Recently, the ITC ruled in favour of Samsung, issuing an exclusion order against certain Apple products, barring them from being sold in the US. Several people have called upon president Obama to step in and overrule the decision (e.g. this guy) – however, not only would this set a very bad precedent for non-US companies, it would also simply be incredibly unfair if you actually look at the ITC ruling itself. Because of this, it is quite unlikely that Obama will step in.
The basic premise of the case appears to be simple: Apple is infringing on what Apple itself calls a FRAND-patent owned by Samsung. The ITC then ruled in favour of Samsung, issuing the exclusion order. Since we’re supposedly talking about a FRAND-patent, that would seem strange, right?
Well, no, not exactly. First and foremost, the ITC states in its ruling that Apple has not actually been able to prove that the patent is standards-essential in the first place, and thus, it cannot invoke the FRAND claim at all. On top of that, even if Apple had been able to prove the patent is a FRAND one, the ITC found that Apple was unable to prove that the ITC could then not issue an exclusion order.
As to waiver of exclusionary relief, the Commission found that Apple failed to cite to any case showing that the ITC lacked jurisdiction over cases involving FRAND-pledged SEPs (or where it declined to issue a remedy on a similar basis). The Commission also faulted Apple’s proof of the elements of a contractual defenses (i.e., parties, offer, acceptance, consideration, terms) â€” let alone the specific contractual obligations that flow from Samsung’s FRAND commitments. 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).
However, it gets worse than that for Apple. The ITC reviewed the negotiation history and materials between Samsung and Apple, and found that Samsung’s offered licensing terms were reasonable, fair, and non-discriminatory. In other words, Samsung offered Apple FRAND licensing terms for the patent in question, but Apple simply refused to accept them.
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 â€œin good faith,â€ 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.
Especially point 2 is interesting, as I’ve brought this up in comments before. Asking for a cross-licensing deal is not a violation of FRAND commitments, as some have often argued. In fact, cross-licensing has been a core aspect of the mobile industry, long before Apple joined the scene in 2007. Apple is the one usually unwilling to cross-license, but that unwillingness seems to come back to bite them in the ass now.
It’s pretty clear from the ITC ruling that Apple is simply in the wrong, and has been infringing upon this particular patent for a long time now – without paying Samsung a single dime. In the words of the people defending Apple so heavily in the Apple vs. Samsung trial – Apple is stealing Samsung’s technology, and they should be punished for doing so.
On top of that, if the Obama administration were to veto the exclusion order, it would send a very negative message to non-US companies operating within the United States. It would send the message that a US company can break the law all it wants – as Apple is clearly doing here – because the president will have its back anyway.
Combine these two factors – the ITC’s case against Apple is well-argued and it would set a bad precedent – and it becomes clear that it seems highly unlikely that the Obama administration will intervene.
A full throated defense of the patent system when Samsung is the one granted exclusion orders. Why am I not surprised.