to be standing on thin ice in its courtroom battle with Apple.

News that Europe's tough regulators are now investigating the company can't be so good for Samsung executives, especially as they watch billions of dollars of Apple's business slowly marching from its doors.

To be fair, it is too early to predict what Europe's regulators will decide in this case, but if Apple is able to prove that Samsung has been egregious in its demands for use of these FRAND patents, then Samsung could potentially face huge fines and restorative action.

While it has become the world's largest smartphone vendor (in the most recent iPhone transition quarter), has this been worth it to deliver low price smartphones using an Android OS which is itself target to a wave of litigation; and which exposes its manufacturing partners to multiple unknowns, not least the threat of being asked for backdated patent licensing fees?

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