Obama administration must veto anti-Samsung ITC ruling

Obama administration must veto anti-Samsung ITC ruling

Summary: The US International Trade Commission has banned the sale in the US of certain Samsung devices, owing to patent disputes with Apple. Since the Obama administration blocked a similar ban against Apple devices, they must block this one, both on the merits and for political reasons.

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I'm not sure about the merits of the US International Trade Commission's recent rulings against Apple and Samsung, which ban the sale of certain of each company's devices because of patent disputes with the other, but at least they give the appearance of consistency.

The Obama administration hasn't been consistent in all policies, but they have an easy opportunity to do so now, by vetoing this latest ITC ruling against Samsung just as they vetoed the older ruling against Apple.

It's really not a hard decision. Whatever the merits of the claims, by allowing this new ruling to stand the administration would be sending a message of overt and hypocritical protectionism against a close ally and major trade partner.

USITC US International Trade Commission seal

In his letter justifying the veto of the sale ban against Apple, US Trade Representative Michael Froman cites a policy statement earlier this year from the Department of Justice and US Patent and Trademark Office about holders of SEPs (standards-essential patents) "…gaining 'undue leverage' and engaging in 'patent hold-up', i.e., asserting the patent to exclude an implementer of the standard from a market to obtain a higher price for the use of the patent than  would have been possible before the standard was set, when alternative technologies would have been chosen."

Perhaps I missed it, but I don't think he actually says that any of the patents involved in the ITC ruling he overturned were SEPs, but citing the policy statement gives at least a veneer of legal justification for his decision. 

He also said that the decision was made based on '…the effect on competitive conditions in the U.S. economy and the effect on U.S. consumers'. What would the effect of banning certain Samsung devices be on the U.S. economy and its consumers? Not good.

Froman concludes the letter by noting that '…the patent owner [i.e. Samsung] may continue to pursue its rights through the courts'.  The same is obviously true of Apple in this case.

There may be differences in the relative merits of the patent claims on each side which would argue for upholding this new ruling and overturning the old one. Even to the extent that those points are valid they don't necessarily justify a trade ban, in light of the previously-mentioned policy paper. At the same time, those points would be within the grasp of very few, while the political and trade implications of upholding the new ruling are only too obvious.

The implication is clear: The administration must once again delegate a decision to Ambassador Froman and he must overturn the similar decision for the same reasons. Let the parties duke it out in the courts.

Topics: Patents, Mobile OS, Smartphones, Tablets

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119 comments
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  • Wrong...

    In the first case, Samsung refused to license standards essential patents on FRAND terms. Hence the Obama veto.

    In the current case, the patents are design patents.
    noibs-0cf43
    • Samsung did no such thing.

      The ITC itself ruled that Samsung had NOT violated its FRAND obligations at all. What actually happened is that Apple refused to accept Samsung's FRAND terms.
      Zogg
      • Samsung's terms were no FRAND...

        as they were completely different from terms offered to anyone else, both in terms of price, and the demand for licenses to Apple's non-FRAND patents (by the way, linking like that isn't allowed). The origin ITC ruling was a disgrace.
        msalzberg
        • Are you an expert on FRAND terms?

          I've got no idea about what is and isn't acceptable for FRAND, but I'm thinking that the ITC *does*. I'm also sure that just because something is SEP doesn't mean that Apple (the licensee) gets to dictate to Samsung (the patent holder) what the terms should be.
          Zogg
          • Dice you are confused let me help you

            The ND in FRAND means non-discriminatory. That means Apple must be treated the same ax any other licensee. That means DEMANDING a license swap is not allowed (they can of course request it but Apple can refuse and insist monetary onl which they are).
            If Samsung cant grasp this then don't submit their patents to be incorporated into a standard - particularly if the are standard essential.
            global.philosopher
          • Re: If Samsung cant grasp this

            It seems this is exactly what has happened. Someone at Samsung was living under the impression that they can use SEP to abuse other market players, thus the investment in adding as much Samsung IP to standards as possible.

            It also seems the double standards of the ITC helped keep this alive for a while. One could argue that the ITC has actually tricked Samsung into doing all this.. who knows.
            Now, both parties are frustrated.

            Sadly (for Samsung), they took the bait and geared up with their smartphone expansion. About the only way forward is to continue providing their IP to the standards, even if it can no longer be used for abusing the market -- as otherwise Samsung will have to license most of the technology, and US companies are known to twist arms and legs in such situations.

            At the end, this clash might turn out to be just a cultural difference....
            danbi
          • A little cynical Danbi

            Samsung more than likely included as much IP as SEP so they could to gain licensing fees. It's purely your biased conjecture that turns it into Samsung doing it for nefarious reasons.
            The ITC agreed, with Samsung, that the FRAND terms were acceptable. Why are people debating the fact? The ruling from the ITC was clear, the veto re-inforced the view SEP can't lead to embargoes. That's all. The evidence I've read, endorsed by the ITC, is that apple wouldn't cross-license but wanted the same prices as those who had cross-licensed. So where's the fairness in that? Apple wanted more for less, you have to be pretty biased to argue apple was looking for FRAND.

