Before the Apple and Beats marriage can really be official, the two companies must first gain regulatory approval from various governing bodies where the companies conduct business. Apple included the following expectation in its official press release announcing the deal: Subject to regulatory approvals, Apple expects the transaction to close in fiscal Q4.
For Apple, having regulatory approval and closing the transaction by the end of fiscal Q4 means it expects everything to be in order by the end of September. According to a Reuters report, regulators in the European Union will announce their decision on the deal by July 30th next month. Expand Expanding Close
Following a report yesterday that the European Commission was about to launch a formal investigation into Apple’s tax practices in Ireland, the EU has now officially announced the investigation at a press conference. Bloomberg reports that the investigation will include not just Apple, but also Starbucks and Fiat Finance & Trade SA and will look at “whether the tax deals in Ireland, the Netherlands and Luxembourg are illegal state aid.”
“Special secret deals should be outlawed across the EU,” Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, said in an e-mailed statement. “All tax breaks and reliefs should be openly available for qualifying businesses.”
“We need to fight against aggressive tax planning,” Joaquin Almunia, the EU’s competition commissioner, said at a press conference in Brussels. He said it’s “still too soon to anticipate” possible recovery if the EU finds the tax rulings to be illegal.
Apple responded with a statement to Bloomberg following the news claiming that it “pays every euro of every tax that we owe” and that it “received no selective treatment from Irish officials.” Apple’s full statement is below:
“Apple pays every euro of every tax that we owe,” the company said in an e-mailed statement. “We have received no selective treatment from Irish officials. Apple is subject to the same tax laws as scores of other international companies doing business in Ireland.”
According to a report from Ireland’s RTE.ie, the European Commission has decided to officially launch a formal investigation into Apple’s tax practices in the country (via The Loop). An announcement is expected by EU officials tomorrow:
The European Commission is to open a formal investigation into Apple’s tax arrangements with Ireland… An announcement is expected to be made by Competition Commissioner Joaquin Almunia tomorrow… EU state aid rules are designed to prevent unfair practices, although it is not clear that countries offering favourable tax terms to companies or industries would violate such rules.
Apple last year faced U.S. Senate hearing on its offshore tax practices in which it denied taking advantage of any tax gimmicks or loopholes in Ireland. The EU shortly after launched an investigation into tax agreements with multinational companies in Ireland and number of other EU countries, while government officials in Ireland denied claims of a special 2% tax deal with Apple.
While Apple’s Black Friday deals started going live in Australia and elsewhere today with Apple Store Gift Cards in place of traditional discounts, it appears Apple will be offering discounts and not gift cards in at least some countries. The UK, France, Germany and other European Apple Online Stores have now started posting Black Friday promotions with discounts on iPads, MacBooks, iPods, Apple TV, and many accessories. Expand Expanding Close
Reuters reports that Samsung is currently in preliminary discussions with EU regulators regarding a possible settlement related to charges that it abused its market dominance by blocking Apple from fairly using its essential patents in various ongoing patent disputes:
The talks came after the European Commission, which acts as EU competition regulator, told Samsung in December that it was acting unfairly by seeking injunctions against Apple over use of the essential patents.
“Samsung has been involved in settlement discussions for several months now. Samsung wants to settle,” said one of the sources, who declined to be identified because of the sensitivity of the matter.
If Samsung does settle in the case, it could avoid as much as $17.3 billion in fines. However, it would presumably have to agree to license its essential patents on fair terms, which could have an impact on current cases related to the European Union’s 3G UMTS standard.
Belgian consumer groups have been following the move of Italian regulators in recent months to push Apple for changes to its warranty programs in order to clarify rules regarding a statutory warranty enforced by EU law that requires companies to make sure products are free from defects for two years. It isn’t the only other nation pushing for changes to warranties, consumers groups in at least Belgium, Germany, Luxembourg, and Portugal had also filed lawsuits against Apple over its AppleCare and warranty practices. Now, Dutch-language a-n-v.be reports Apple has tweaked its online warranty program in Belgium to meet EU law.
The change in the online warranties tweaks the wording of Apple’s 1-year warranty for free repair and replacements to clarify the 2 year statutory warranty, much the same as what happened in Italy.
In the midst of the U.S. government’s interest in Apple and other large multinationals that “avoid” paying taxes in the U.S. or repatriating funds stored abroad, RudeBaguette.com notes that the French society of authors, composers, and music publishers (SACEM) has announced that Apple owes around 5 million euros in unpaid taxes.
The funds apparently come from unpaid royalties on iPad sales for 2011 that France and other EU countries, such as Germany, collect for devices capable of transferring and displaying copyrighted material:
To give a bit of a background, the copie privée is a tax in several countries including France & Germany that is applied to all digital devices that can transfer, read, or otherwise make use of copyrighted material. The tax goes to the SACEM, which then takes the lump sum of all the taxes collected and deals them out to authors, creators, producers, actors, etc. accordingly… the problem here isn’t so much the tax, but that Apple actually charged the consumers this tax, and didn’t pay it out to the SACEM.
