The coverage has been wall-to-wall this weekend about Pres. Obama’s veto of the exclusion order entered in favor of Apple by the International Trade Commission regarding its on-going patent dispute with Samsung. The letter can be found here – http://www.ustr.gov/sites/default/files/08032013%20Letter_1.PDF.
There are perhaps two noteworthy points about this letter. First, that the Administration even got involved was surprising. After all, the last time a President took a position on an ITC exclusion order was 1987 . Equally noteworthy are the grounds on which the Administration chose to rely.
As lawyers, we are used to a trial court developing a record and when the higher court hears the appeal, it considers that record and decides whether a violation of law has occurred. What USTR Froman did in the August 3rd letter was to basically tell the ITC it decided the case on the wrong grounds. There is no doubt the ITC considered the patent infringement issue. However, Mr. Froman said it should have also considered the factors stated in the legislative history to 19 U.S.C. § 1337: 1) public health and welfare; 2) competitive conditions in the U.S. economy; 3) production of competitive articles in the U.S.; 4) U.S. consumers; and 5) U.S. foreign relations, economic and political.
I had said all along I did not see Obama getting into the middle of the Apple – Samsung dispute, for a variety of political reasons, but the Administration chose to do so by reference to a January 8, 2013 policy statement issued by the Dept. of Justice and the Patent and Trademark Office. It deals with standard-essential patents (SEPs) which the rights holder voluntarily commits to make available for licensing on terms that are fair, reasonable and non-discriminatory (FRAND). SEPs are patents which result from consensus technology standards set by standard setting organizations. The anti-trust concern is that by asserting the patent on unreasonable grounds to exclude an implementor, there could be unfair steps taken to limit competition.
In the end, what USTR said was the ITC did not evaluate the policy factors contained in 337’s legislative history and so the order should be overturned. Apple had the right to appeal the ITC order to the Court of Appeals for the Federal Circuit, but since it has been overturned, Apple has no grounds to proceed. At the same time, Samsung is now left without an avenue for appeal of this particular decision, but the two companies continue to fight it out all over the world. So, it makes one wonder, when will the parties settle their differences and enter into cross-licensing agreements?