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29 August 2013Patents

Samsung says Ericsson unfairly seeks “billions more” in licensing fees

In a document filed with the US International Trade Commission (ITC) on Monday, Samsung Electronics claimed that Ericsson has demanded billions more than in previous licence agreements with the company, which expired in 2007.

In the latest development in the telecommunications companies’ patent dispute that started last year, Samsung said it was prepared to show at trial that Ericsson’s offers to license its standard essential patents (SEPs) were “unreasonably high”, and are inconsistent with fair, reasonable and non-discriminatory (FRAND) practices.

In the document Samsung said its dispute with Ericsson is concerned with how much a licensee should pay as a FRAND royalty for licensing patents, and that Ericsson is “wrong” to suggest in its notice of new authority that the ITC should set up unilateral FRAND royalty rates among its licensees.

It said Ericsson had misinterpreted a letter written by the Office of the United States Trade Representative, which vetoed an exclusion order that would have banned the import into the US of Apple products, including the iPhone and iPad, on public interest grounds. Samsung said the letter may have an impact on the ITC’s investigation into its case with Ericsson.

Ericsson brought the initial action against Samsung in November 2012, when it filed two patent infringement lawsuits against the company requesting damages and an injunction. It alleged Samsung infringed 24 of its SEPs covering technologies related to wireless communications.

Ericsson also asked the court to find that Samsung was in breach of its agreement to license any SEPs it owns on FRAND terms, and to declare its SEPs are unenforceable.

Three days later, Ericsson filed a complaint with the ITC, asking for a ban on the import into the US of Samsung’s infringing products.

The ITC launched its investigation in January 2013.

Jeremy Oczek, a partner at Bond Schoeneck & King in Buffalo, said: “The main dispute in the case between Samsung and Ericsson is that they both have SEPs that they both contend each other should pay and cross-license according to these FRAND terms.”

He said it is not uncommon for parties to disagree on what FRAND terms are, and that it depends on what technology, industry and the particular standards are at issue.

“Ericsson maybe has other licensees to whom it is licensing patents on the same rates, and perhaps Samsung disagrees with what those rates are,” he said, adding that there is usually a benchmark license rate.

He said it would be “unprecedented” for the ITC to set up unilateral royalty fees.

“Ericsson is making a unique argument on the heels of the unprecedented presidential veto that came down in the Apple v Samsung case where Samsung got an exclusion order against the iPhone,” he said.

However, ITC’s power is limited to issuing an exclusion order, so it may ban the import of goods, but patent damages must be sought at district court, he continued.

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