Last week, it was reported that Apple won a decision against Samsung in Tokyo, Japan, where a judge ruled that Samsung failed to negotiate in good faith with Apple before bringing patent infringement claims over its standard-essential patents. Until today, the court’s actual ruling was not publicly available. But yesterday, Apple submitted a “Notice of New Facts” and a redacted copy of a translation of the Tokyo court’s decision to the U.S. International Trade Commission in ITC Inv. No. 337-TA-794, and this submission hit the ITC’s docket this morning.
Recall that the -794 case is the ITC’s investigation over Apple’s alleged infringement of several Samsung patents (including two 3G cellular standard-essential patents), and that a Final Determination by the Commission is due no later than this Thursday, March 7 — and that the issue of the propriety of issuing an exclusion order for standard-essential patent infringement has been hotly debated here. Apple argues that the Tokyo court’s decision and factual findings “underscore that it would be against the public interest to issue an exclusionary remedy to Samsung on declared-essential patents.”
You can read the English language translation of the Tokyo court’s decision for yourself (attached as Exhibit A to Apple’s submission), but here is a brief summary of the court’s findings (keep in mind that much of the information surrounding Apple-Samsung licensing negotiations has been redacted):
- Samsung entered into a FRAND obligation with ETSI regarding the UMTS 3G cellular standard and Samsung’s patents that are essential to that standard.
- After Apple sued Samsung in 2011 over (non-essential) patents relating to the iPad and iPhone, Samsung sought a preliminary injunction in Japan against Apple based on alleged infringement of Samsung standard-essential patents.
- The parties entered into licensing negotiations, and in July 2011, Samsung offered Apple a worldwide license to its UMTS-essential patents at a royalty of 2.4% of the price of each end product. Samsung indicated that the offer would be open for 10 days.
- Under the Japanese civil code, parties in contract negotiations owe a duty to each other “to provide the other party with important information and negotiate in good faith.” But because Samsung did not indicate to Apple “the basis” for its offered 2.4% royalty rate at the time it made the offer, Samsung breach a duty of good faith to provide “material information” to Apple.
- Therefore, because “Samsung breached its duty of good faith to provide to the counterparty with material information at the stage of preparation for execution of a FRAND license agreement . . . it is held that Samsung should be be allowed to exercise the right to seek damages from Apple” without performing its duty of good faith. Samsung’s attempt to exercise its right “constitutes an abuse of rights.”
There’s no telling if this will actually affect the ITC’s decision whether to issue an exclusion order, especially because it was decided under Japanese legal principles (particularly the apparent duty to provide material information to counterparties in contractual negotiations). However, I’m sure Apple saw no downside to bringing the ITC’s attention to the ruling. Stay tuned later this week for the ITC’s Final Determination.