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Apple Inc. v. Samsung Elecs. Co.

United States District Court for the Northern District of California, San Jose Division

May 14, 2012, Decided; May 14, 2012, Filed

Case No.: 11-CV-01846

Opinion

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS AMENDED COUNTERCLAIMS

Before the Court is Defendants Samsung  [*10] Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC's (collectively "Samsung") Motion to Dismiss Plaintiff Apple, Inc.'s ("Apple") Counterclaims in Reply. See Samsung's Motion to Dismiss Apple's Counterclaims ("Mot. to Dismiss"), ECF No. 405. Samsung seeks to dismiss counts twenty-five (Breach of Contract — FRAND and Other Standard-Related Misconduct), twenty-six (Promissory Estoppel), twenty-seven (Declaratory Judgment that Apple is Licensed to Samsung's Declared-Essential Patents), twenty-eight (violation of Section 2 of the Sherman Antitrust Act), and twenty-nine (California Unfair Competition Law) of Apple's Amended Answer, Defenses, and Counterclaims in Reply to Samsung's Counterclaims ("Amended Counterclaims in Reply" or "ACR"). See generally, Mot. to Dismiss. A hearing was held on April 12, 2012. After considering the briefing provided by the parties, as well as the declarations and exhibits filed in support thereof by the parties, the Court grants in part and denies in part Samsung's Motion to Dismiss.

I. RELEVANT BACKGROUND

A. Factual Background

Unless otherwise noted, the following allegations are taken from Apple's Amended Counterclaims  [*11] in Reply and are presumed to be true for purposes of ruling upon Samsung's Motion to Dismiss. Apple and Samsung both sell telecommunications handsets that operate on wireless networks. ACR ¶ 23. To facilitate the interoperability necessary for various manufacturers' products to function on wireless networks, standards setting organizations ("SSOs") establish precise specifications for essential components of the technologies. Id. ¶ 24. Standards may have both pro-competitive and anti-competitive effects. For example, standards may reduce costs for both suppliers and purchasers by allowing wider distribution of a single product and thus increased manufacturing volumes and lower per unit costs and by increasing price competition among many suppliers all making standards-compliant products. Id. ¶¶ 25-26. Alternatively, standardization also creates a "lock-in" effect such that alternative technological approaches are practically unavailable as substitutes and thus owners of patents that are incorporated into a standard may demand excessive royalties for use in the adopted patented technology. Id. ¶¶ 27-28.

Apple and Samsung are both members of the European Telecommunications Standards Institute  [*12] ("ETSI"), which is an SSO headquartered in France. Id. ¶ 39. ETSI is one of six SSOs which combine to form the Third Generation Platform Partnership ("3GPP"). Id. ¶ 42. 3GPP sets standards for mobile wireless carrier technology, including the Universal Mobile Telecommunications Standard ("UMTS"), the standard at issue in this case. Id. ¶ 42. During the development of the UMTS, Samsung participated in ETSI working groups and proposed and advocated for the standardization of certain technologies to perform functions included in the standard. Id. ¶¶ 55, 57. Samsung has represented to Apple that it owns several patents that are essential to the UMTS (the "Declared-Essential Patents"). Id. ¶ 56.

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2012 U.S. Dist. LEXIS 67102 *; 2012-1 Trade Cas. (CCH) P77,890; 2012 WL 1672493

APPLE INC., a California corporation, Plaintiff, v. SAMSUNG ELECTRONICS CO., LTD., A Korean business entity; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation; SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, Defendants.

Subsequent History: Motion granted by, in part, Motion denied by, in part Apple, Inc. v. Samsung Elecs. Co., LTD., 2012 U.S. Dist. LEXIS 78103 (N.D. Cal., June 4, 2012)

Prior History: Apple Inc. v. Samsung Elecs. Co., 2012 U.S. Dist. LEXIS 62971 (N.D. Cal., May 4, 2012)

CORE TERMS

patents, license, Counterclaims, technology, Reply, antitrust, monopoly, estoppel, anticompetitive, promissory, notice, negotiate, Declaratory, infringement, non-discriminatory, irrevocable, pled, contractual, proprietary, royalty