Bloomberg reports that the Berlin Regional Court in Germany has told Apple to change its policies for managing customer’s data on its website after ruling that Apple’s terms for data use go against German laws. According to a statement posted by a German consumer group Verbraucherzentrale Bundesverband (VSBV), the courts have ruled that Apple cannot request “global consent” for use of a customer’s data” without informing the user of where and how the data will be used. It will also no longer be able to use German users’ data to “promote location-based services and products” or deliver the data to third-parties for advertising purposes: Expand Expanding Close
As if we needed someone to tell us that the ongoing patent lawsuits between Apple and Motorola in Germany were getting a little out of control… Today the European Commission has finally stepped up calling Motorola’s enforcement of an injunction against Apple with mobile standard essential patents “abuse of a dominant position prohibited by EU antitrust rules.” The EU Commission, however, does note that the statement of objections sent to Motorola does not reflect the final outcome of its investigation into its use of standard essential patents (SEPs):
The Motorola Mobility SEPs in question relate to the European Telecommunications Standardisation Institute’s (ETSI) GPRS standard, part of the GSM standard, which is a key industry standard for mobile and wireless communications. When this standard was adopted in Europe, Motorola Mobility gave a commitment that it would license the patents which it had declared essential to the standard on FRAND terms. Nevertheless, Motorola Mobility sought an injunction against Apple in Germany on the basis of a GPRS SEP and, after the injunction was granted, went on to enforce it, even when Apple had declared that it would be willing to be bound by a determination of the FRAND royalties by the German court.
The EU Commission essentially states that Apple should be able to license the technology under fair, reasonable and non-discriminatory terms decided by a third-party, and that Motorola’s approach with its latest injunction could “distort licensing negotiations and impose unjustified licensing terms.” Back in February of 2012, Apple was for a short while forced to remove all 3G devices from its online store in Germany following the injunction, and at the time Apple noted that “Motorola repeatedly refuses to license this patent to Apple on reasonable terms, despite having declared it an industry standard patent seven years ago.” Expand Expanding Close
Following a controversy in which Apple removed app discovery service AppGratis from its App Store for breaking Apple’s guidelines, Reuters reports today that regulators in France are planning to ask the European Commission and EU member states for better regulation of technology companies. The statement was made by French junior minister for digital economy Fleur Pellerin on a recent trip to AppGratis publisher iMediapp. Fleur described Apple’s decision to pull AppGratis as “extremely brutal and unilateral”:
“This behaviour is not worthy of a company of this size,” Pellerin said. She added that certain Internet companies were guilty of “repeated abusive behaviour” and said she would ask the European Commission and EU member states to better regulate digital platforms, search engines and social media.
The decision comes as Apple is drawing some heat for its broad App Store guidelines that have allowed it to remove some apps that promote App Store content but not others. Apple originally said that AppGratis was removed for breaking a guideline that warns against “Apps that display Apps other than your own for purchase or promotion in a manner similar to or confusing with the App Store.” Apple also said AppGratis was in violation of guideline 5.6 that says “apps cannot use Push Notifications to send advertising, promotions, or direct marketing of any kind.
AllThingsD reported that sources have indicated Apple’s removal of AppGratis is part of a broader crackdown on app discovery applications, but a grey area still remains regarding how Apple decides which apps are approved and which are removed.
Apple told Retuers today that it had discussions with AppGratis prior to the removal and that the developers had “disregarded its technical specifications.” Expand Expanding Close
Apple may face an anti-trust investigation in Europe over its iPhone contracts with carriers as it defends itself against separate investigations for alleged price gouging in Australia.
Apple was informed last year that it would be required to attend a hearing by Australia’s Standing Committee on Infrastructure and Communications to explain why its pricing of digital content was higher in Australia than in the United States. The hearing is now underway, as reported by the Sydney Morning Herald, with Apple asked to explain why content sold through iTunes is marked up between 30 and 70 percent higher than in the U.S. Apple is blaming wholesale pricing agreements in the country.
“The pricing of this digital content is based on the wholesale prices which are set through negotiated contracts with the record labels, movie studios and TV networks,” said Mr King, who is Apple’s vice president for Australia, New Zealand and South Asia.
Today, we have updates on Apple and Samsung’s ongoing court woes. A report from Bloomberg noted U.S. District Judge Lucy H. Koh in the San Jose, California case rejected Apple’s most recent request for a United States sales ban on 26 Samsung devices. According to the report, Koh said the decision was based on the fact that the “case involves lost sales—not a lost ability to be a viable market participant.”
