Category: Competition law

Next step for Samsung after losing v. Apple? Take it to D.C.

Samsung has a very low legal barrier to overcome to challenge the Apple victory in the District Court of Northern California: it needs to show “substantial evidence” that the decision was incorrect. Substantial evidence is evidence that a reasonable person could accept as adequate to support the appellant’s conclusion.  This is lower than the civil standard for a verdict and is famously defined as “more than a scintilla but less than preponderance.” Basically, if you’ve got some evidence that you think the court didn’t give adequate hearing to, you’re in.

On August 1st Samsung lawyers Quinn Emmanuel released to the media further supporting evidence which the District Court judge had refused, thereby cementing a case for appeal on substantial evidence while making an arguably effective appeal for public sympathy as an underdog versus colossus Apple. Not bad for a huge Korean conglomerate with the world’s 2nd largest patent portfolio.

What do I think of the ruling? (the jury verdict is here)

For one, I’m not a fan of competition through litigation and moreover, a lot of questionable “soft” patents (design, software functionalities, business processes) were granted over the past 10-15 years—at least before Dave Kappos took the helm at USPTO and repaired a dysfunctional and understaffed agency.

That said, I think that both Apple and Samsung have a case to make. Samsung has patents (notably the ‘460 patent) that look like they may have been infringed and that the jury simply decided to ignore. Moreover, they checked “Y” next to every Samsung smartphone variant on the list they were submitted.

I find it hard to believe that the jury could have tested each of the phones versus an iPhone. For example, if you look at the functionality of the Nexus S 4G, it is completely different from an iPhone. No central home button, widgetized homescreens, an app list that has to be called up specifically to be accessed and a notification bar that Apple arguably copped for iOS 5. However, the Galaxy S, with its Samsung TouchWiz layer on the Android and the central home button is arguably very similar to iPhones 1-3.

So what do I think Samsung will do? I think it needs to immediately appeal to the Court of Appeals for the Federal Circuit in Washington. Nothing against Judge Koh or the 9th District, but I don’t think that Samsung ultimately got a fair hearing or a fair verdict with this particular court and jury (which apparently included some people familiar with  engineering and design). The case should be retried by a court with a stronger expertise in patent cases.

Updated: Apple v. Samsung jury foreman and others speak out on how they reached the ruling. The pitiful level of analysis is breathtaking. Great reporting from FoxNews.

Updated 2: Keith Sawyer’s Innovation & Creativity blog has a great post expanding on some of the points raised here.

69 Questions: EU quizes the G on its new privacy policy.

France’s data privacy authority CNIL (acting under EU mandate) sent Google the following questionnaire in order to clarify a number of concerns on the policy’s implementation, Google’s due diligence vis-a-vis its users and compliance of the policy with EU regulations.

The EU’s Article 29 Working Party (grouping Member State data protection authorities) stated that it further needs to clarify the consequences of the policy for users; specifically different levels of users, such as whether or not they have a Google Account, are non-authenticated, or simply passive users of Google’s services through Google APIs via other websites and/or applications (advertising, analytics, etc.).

Many of the questions seem to point in the direction of Competition Law concerns. It’s hard to imagine that the EU would be posing the same questions about Yahoo!’s privacy policy (which to my eyes, looks compliant).

The CNIL asked Google to provide written responses by April 5. Under EU law, responses are confidential unless Google consents to their release.

 

French Competition Authority will cut fines 10% for companies with compliance programs.

More recognition across Europe that a well-built and delivered compliance program is being taken into consideration by regulatory authorities comes from France today as the Competition Authority published notice that it would reduce fines for companies that put into place a competition law compliance program. They note and recommend that an “an efficient program” include the following basic elements:

  • The existence of a clear, firm and public position of support adopted by the company’s management bodies;
  • The commitment to appoint one or more persons responsible for the program’s development and operation;
  • Developing information tools, awareness raising measures and staff training;
  • Setting up management, audit and whistle blowing mechanisms;
  • Establishing a system for reviewing reports of misconduct and taking relevant followup actions.

It’s edifiying to witness the principal of reducing sanctions for companies with an effective compliance program spread out to other areas of corporations law. This is a very welcome development for compliance officers and legal departments who can leverage it to demonstrate the value of their programs.

Finally, it wouldn’t be a surprising to see 1) every market leader (or near-leader) in the EU adopt a compliance program and 2) compliance programs being considered in sanctions on in other aspects of corporate behavior, especially in the financial and energy sectors.

 

Don’t touch that. Dawn raids and the EU seal.

A costly mistake.

While reading a Bloomberg news story on the EU probe into possible collusion between Veolia, Suez and Saur to fix French water services prices, I was reminded that last year Suez’s subsidiary Lyonnaise des Eaux stumbled across one of EU Competition law’s most onerous and unusual provisions.

Suez was fined €8 million for opening a door.

Unless you have actually been raided, you probably are not aware that the Commission’s inspectors often seal rooms when carrying out dawn raids at corporations suspected of violating Competition law. In the Suez case, when the EU team returned the day after the initial raid to continue its search, it found that a seal on an office door had been removed.

Under EU regulations, the Commission can fine a company up to 1% of its total turnover (worldwide) for a seal broken either intentionally or negligently. You basically have no excuse.

Since Suez cooperated with the Commission, the fine is much lower than 1% of their global turnover. Still, I’m not sure their CFO was impressed with the savings.

This is not the first time a seal has been broken. In an even more costly “seal case”, the EU fined E.ON Energie €38 million. E.ON challenged the fine and lost on appeal.

The moral of the story?

Competition law compliance training should be adapted to each employee and contractor in your organization. In this case, a short and frank discussion with the administrative and cleaning staff would have been worth say, €8 million. These discussions should be renewed any time there is a change in staff or service providers.

Photo: European Union © 2012

Good relations are key to Competition Law compliance.

Competition law compliance secret #2: Good relations with your distribution network, customers and competitors are good for your business.

While an informal complaint to DG COMP may not be investgated, its effect on your business will be immediate and possibly expensive should an inquiry be opened, whether or not the complaint has any merit.

Note that any individual can file an informal complaint via the DG COMP web site complaint form.

What do I recommend to preserve good relations?

1. Take any negative feedback from your partners, customers and competitors seriously. This means taking positive action to remedy any situation and documenting such actions;

2. Have a clear policy on communication with competitors, partners and customers and a defined escalation path (through compliance or legal) for complaints from any 3rd parties; and

3. Be honest with partners and customers and never show favoritism that can’t be justified by qualitative facts and only after vetting with your legal counsel.

 

 

Train your salesforce to compete fairly.

Competition law compliance secret #1:

Firstly, your salesforce needs to know that competition law is serious business and can affect their bottom line–even to the point where authorities can get involved in their personal lives.

Competition/Anti-trust legal penalties are SEVERE:

  • Fines (up to 10% of worldwide turnover)
  • Cease & Desist orders, consent decrees, authorities dictating your terms, conditions and prices
  • Personal liability for company officers
  • Searches of offices, laptops, and employee homes
I can put a training program together for your company or your legal department. Click feedback on the left of your screen and send me a message–I will immediately get back to you. 

 

Facing inquiries?

You have had a lot of success in the marketplace and you may in fact be the market leader. With success comes responsibility–the obligation to engage in fair competition and to respect your distributors.

Do you want to know the 5 secrets to how you can ensure competition law compliance and maintain friendly relations with the EU and local authorities?

Each week I will publish one vitally important piece of advice that you can immediately use in your enterprise, along with the possibility to contact me for further information if you need it. This week’s secret: Train your salesforce