This is the case in which Apple requested the court to confirm that Apple’s products do not infringe Samsung’s Japanese patent No. 4642898.
Samsung declared its willingness to negotiate a license agreement on the basis of fair, reasonable and non-discriminatory terms (i.e. FRAND terms, which we’ve reported on previously). Apple uses Samsung’s patent technology for their products. Thus, Apple attempted to contract with Samsung for using the patent. However, Apple and Samsung could not reach an agreement. Ultimately, Apple filed a lawsuit before the Tokyo District Court.
In the first instance, Tokyo District Court ruled that although some acts of Apple infringe the patent, Samsung cannot exercise its patent right against Apple, since Samsung did not negotiate the license agreement under FRAND with Apple in good faith: Apple had requested Samsung to disclose some information relating to the royalty proposed by Samsung, so that Apple can judge if such a proposal is appropriate or not. However, Samsung did not disclose such information and just asserted that Apple should present their counter-proposal if Apple does not agree with Samsung’s proposal.
Samsung appealed against the decision to IPHC, and IPHC decided to review this case in Grand Panel (collegial body of five judges including four chief judges of each division of IPHC). This is the first Japanese IP case for which the court collected public comments on exercising patent rights under FRAND.
The Grand Panel judged as follows:
(1) Is the license agreement completed by just declaring FRAND? → No. FRAND is not an offer of the license agreement. Since Apple and Samsung have not come to the final agreement of the contract, there is no valid contract between Apple and Samsung.
(2) Can Samsung exercise its patent right against Apple? → Partially yes, for compensation of damage. Not, for injunction.
2.1 IPHC mentions that the compensation of damage within the range of “fair and reasonable condition” should be admitted, even under FRAND declaration. On the other hand, if the proprietor asserts the royalty which is beyond the range of “fair and reasonable condition”, such a part (the part beyond the “fair and reasonable condition”) cannot be compensated.
2.2 Regarding injunction, IPHC concluded that the proprietor who declares FRAND cannot request an injunction against the third party, as long as the party has an intention to make license agreement with the proprietor (since Apple tried to make a contract with Samsung, IPHC judged that Apple had an intention to make a contract. Thus, IPHC did not admit Samsung’s right for injunction against Apple’s products). The decision states, on the other hand, if the third party has no intention to make a license agreement with the proprietor, the injunction can be permitted.