Antitrust Law Daily Wrap Up, ANTITRUST—NDCal: Failure of Apple’s iPad-Related Standard-Setting Claims Against Samsung Was Justified, (Jan 31, 2013)

By E. Darius Sturmer, J.D.

After a trial on patent and antitrust claims asserted by Apple, Inc. against rival electronics and wireless telecommunications device manufacturer Samsung Electronics Co., Ltd. went largely in Samsung’s favor, Apple’s motions for summary judgment as a matter of law on the antitrust claims and, in the alternative, for a new trial, were denied by the federal district court in San Jose, California (Apple, Inc. v. Samsung Electronics Co., Ltd., January 31, 2013, Koh, L.).

The lawsuit centered on Apple’s contention that Samsung had infringed on the trade dress of, and the patents related to, the iPad and iPad2. However, Apple also contended that Samsung had breached the European Telecommunications Standards Institute’s (ETSI) Intellectual Property Rights Policy by failing to adequately disclose certain standards-essential patents and refusing to license them at fair, reasonable, and non-discriminatory (FRAND) rates. In so doing, Apple claimed, Samsung had committed a violation of Sec. 2 of the Sherman Act. Both Apple and Samsung are members of ETSI.

Apple alleged that while working with ETSI on the development of a Universal Mobile Telecommunications System technical standard pertaining to cellular phone technology, Samsung declared several of its patents essential to the standard—meaning that it believed it would be impossible to comply with the standard without infringing the patents—only after adoption of those specifications into the standard. Further, Samsung purportedly then demanded excessive royalty rates for the patents.

The court noted that the jury was instructed as to the five elements of a Sherman Act, Sec. 2 violation that Apple had to prove—a relevant antitrust market, establishment of monopoly power, willful acquisition of that power through anticompetitive conduct, conduct occurring in interstate commerce, and injury to business or property because of the anticompetitive conduct—and that failure to establish any of these would justify a finding of no liability.

The jury’s finding that Samsung had acted within the boundaries of federal antitrust law was not against the clear weight of the evidence, the court found. Apple’s evidence in support of its argument that ETSI would likely have adopted an alternative standard had ETSI known of Samsung’s IPR was sufficiently equivocal that the jury could reasonably have found that the injury causation element of a Sherman Act, Sec. 2 claim was not satisfied.

Regarding Samsung’s licensing behavior, the conflicting testimony at trial fell short of establishing as a matter of law that Samsung had failed to meet its FRAND obligations. Thus, the jury could reasonably have found that the conduct was not anticompetitive, and so did not meet the third requirement for Sherman Act liability.

The case is Case No.: 11-CV-01846-LHK.

Attorneys: Michael A. Jacobs (Morrison & Foerster LLP) for Apple, Inc. Huan-Yi Lin (Steptoe Johnson LLP) for Samsung Electronics Co., Ltd.

Companies: Apple, Inc.; Samsung Electronics Co., Ltd.

Cases: Antitrust CaliforniaNews