“Samsung may have cut into Apple’s customer base somewhat, but there is no suggestion that Samsung will wipe out Apple’s customer base, or force Apple out of the business of making smartphones,” Koh said. “The present case involves lost sales — not a lost ability to be a viable market participant.”
As noted by The Verge, a second post-trial order delivered by Koh yesterday denied Samsung’s request for a new trial on the claims of jury misconduct. Koh claimed that juror Velvin Hogan disclosed his previous involvement with Seagate during the jury selection process, giving Samsung’s lawyers more than enough time to discover the litigation. From the court filing:
Samsung has waived its claim for an evidentiary hearing and a new trial based on Mr. Hogan’s alleged dishonesty during voir dire. Prior to the verdict, Samsung could have discovered Mr. Hogan’s litigation with Seagate, had Samsung acted with reasonable diligence based on information Samsung acquired through voir dire, namely that Mr. Hogan stated during voir dire that he had worked for Seagate.
Samsung vs. Apple cases abroad are also making news today: FossPatents reported today that Samsung has dropped all requests for sales bans against Apple in Europe related to standard-essential patents. However, as pointed out in the report, Samsung will still attempt to win monetary compensation in its cases against Apple, but will no longer request courts to enforce bans on Apple products. FossPatents speculated on Samsung’s decision: Expand Expanding Close
We reported several times about Italian anti-trust authorities fining Apple $1.2 million for “misleading consumers” in relation to AppleCare warranties. The decision made by the Autorità Garante della Concorrenza e del Mercato stated Apple’s 1-year AppleCare warranties were failing to inform consumers of a mandatory warranty of two years imposed by European Union law. Today we heard confirmation from Bloomberg that not just Italy, but consumer groups from 11 countries, requested that Apple make changes to its AppleCare policies and immediately halt its current “practices on the guarantees.”
Apple products say they come with a one-year warranty when European Union law requires manufacturers cover goods for two years, consumer groups in 11 countries, including Italy and Germany, said in an e-mailed statement today. The groups said they sent letters to national regulators seeking an immediate halt to Apple’s practices on the guarantees
The letter sent by consumer groups comes two days before Apple is set to appeal the $1.2 million fine imposed by Autorità Garante della Concorrenza e del Mercato on March 21. Apple already published the initial anti-trust decision on its website, but the group is asking Apple to also alter its warranty policies and publish a notice to consumers about the changes it made on Apple.com. Expand Expanding Close
European Union regulators today announced the launch of a formal investigation of Samsung over mobile patents to determine whether the South Korean conglomerate breached EU antitrust rules in its legal dealings with competitors. The investigation is focused on so-called FRAND patents, a common rule that stipulates a patent applying to the standard must be adopted on “fair, reasonable, and non-discriminatory terms” (FRAND). According to the press release, EU regulators want to figure out whether Samsung “used certain of its standard essential patent rights to distort competition in European mobile device markets, in breach of EU antitrust rules.”
The Commission reminds that Samsung a decade ago promised to let rivals license its mobile patents under FRAND terms. The full-blown investigation comes in the light of the lawsuits Samsung filed against Apple at courts in Germany, France, the Netherlands and other countries around the world, asserting copyright infringement related to patents essential to wireless telecommunications standards.
The case is “a matter of priority,” the document reads. Patent blogger explained, “The European Commission can’t wait until Samsung finally wins a ruling based on such a patent and enforces it, potentially causing irreparable harm.” The full text of the European Commission Antitrust Commission announcement can be found below.
Apple plans to appeal a decision by Autorità Garante della Concorrenza e del Mercato to impose $1.2 million USD fine for not providing consumers with a two-year warranty mandatory under European Union law and the Italian Consumer Code. An Apple PR representative apparently confirmed the decision to appeal the fines to The Register.
We reported earlier this week that Italian antitrust authorities were fining Apple Inc., Apple Sales International, and Apple Retail Italy $1.2 million USD related to “bad commercial practices that harmed consumers.” The Autorità Garante della Concorrenza e del Mercato claimed Apple has not implemented a two-year product guarantee available to all consumers through EU law. Instead, Apple continues to push their own AppleCare warranties to consumers without indication of the consumer’s rights to the free two-year guarantee.
The Autorità Garante della Concorrenza e del Mercato asked Apple “cease practice” of their current warranty policies, and “notify the Authority” of a new course of action. They also want Apple to publish clarification of the new policy on Apple.com to notify consumers. It is unclear if other authorities throughout the EU will take similar action.
Apple is also accused by the European Antitrust Commission of engaging in “illegal agreements or practices that would have the object or the effect of restricting competition in the EU or in the EEA” related to their iBooks business.
