To the surprise of almost no one the Obama Administration has overturned the looming
The Obama administration on Saturday vetoed a U.S. trade body's ban on the import and sale of some Apple Inc. iPhones and iPads, a rare move that upends a legal victory for smartphone rival
Samsung Electronics Co.
The particular reason used was that the patent in question was a standards essential one:
In addition, on January 8, 2013, the Department of Justice and United States Patent and Trademark Office issued an important Policy Statement entitled “Policy Statement on Remedies for Standard-Essential Patents Subject to Voluntary FRAND Commitments” (“Policy Statement”).2 The Policy Statement makes clear that standards, and particularly voluntary consensus standards set by standards developing organizations (“SDO”), have incorporated important technical advances that are fundamental to the interoperability of many of the products on which consumers have come to rely, including the types of devices that are the subject of the Commission’s determination. The Policy Statement expresses substantial concerns, which I strongly share, about the potential harms that can result from owners of standardsessential patents (“SEPs”) who have made a voluntary commitment to offer to license SEPs on terms that are fair, reasonable, and nondiscriminatory (“FRAND”), gaining undue leverage and engaging in “patent holdup”, i.e., asserting the patent to exclude an implementer of the standard from a market to obtain a higher price for use of the patent than would have been possible before the standard was set, when alternative technologies could have been chosen. At the same time, technology implementers also can cause potential harm by, for example, engaging in “reverse holdup” (“holdout”), e. g., by constructive refusal to negotiate a FRAND license with the SEP owner or refusal to pay what has been determined to be a FRAND royalty.
This seems reasonable enough: the EU also has a similar policy that violation of SEPs, that should be available on FRAND terms, cannot be used to ask for product or sales bans.
Samsung, as you might imagine, is not happy:
Samsung is unsurprisingly unhappy with the decision. In an emailed statement, a representative said "We are disappointed that the U.S. Trade Representative has decided to set aside the exclusion order issued by the U.S. International Trade Commission (ITC). The ITC’s decision correctly recognized that Samsung has been negotiating in good faith and that Apple remains unwilling to take a license."
It is unusual for such a ban to be overturned, this is true:
Trade Representative Michael Froman issued the veto for the executive branch today, marking the first time a presidential administration has vetoed a product ban by the ITC since 1987.
This doesn't change Samsung's legal rights in a court room at all of course:
Froman noted that his decision does not stop the dispute between Apple and Samsung from continuing to play out in court. Last summer, Apple won a $1 billion lawsuit against Samsung over patent issues.
As my colleague points out:
Florian Mueller of Foss Patents, who has been following Apple and Samsung’s case before the ITC, called today’s veto “a victory for consumers and fair competition.”
“This is the first veto of an ITC ruling in decades, and I believe the ITC’s majority opinion was so out of step with basic antitrust rules (such as tying) and its effects would have been so very anticompetitive and anti-innovative that this veto was unfortunately necessary,” Mueller said, noting that supporters of Apple, including
AT&T , Verizon and a bipartisan group of U.S. Senators, have been speaking up in recent weeks.”The issue here is not primarily what would have happened to those older iPhones and iPads — I’m sure Apple could have handled the situation somehow. The problem is that this would have made the ITC the forum of choice for SEP abusers (strategic abusers who want to get away with infringement of non-SEPs as well as overly aggressive monetizers).”
Apple's pretty happy about it all of course:
"We applaud the Administration for standing up for innovation in this landmark case," Apple spokeswoman Kristin Huguet said in a statement. "Samsung was wrong to abuse the patent system in this way."
It's possible to be rather cynical about this. Apple is the largest single taxpayer in the US and it's sorta unlikely that an administration would ban the products of said largest taxpayer. But I think such cynicism would be misplaced here. The important point being that it is indeed all about a standards essential patent. And the general movement in patent cases seems to be that SEP violations should not lead to product bans. So, given that this is an SEP violation, no product ban.
