USTR Overrides ITC in Nixing Import Ban on Some Apple Products
U.S. Trade Representative Michael Froman vetoed a ban on imports of early-model Apple iPhones and iPads on Saturday, dealing a blow to Samsung in a patent dispute under Section 337 of the 1930 Tariff Act. The International Trade Commission had issued the limited exclusion order after finding that some Apple iPhones and iPads infringe Samsung’s patents. After a 60-day presidential review period, the USTR said an import ban is unwarranted because the technology at issue is a standard-essential patent, and Samsung didn’t prove it made enough of an effort to license the technology to Apple.
"We are disappointed that the U.S. Trade Representative has decided to set aside the exclusion order issued by” the ITC, said a Samsung spokeswoman. “The ITC’s decision correctly recognized that Samsung has been negotiating in good faith and that Apple remains unwilling to take a license.” Apple didn’t comment.
The ITC issued a limited exclusion in early June after finding patent infringement by imports of Apple’s iPhone 4, iPhone 3GS, iPhone 3, iPad 3G, and iPad2 3G. The decision overturned an administrative law judge’s earlier finding of no infringement. Commissioner Dean Pinkert dissented on whether the ITC should have refused entry for Apple’s products. He said Samsung had an obligation to license the standard-essential patents at issue in the dispute to Apple on a “fair, reasonable, and non-discriminatory” (FRAND) basis. Instead, Samsung tried to make Apple obtain a license on another patent as part of the terms of the licensing deal on the standard-essential patent, Pinkert said. That requirement was “neither fair nor nondiscriminatory,” he said.
The limited exclusion order triggered a 60-day presidential review period for the USTR to review how blocking the imports would impact the public interest. A bipartisan group of senators sent a letter to Froman on July 30, urging careful consideration of whether Samsung made a good faith effort to license the patent on FRAND terms. “Any precedent that would enable or encourage companies to include their patented technology in a standard, commit to license included patents on FRAND terms, and then seek to threaten to secure an exclusion order against a willing licensee despite a breach of that commitment would thus implicate significant policy concerns,” the letter said (http://bit.ly/1enZzE5). “Such an outcome could undermine broad participation in the standards-setting process and in turn threaten the meaningful benefits these standards provide for competition and consumers.” The letter was signed by Sens. Barbara Boxer, D-Calif.; Amy Klobuchar, D-Minn.; Mike Lee, R-Utah; and James Risch, R-Idaho.
The USTR letter vetoing the import ban didn’t explicitly fault Samsung’s willingness to license the patents. But it did say its decision to veto the limited exclusion order was based on its consideration of that issue. Citing a January policy statement from the Patent and Trademark Office and the Justice Department (CD Jan 10 p12), Froman said exclusion orders on standard-essential patents that are licensed on FRAND terms should only be issued in special cases, like when the putative licensee (in this case, Apple) is unable or refuses to take an FRAND license. The decision to veto was based on that policy consideration, the letter said.
Klobuchar believes the “decision is good news for consumers,” she said. “I will continue to work to ensure that disputes over these patents don’t burden customers with higher costs and restricted access to technology.”