            For the record, I believe SEP should exclude embargoes, non-SEP can lead to import bans if applicable. No hypocrisy, just different rules for different IP and how it's used in industry standards.
            Little Old Man
          • Re: Why are people debating the fact?

            Let's see....

            You and me are negotiating a contract. I say YES (give me more money), you say NO (I don't agree).

            So I go to some IP court, and tell them you do not agree with my terms. I ask those people to declare that my terms are fair. They say so (for a fee, hint). You still don't agree.

            Who is at fault here? You? Because you are one and we are two? :)

            Yes, I am somewhat cynical at times... I am old enough to have seen plenty...

            My personal preference would be for SEP to go away. If you want your IP in an mandatory standard, then your IP becomes public domain. Period!
            You get to benefit from already implementing the stuff in your product and they being instantly standards compliant. If you did not... that is your problem -- and you were clearly cheating about having any IP!
            danbi
          • I think Apple would like SEP to go away too.

            "My personal preference would be for SEP to go away. If you want your IP in an mandatory standard, then your IP becomes public domain. Period!"

            And I'd like ALL software vanish in a big puff of smoke! But anyway, back to something called "reality"...

            "I ask those people to declare that my terms are fair. They say so (for a fee, hint)."

            That "hint" is pushing the boundaries of cynicism slightly. And you're missing the part about Apple wanting to license the SEP *for free*:

            http://www.groklaw.net/article.php?story=20130626210351286&query=apple+samsung+reverse+patent+holdup

            You should read up on what's really been happening in the courts, instead of just wailing about Poor Little Apple in these forums.
            Zogg
          • Edit: s/ALL software/ALL software patents/

            *sigh*, if only there were an "Edit" button.

            Surely that's something *everyone* here could agree upon, if nothing else!
            Zogg
        • ITC believes that cross-licensing is acceptable for FRAND.

          It's in the ITC ruling, which can be found on Groklaw:
          "Apple also criticizes Samsung's attempt to negotiate a cross-license of both parties' mobile telephone patent portfolios. We cannot say that Samsung's offers in this regard are unreasonable. The record contains evidence of more than 30 Samsung licenses that cover the '348 and '644 patents. ... All of those licenses include a cross-license to the licensee's portfolio. That evidence supports a conclusion a portfolio cross-license offer is typical in the industry and reasonable.

          Apple has offered no evidence to suggest that such portfolio cross-licenses are atypical in the industry. In fact, Apple's own witness on ETSI policies affirmed that ETSI anticipates cross-licensing may be part of the process of negotiating a FRAND license between two parties. ... Additionally, the negotiating history recounted above shows that Apple has made cross-license offers to Samsung."

          http://www.groklaw.net/article.php?story=20130806152107849

          So your "ITC ruling was a disgrace" line sounds like BS to me.
          Zogg
          • Cross licensing is ok...

            but not as a demand. That's considered tying, and is illegal.
            msalzberg
          • There you go, trying to sound like an expert again!

            "That's considered tying, and is illegal."

            I don't know who's feeding you this stuff, but I'm thinking that the ITC knows what's legal and what isn't.
            Zogg
          • I agree with you Zogg

            Maybe instead of spending time here spouting about stuff they clearly know nothing about, these people should be standing in line to apply for a job at the ITC? They are clearly SO much more qualified than the people there. /s
            toddbottom3
          • Do you understand what the expression...

            'non discriminatory' means?

            "it is neither fair nor non-discriminatory for the holder of the FRAND-encumbered patent to require licenses to non-FRAND-encumberd patents as a condition for licensing its patent"

            Who said that? Oh, the USITC commissioner.

            I think he qualifies as an expert.
            msalzberg
          • And the bit where...

            Samsung insisted that their licensees - Qualcomm for example - were not allowed to sell to Apple is hardly non-descriminatory either.

            Also Samsung demanding 16 bucks license on an 11 dollar chip that already paid a license fee to Samsung is pretty damn a glowing example of unfair and unreasonable.
            jgpmolloy
          • You are quoting Dean Pinkert, presumably.

            What you failed to mention is that he was out-voted 5 to 1 by the other USITC Commissioners.
            Zogg
          • Game - Set - Match

            Nicely done Zogg.

            I enjoyed reading this discussion.
            toddbottom3
          • What you failed to mention...

            is that his opinion, ultimately, was the one that mattered.
            msalzberg
          • There are two problems with that statement.

            Firstly, it was the U.S. Trade Representative Mr Michael Froman who vetoed the ITC's ban - not an ITC Commissioner. And secondly, Mr Froman explicitly stated in his letter, that:

            "This policy decision is not an endorsement or a criticism of the Commission's decision or analysis."

            So trying to claim that the ban was overturned because someone agreed with Mr Pinkert's point of view is an error at best, and blatant disinformation at worst.
            Zogg