On April 29, 2014, the European Commission (“EC”) announced that it has reached a legally-binding agreement with Samsung on standard essential patent (“SEP”) injunctions. According to the terms of the agreement, Samsung “will not seek injunctions” in the EU on the basis of its SEPs for smartphones and tablets against licensees who sign up to a specified licensing framework.
The reason the EC reached this agreement with Samsung is because SEPs give their owners significant market power, since it is not possible to manufacture products that comply with a certain standard without obtaining licensing for the SEPs. As a result, the EU requires SEP owners to issue licenses based on fair, reasonable and non-discriminatory (“FRAND”) terms. An SEP owner, such as Samsung, can use injunctions to stop other companies from gaining access to the SEP and thus restricting competition, so the EC is interested to limiting injunctions only to instances where companies seeking SEP licenses is unwilling to do so on FRAND terms.
Samsung agreed to the following terms in this agreement with the EC:
For a period of five years, Samsung has committed not to seek any injunctions in the European Economic Area (“EEA”) on the basis of any of its SEPs, present and future, that relate to technologies implemented in smartphones and tablets against any company that agrees to a particular framework for licensing the relevant SEPs.
The licensing framework provides for:
a negotiation period of up to 12 months; and
if no agreement is reached, a third party determination of FRAND terms by a court if either party chooses, or by an arbitrator if both parties agree on this.
An independent monitoring trustee will advise the Commission in overseeing the proper implementation of the commitments.