Linked by Thom Holwerda on Sat 3rd Aug 2013 20:34 UTC
Legal The Obama administration:

After extensive consultations with the agencies of the Trade Policy Staff Committee and the Trade Policy Review Group, as well as other interested agencies and persons, I have decided to disapprove the USITC's determination to issue an exclusion order and cease and desist order in this investigation.

Lots of talk about SEPs and FRAND in Obama's decree, which means that the Obama administration contradicts everything the ITC has said. To freshen your memory, the ITC ruled that not only was the patent in question not a standard essential patent, but Samsung's offer was actually proper FRAND:

Additionally, the Commission found that there were still disputed issues concerning the patent at issue was even actually essential to the standard (and therefore whether a FRAND or disclosure obligation applied at all).

[...]

The Commission analyzed the history of negotiations between Apple and Samsung (this portion is heavily redacted) to see if Apple showed that Samsung failed to negotiate “in good faith,” and found that Apple failed to do so. Notably, the Commission dismissed Apple’s arguments that (1) Samsung’s initial offer was so high as to show bad faith, and (2) Samsung’s attempts to get a cross-license to Apple’s non-SEPs violated its FRAND commitments.

In other words, the Obama administration threw out virtually everything the ITC has said in order to protect Apple. This effectively means that American companies can infringe on non-American companies' (standard essential) patents all they want, because the president will simply step in if they try to fight back.

So, I was wrong. I expected the Obama administration to be impartial and not give such a huge slap in the face of the ITC - as cynical as I usually am, I can still be naive. Protectionism is more important to the POTUS.

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It's not that clear, Thom
by oskeladden on Sat 3rd Aug 2013 22:02 UTC
oskeladden
Member since:
2009-08-05

The trouble is that from a strictly legal point of view, it's not at all clear what FRAND means in relation to competitors. Does a FRAND requirement force you to offer your licenses to competitors on the same terms as to non-competitors, or can you offer terms that are substantially different? What does 'non-discriminatory' mean in this context? Legal opinion is far from clear. The ITC's ruling follows one strand of opinion (of which the clearest example is probably the work of Damien Gerardin, available on SSRN), but there are plenty of people who disagree (including the vast majority of US patent scholars). The reality is that the FRAND commitment was drafted in a different era, when nobody anticipated the sort of ridiculous behaviour we now see in relation to shiny gadgets, so the question of what the clause means is well and truly up for grabs. The ITC is pretty low down in the pecking order when it comes to interpreting the law, so it's not at all surprising that the US Department of Justice give its views as to what 'FRAND' means less than total respect. The view they're taking is in essence that this is an issue that needs to be resolved by a Court, not a quasi-administrative body like the ITC. That is the precise import of the last paragraph of the memo.

My own view is that this is not an issue the law courts can resolve - in an ideal world, standard-setting organisations would have arbitral tribunals that would provide authoritative rulings on the meaning of ambiguous clauses and phrases in their standard agreements and / or regulations. Regrettably, that's unlikely to happen. In the absence of that, though, I sort of agree with the DoJ that an organisation like the ITC should not be in the business of determining what contested phrases like 'FRAND' mean. That isn't the role it was supposed to play when it was set up. The courts (and, in particular, the lower judiciary in the US) are far from ideal as fora to decide disputes of this type, but even they're better than the ITC.

Reply Score: 3

RE: It's not that clear, Thom
by Carewolf on Sat 3rd Aug 2013 23:16 in reply to "It's not that clear, Thom"
Carewolf Member since:
2005-09-08

The ruling from ITC said the patents in question were not FRAND, and even though they were not FRAND, had been offered on FRAND terms by Samsun gto Apple. Apple had simply refused to negotiate.

Ofcourse ITC could be wrong, but since only older iPhones and iPads infringe, I think they might be onto somthing about the patents not being that standard essential ;)

Edited 2013-08-03 23:17 UTC

Reply Parent Score: 7

MOS6510 Member since:
2011-05-12

For the newer models Apple bought the chips from a company that did pay a license.

Reply Parent Score: 3

oskeladden Member since:
2009-08-05

The ruling from ITC said the patents in question were not FRAND


Actually, it said nothing of that sort.  The ITC refused to decide the question of whether the patents were FRAND or not, on the basis that the parties hadn't led evidence before the judge at first instance on this question.  They said as much on pp. 50-51 of their decision (available at http://essentialpatentblog.com/wp-content/uploads/2013/07/337-TA-79...).

and even though they were not FRAND, had been offered on FRAND terms by Samsun gto Apple. Apple had simply refused to negotiate.

