Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI applauds disapproval of ITC’s iPhone, iPad import ban, (Aug 6, 2013)

By John W. Arden, J.D., LL.M.

The American Antitrust Institute (AAI) has voiced its support for the U.S. Trade Representative’s disapproval of an International Trade Commission exclusion order, which would have banned further importation and sale of Apple iPhones and iPads. In an August 5 announcement, the public interest group praised the Trade Representative’s conclusion that the ITC’s order could negatively affect the competitive conditions in the U.S. economy and U.S. consumers.

On June 4, 2013, the ITC issued a notice of final determination, that Apple Inc. violated Section 337 of the Tariff Act of 1930 by importing iPhone and iPad devices that infringed a U.S. Patent owned by Samsung Electronics Co., Ltd. The patent covered technology essential to the implementation of voluntary consensus standards and was subject to a voluntary commitment on Samsung’s part to license all implementers on fair, reasonable, and nondiscriminatory (FRAND) terms.

The ITC prohibited the unlicensed importation of the infringing devices, manufactured for or on behalf of Apple, and the sale of such devices in the United States.

In the first disapproval of an ITC exclusion order since 1987, U.S. Trade Representative Michael B. G. Froman referred to policy considerations concerning the ITC order’s effect on competition in the U.S. economy and on consumers. The Trade Representative’s August 3 letter, disapproving the ITC decision, expressed strong agreement with the January 2013 Department of Justice and U.S. Patent and Trademark Office Policy Statement, calling attention to “the potential harms that can result” when owners of standard essential patents (SEPs), subject to FRAND commitments, engage in “patent holdup.”

“Patent holdup” occurs when a patent is asserted 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 had been set, when alternative technologies could have been chosen.”

The Trade Representative decided to veto the ITC order based on his review of the “various policy considerations” set forth in the DOJ-USPTO Policy Statement, he said. The antitrust advocacy organization noted that the disapproval directly affected only the June 4 order against Apple products. It will not prevent the ITC from issuing similar orders in future cases and would not prevent SEP owners from continuing to seek such orders in the course of district court infringement litigation.

“The AAI has on several occasions over the past two years urged the enforcement agencies, courts and Congress to address anticompetitive abuses of a vastly proliferating array of SEPs and, in particular, the many ways in which SEP owners evade weak and ineffectual patent policies of standard setting organizations (SSOs),” the organization observed. “These SEP owners thereby acquire market power over major parts of the information technology and communications sectors and defeat the whole purpose of open standards efforts.”

Companies: Apple Inc.; Samsung Electronics Co., Ltd.

News: Antitrust