According to a report from Dutch publication Webwereld (via Computerworld), Apple has once again submitted doctored evidence related to their claims of design patent-related infringement by Samsung, this time to a court in Netherlands. This further supports claims by Bas Berghuis of Simmons and Simmons (Samsung’s lawyer) that Apple has been “manipulating visual evidence, making Samsung’s devices appear more similar to Apple’s.”
“It surprises me that for the second time incorrect presentations of a Samsung product emerge in photographic evidence filed in litigation,” said Mark Krul, lawyer and IP law specialist at Dutch firm WiseMen. “This is not appropriate and undermines Apple’s credibility both inside and outside the court room.”
If you aren’t up to speed with the legal disputes between Apple and Samsung in Europe… a court in Germany already granted a preliminary injunction halting sales of Samsung’s Galaxy tab 10.1 tablet in the EU (which has been since lifted pending an appeal). We already heard about Apple manipulating images in that case related to the iPad and Galaxy tab. This time, however, the report claims Apple doctored images of the Samsung Galaxy S smartphone in comparison to the iPhone 3G.
Apparently the changes made the Galaxy S appear smaller than it actually is to closer resemble the dimensions of the 3G, which is odd given the fact Computerworld reports Apple has confirmed the Galaxy S does include “some non-identical elements, such as the slightly larger dimensions.” This supports the idea that Apple isn’t trying to secretly submit this evidence to the courts. Many have noted a German court’s decision to grant Apple with the original preliminary injunction on the Galaxy tab didn’t take the doctored images into account. In fact, patent expert Florian Mueller noted “the court’s decision was based on both Apple’s motion and Samsung’s pre-emptive opposition pleading” and also stated “Samsung is in a legally weak position against Apple. If Samsung wants to inspire confidence, it has to understand that half the truth is sometimes tantamount to a whole lie.” Expand Expanding Close
It’s no secret patent-related legal disputes have become the subject of most media coverage lately…Whether it’s Apple halting sales of Samsung’s tablets, HTC going after Apple, or Google snatching up Motorola to beef up their patent portfolio, it’s clear the company with the most patents will have an advantage over others in the legal proceedings that we’re bound to continue encountering down the road. This is why we’re intrigued by the graphic above (via GigaOM)from mobile analyst Chetan Sharma charting the number of issued patents (in the US and Europe) between 1993 and 2011.
While these estimates of mobile communications related patents don’t take the quality of patents into account (which is obviously a huge factor in determining their long-term value), you can see from the breakdown below that Nokia and Samsung top the list, with the other expected players including IBM, Microsoft, Sony, Motorola, and Intel following.
Noticeably far down the list is Apple, the one company who seems to have had more success than others fighting patent-related issues recently. Again, these numbers in no way represent the quality of patents and the ability for companies to protect their IPs in the courtroom… which is also a good indication that perhaps we should be looking more closely at the quality of patents rather than the sheer number.
Recently patent expert Florian Mueller took to Twitter following the Google/Motorola acquisition saying he“would caution everyone against overestimating the strength of Motorola Mobility’s patent portfolio,” he continued, “Apple and Microsoft sued Motorola Mobility anyway”. Remember kids… all patents aren’t created equally. Expand Expanding Close
Update: Samsung has issued the following statement (via TNW) addressing the court’s decision to grant Apple the preliminary injunction:
Samsung is disappointed with the court’s decision and we intend to act immediately to defend our intellectual property rights through the ongoing legal proceedings in Germany and will continue to actively defend these rights throughout the world.
The request for injunction was filed with no notice to Samsung, and the order was issued without any hearing or presentation of evidence from Samsung.
We will take all necessary measures to ensure Samsung’s innovative mobile communications devices are available to customers in Europe and around the world.
This decision by the court in Germany in no way influences other legal proceedings filed with the courts in Europe and elsewhere.
Reports are coming in that Apple has been granted a preliminary injunction for the entire European Union (excluding Netherlands) that will halt distribution of Samsung’s Galaxy Tab 10.1. This comes on the heels of a postponed launch of the device in Australia due to a lawsuit with Apple.
The decision by the Regional Court of Dusseldorf in Germany to block sales of the device comes after a judge sided with Apple on claims that Galaxy Tab copied key design components related to the iPad 2. While Samsung can appeal the court’s decision sometime in the next month, the Telegraph’s Shane Richmond is quick to point out it would be heard by the same judge. Apple is also said to have a separate lawsuit filed in the Netherlands as well.
Samsung had this to say in a recent statement about their legal disputes with Apple:
“Samsung believes that there is no legal basis for this assertion. We will continue to serve our customers and distributors and the sale of Samsung products will be continued.”
And Apple has made their stance on the situation clear…
“It’s no coincidence that Samsung’s latest products look a lot like the iPhone and iPad, from the shape of the hardware to the user interface and even the packaging. This kind of blatant copying is wrong, and we need to protect Apple’s intellectual property when companies steal our ideas.”