 
 Again, it said nothing of that sort.  Apple and Samsung were negotiating quite extensively.  And it very specifically did not say that the terms that Samsung offered were FRAND.  It said, more than once, that offers did not have to be FRAND.  Samsung would, according to the ITC, have complied with its FRAND obligations even if every single offer it made was unreasonable, as long as the negotiations held out the possibility of ultimately coming to a final agreement that was reasonable.   The basis of its decision was that Samsung was not asking for anything that would have made a reasonable final agreement impossible.  See pages 60-62.

This is probably entirely correct on the facts, but its wider implications are potentially chilling. I don't hold a brief for Apple or Samsung.  I don't particularly care which of them wins, and I wouldn't be particularly bothered if either of them had their phones disappear from the market.  What I do care about is that the ITC's ruling guts the concept of FRAND.  This is all well and good when the target is a hated company like Apple, but these same principles will bite small upstart companies even harder.  Apple can always litigate their way around disputes: a small company without the money to engage in long and protracted negotiations cannot.  A series of unreasonable opening licensing offers will kill a small company  (as I have seen first hand, having acted for enough of them when I was in practice).  Which is why I find it troubling that the ITC seems to think ruthless conduct is compatible with a FRAND obligation.  To the extent that the DoJ tells the ITC to take a different approach to awarding injunctions in FRAND cases, it's a step in the right action, as it will make it harder for Motorola, Microsoft, Nokia, or some other such company to use standard-essential patents to kill - say - Jolla's phone, or the Ubuntu Phone or the Firefox Phone.  

Reply Parent Score: 6

Tony Swash Member since:
2009-08-22

Apple had simply refused to negotiate.


The details of the negotiations have not been made public.

Reply Parent Score: 1

RE: It's not that clear, Thom
by l3v1 on Sun 4th Aug 2013 05:55 in reply to "It's not that clear, Thom"
l3v1 Member since:
2005-07-06

it's not at all clear


It is clear, you are just missing the point, which is: "I have decided to disapprove the USITC's determination".

Regarding Apple, if they reuire such protection, then they'd better just simply take the loss. It's still better to lose then to be this kind of a loser.

So, let's see what will they do in the MS vs Motorola frand case, where each party is from the US.

Reply Parent Score: 4

oskeladden Member since:
2009-08-05

So, let's see what will they do in the MS vs Motorola frand case, where each party is from the US.


They can't do anything in that case. The US Trade Representative has no jurisdiction over the main dispute there, because it's being litigated before a court (the Federal District Court at Seattle), rather than the ITC. Which is precisely what they've asked Samsung to do, as you'll see if you read the determination in this case.

Reply Parent Score: 3

Nelson Member since:
2005-11-29

This is the equivalent of your boss telling you that you did your job wrong. The USTR has authority over the ITC.

This isn't some grand reversal or game changing move -- its simply telling Samsung that the price negotiations are to be had in the courts. Like MS/Moto.

Reply Parent Score: 4

RE: It's not that clear, Thom
by Lennie on Sun 4th Aug 2013 10:33 in reply to "It's not that clear, Thom"
Lennie Member since:
2007-09-22

The trouble is that from a strictly legal point of view, it's not at all clear what FRAND means in relation to competitors. Does a FRAND requirement force you to offer your licenses to competitors on the same terms as to non-competitors,


As someone who doesn't speak "legalese". Yes, I think that is what it means. Actually, I think that is the whole point.

Well, maybe it means 'similar terms'.

or can you offer terms that are substantially different? What does 'non-discriminatory' mean in this context? Legal opinion is far from clear.


If I understand standards and their processes around it, I would expect that before something is declared a standard, that the FRAND-status of all patents that cover it should be clear.

What is unclear here I think if Apple can claim FRAND should apply to this patent for something it considers a standard or 'essential'.

Edited 2013-08-04 10:52 UTC

Reply Parent Score: 2

oskeladden Member since:
2009-08-05

As someone who doesn't speak "legalese". Yes, I think that is what it means. Actually, I think that is the whole point.


Well, consider this scenario.  Company S has a standard-essential patent, which it licenses to companies X, Y and Z (who're not competitors) for just money.  Company A, a competitor, requests a license.  Company S states it will not grant a license for just money to Company A, but will grant a license for money + a cross-license.

Does such a demand violate an obligation to grant a license on FRAND terms?  The ITC says it does not: FRAND, according to them, is compatible with making demands of one licensee that you don't of others, as long as the final outcome is commercially reasonable.  I personally find this problematic, because it seems to junk the 'non-discriminatory' bit of 'fair, reasonable and non-discriminatory.' 

If I understand standards and their processes around it, I would expect that before something is declared a standard, that the FRAND-status of all patents that cover it should be clear.


This is very literally impossible.  There is simply no way anyone can find out what patents cover a standard.  Standard setting organisations rely on their members disclosing all relevant patents, but (a) the obligation to do so is weak, particularly if the ITC's position in this case is upheld (b) third parties are free to assert claims.

Reply Parent Score: 2