Apple Ruling to Get Into Who Can Use Standard Technology

Apple Inc. (AAPL)’s legal battle with Samsung Electronics Co. (005930) over smartphone inventions could determine if there are limits to the power of patents that cover most widely-used technology for electronics.

The U.S. International Trade Commission in Washington is scheduled to announce June 4 whether Apple infringed Samsung patents for transmitting data and, if so, whether the Korean handset maker can block such a fundamental function of a mobile device. The decision, postponed from today, would be the first final decision in any U.S. cases between the world’s two largest smartphone makers.

The commission, which can block imports into the U.S., in March asked for comments on how banning older models of the iPhone and iPad tablet computer would affect the public. On a broader scale, the commission must decide if it’s appropriate to exclude a product for infringing a patent that’s part of technical standards it must follow.

“This will be the most important decision from the ITC dealing with the standard-essential patents to date,” said David Long, a patent lawyer with Dow Lohnes in Washington. “In other cases, they found ways out. Here, they seem to be indicating there’s infringement, now what do we do.”

Whether owners of standards patents should be able to block others from using those ideas has been the topic of U.S. congressional hearings, a policy paper from President Barack Obama’s administration and regulatory investigations on three continents, including one that led to a settlement between the U.S. and Google Inc.

Widely-Used Patents

Samsung, based in Suwon, South Korea, has been making mobile phones since the 1980s and participated in industry groups that established ways phones communicate with each other, exchange data and perform other key functions. Companies that help develop standards have the advantage of ensuring their technology is widely used, so they are required to pledge to license any relevant patents on fair terms.

In the ITC case, Samsung contends Apple infringes four patents, including two standards patents that relate to how phones transmit data. A judge initially said Apple didn’t infringe any of the patents, and that one, for a way to detect movement on a touch-screen, was invalid. The fourth patent is for a way to detect phone numbers in e-mails so they can be dialed or stored in the phone’s contact list.

The six-member commission, which is reviewing the judge’s findings, in March asked for additional information about licensing negotiations.

Apple Pledge

Apple, based in Cupertino, California, denies infringing any of the Samsung patents. Even if a violation is found, Samsung shouldn’t be allowed to use patents on standard-essential technology to block competition, Apple has said. The iPhone maker has pledged not to seek court bans on the use of any patents it owns on fundamental technology.

Apple won a $1.05 billion verdict against Samsung last year for infringing patents that weren’t part of standards, although a new trial has been ordered for part of the case.

“The upcoming ITC ruling may have a greater significance than the court’s ruling because the latter is made based on the jurors’ decisions, while the ITC’s is made by professionals,” said Lee Sun Tae, a Seoul-based analyst at NH Investment & Securities.

Standards Patents

The issue goes beyond the Apple-Samsung battle. Ericsson AB and Samsung have accused each other of failing to offer fair licensing terms in cases before the ITC and federal courts. Huawei Technologies Co., China’s largest phone-equipment maker, filed an antitrust complaint with European regulators over InterDigital Inc.’s royalty demands for patents on wireless technology.

Apple and Microsoft Corp. have each accused Google Inc.’s Motorola Mobility unit of demanding unfair rates for its standard-essential patents. A federal judge in Seattle last month said Google is entitled only to pennies per unit from Microsoft, while a different judge threw out Apple’s breach of contract case.

House judiciary committee members, in a May 10 letter to the commission on the Apple case, repeated a request made last year that the ITC “carefully assess the substantial public interest considerations that exist with regards to this and other cases.”

The Apple case against Samsung is In the Matter of Electronic Digital Media Devices, 337-796, and Samsung’s case is In the Matter of Electronic Devices, Including Wireless Communication Devices, Portable Music and Data Processing Devices, and Tablet Computers, 337-794, both U.S. International Trade Commission (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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