Samsung uses brute-force FRAND strategy: parallel antitrust/contract lawsuits against ZTE in U.S., UK, Germany

Context: When we became aware of a press release by the Frankfurt Regional Court on an antitrust action by an implementer against a Chinese standard-essential patent (SEP) holder, the fact that Samsung had previously sued ZTE in the High Court of Justice for England & Wales (EWHC) was the primary reason for which we were unsure that this was a Samsung v. ZTE case. Samsung’s German subsidiary is based in the Frankfurt area, but it appeared counterintuitive that someone would bring two FRAND cases against the same defendant in parallel. A visit to the courthouse, however, confirmed that it was indeed Samsung v. ZTE.

What’s new: Even more surprisingly, a third such lawsuit became discoverable in the Northern District of California last week. Samsung brought claims under antitrust as well as contract law, accusing ZTE of having violated its FRAND licensing obligations and seeking a preliminary and permanent injunction of rather broad scope.

Direct impact: Theoretically, multiple bites at the apple increases the likelihood of obtaining at least one favorable decision. In this case, however, it is not a given that Samsung is going to get a better result as a result of bringing an unprecedented number of parallel FRAND claims in three countries on two continents. For the reasons discussed in this article, it could also prove counterproductive. It could make each of the three courts wonder why it should move quickly when there are related cases pending in other venues,

Wider ramifications: The degree to which this dispute has escalated at an early stage is unusual. Normally, both Samsung and ZTE resolve disagreements on licensing terms without having to resort to litigation. Also, two of the arguments Samsung makes in its new U.S. complaint are inconsistent with certain positions it took in past disputes with Apple and Ericsson.

Both Samsung and ZTE are major wireless innovators. Recently, Samsung may have lost market share, which some attribute to the fact that Google increasingly tries to sell its own Pixel products (reportedly also because of dissatisfaction with Samsung’s efforts to compete with Apple, particularly in the U.S. market) and others to the fact that certain competitors in the Android device market may have been ahead in the incorporation of AI functionality. But Samsung still has an estimated global smartphone market share of more than 20%.

More than a decade ago, ZTE defended itself against SEP assertions from Huawei that led to the famous Huawei v. ZTE ruling by the European Court of Justice, while Samsung was investigated by competition watchdogs over its alleged abuse of SEPs against Apple.

Samsung’s U.S. complaint does not mention the Frankfurt action. It does, however, seek to distinguish itself from the UK FRAND case Samsung brought last year (prior to the expiration of their previous license agreement and, therefore, prior to any enforcement action by ZTE).

We are unaware of any other dispute in which an implementer brought proactive FRAND claims against the same party (thus over essentially the same question) in two, let alone three jurisdictions.