Apple Joins Samsung in Telling EU to Cut Patent Trolls’ Power

Apple Inc. (AAPL) and Samsung Electronics Co. (005930), which have sued each other around the globe over patents, joined together to tell the European Union to cut down on the ability of companies that license patents to win court rulings limiting product sales.

Apple and Samsung are among 19 companies and associations that told the EU in a letter that a new court should limit the ability of companies that license technology to win court injunctions when the validity of the underlying patent is in dispute.

Manufacturers are turning to lawmakers and courts in Europe and America in battles with patent trolls, a derogatory term for intellectual property owners that don’t manufacturer products and instead rely on license fees. A similar group of companies are asking the U.S. Supreme Court to make it easier for them to collect legal fees in patent disputes.

The companies have repeatedly lobbied the EU over the issue as the 28-nation bloc implements plans to set up its first patent court, paving the way for a common patent system.

The companies urged the committee of EU member states representatives that oversee the setting up of the court to incorporate guidance that advises judges on when to issue injunctions or halt the proceedings while a patent’s validity is at issue.

“Without this guidance, the potential exists for a court to order an injunction prohibiting the importation and sale of goods even though the patent may ultimately be found invalid,” the companies, including China’s biggest smartphone maker Huawei Technologies Co. and Google Inc. (GOOG), wrote in a letter that was sent to EU authorities today.

The proposal would bring the EU closer to the U.S., where it’s almost impossible for patent owners who don’t make products to block the sales based on a finding of infringement. Even direct competitors like Apple and Samsung have been stymied in their efforts to halt sales of infringing devices in the U.S.

IPCom Suit

Apple, the maker of the iPad and iPhone, is being sued in Germany for 1.57 billion euros ($2.2 billion) by IPCom GmbH over technology for phones using the 3G wireless standard. IPCom, based in Munich, has sued mobile-device makers globally over mobile technology it acquired from Robert Bosch GmbH in 2007 to collect license fees.

Intellectual property disputes, primarily over patents, made up 18 percent of cross-border litigation between companies and that number is expected to rise, according to a survey of lawyers and executives by the Hogan Lovells law firm. Contract disputes remain the most common type of litigation, at about 44 percent.

Cross-Border Cases

The rise in cross-border intellectual property fights is greatest in the U.S., U.K., Germany, France and China. It’s a reflection of changing attitudes toward patents in all industries, not just smartphones -- auto manufacturing, chemicals, genetically-modified plants and pharmaceuticals are all seeing an increase in both patents being issued and patents being litigated.

“You never know what one judge will do, but if you’re in five countries, the chances that a judge will go favorably to you increases,” Andreas von Falck, head of the firm’s intellectual property practice. “It’s more a business tool for monetization when it used to be used to fend off a competitor. That has increased the litigation across the world.”

While in the U.S. and Europe the political attention is on lawsuits filed by patent owners who don’t make products and rely on threats of litigation to extract royalties, the majority of cases remain between companies suing competitors, he said.

Samsung and Apple have filed suits in the U.S., U.K. and Germany over the technology to their phones and tablet devices.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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