[A2k] WSJ: Obama Administration Vetoes Ban on Sale of Some Apple iPhones, iPads

Thiru Balasubramaniam thiru at keionline.org
Sun Aug 4 05:38:04 PDT 2013


<SNIP>

U.S. Trade Representative Michael Froman made the decision to veto the ban
on the Apple devices, citing concerns about patent holders gaining "undue
leverage" as well as potential harm to consumers and competitive conditions
in the U.S. economy.

He said Samsung could continue to pursue its patent rights through the
courts.

The action marked the first time since 1987 that a presidential
administration had vetoed an import ban ordered by the U.S. International


--


http://online.wsj.com/article/SB10001424127887324136204578646192008412934.html

   - TECHNOLOGY<http://online.wsj.com/public/page/news-tech-technology.html>
   - Updated August 3, 2013, 5:22 p.m. ET

Obama Administration Vetoes Ban on Sale of Some Apple iPhones, iPads

*Concern Cited Over Patent Holders Gaining 'Undue Leverage'*



   - By BRENT KENDALL and IAN
SHERR<http://topics.wsj.com/person/A/biography/7261>
   CONNECT

The Obama administration on Saturday vetoed a U.S. trade body's ban on the
import and sale of some
Apple<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=AAPL>Inc.
iPhones and iPads, a rare move that upends a legal victory for
smartphone rival Samsung
Electronics<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=005930.SE>Co.

U.S. Trade Representative Michael Froman made the decision to veto the ban
on the Apple devices, citing concerns about patent holders gaining "undue
leverage" as well as potential harm to consumers and competitive conditions
in the U.S. economy.

He said Samsung could continue to pursue its patent rights through the
courts.

The action marked the first time since 1987 that a presidential
administration had vetoed an import ban ordered by the U.S. International

The ITC in June had ordered the import ban and an accompanying
cease-and-desist order affecting some older-model Apple iPhones and iPads
after finding the products infringed a Samsung patent.

The ban raised concerns among U.S. antitrust enforcers and touched off
intense lobbying of the Obama administration by technology companies with
opposing positions on the issue.

Critics of the ITC order questioned whether companies should be able to
block rival products in cases involving patents that have been deemed to be
essential to creating products based on key technologies overseen by
industry standard-setting groups.

Apple and some other technology companies argued to the trade
representative that the ban was inappropriate because Samsung had committed
to fairly license such "standard essential" patents associated with
technology for wireless devices.

Samsung insisted it had offered to license its patents to Apple, but the
Silicon Valley company had sought to avoid paying for licenses of Samsung's
patents.

The South Korean electronics giant and some U.S. technology companies
disputed that their commitments to standard-setting bodies mean that patent
holders can't seek import bans or court injunctions in enforcing their
intellectual property. They argued that a veto of the ITC order would upset
decades of settled expectations, weaken the value of patents and discourage
innovation.

"We applaud the Administration for standing up for innovation in this
landmark case," an Apple spokeswoman said in a statement. "Samsung was
wrong to abuse the patent system in this way."

A Samsung spokesman said the company was disappointed by the veto. "The
ITC's decision correctly recognized that Samsung has been negotiating in
good faith and that Apple remains unwilling to take a license," he said.

The veto concludes one of the most dramatic ITC cases in years. Apple's
loss in the case and the subsequent ban was seen as a blow to the company's
continued efforts to press cases against competitors it says have copied
technology it developed for the iPhone and iPad.

Samsung, meanwhile, is scheduled to face a ruling by the ITC this Friday on
whether some of its products infringe Apple patents and should be barred
from import as a result. One person familiar with ITC proceedings said it
might choose to delay that decision in the wake of the Obama
administration's move Saturday.

The ITC cases represent one set of fronts in a global patent war between
Apple and Samsung, longtime technology partners that became bitter rivals
after Apple introduced the iPhone in 2007 and Samsung later introduced
products that contain similar features.

Apple launched a series of patent suits against Samsung, which responded by
leveling infringement charges of its own.

The ITC order would have barred the U.S. sale or import of some Apple
products still on store shelves, including a version of the iPad 2 made to
work on AT&T<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=T>Inc.'snetwork,
and the iPhone4, which runs on AT&T and T-Mobile USA's
airwaves.

Mr. Froman, in a letter explaining the veto, said he came to his decision
after extensive consultations with government trade bodies "as well as
other interested agencies and persons."

He said he also "strongly shares" concerns raised in a policy statement
issued in January by the Justice Department and the U.S. Patent and
Trademark Office, which said ITC product bans should rarely be allowed in
cases involving standard-essential patents. Among other issues, the
agencies discussed the possibility that holders of such patents could use
them in ways that would unduly increase royalty rates they might receive
for licenses.

DOJ officials were included during the trade representative's review of the
Apple ban. A Justice spokeswoman declined to comment.

The Federal Trade Commission, which shares antitrust authority with the
Justice Department, has made similar arguments. The FTC in January reached
a settlement with
Google<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=GOOG>Inc.
after alleging the company was misusing standard-essential patents it
acquired from handset maker Motorola Mobility.

An FTC spokesman didn't immediately respond to a request for comment.

Former FTC Chairman Jon Leibowitz, who led the agency during the Google
case, said Saturday's veto would benefit consumers and promote innovation.

"When a company agrees to license what is known as a standard-essential
patent at fair and reasonable terms, it shouldn't be able to ban
importation of a product into the United States simply because it wants a
better deal," he said.

Susan Kohn Ross, a partner at the law firm Mitchell Silberberg & Knupp,
said she was surprised the Obama administration stepped in on the case.
Usually, such reviews turn on whether a patent in a case was really
infringed, rather than concerns about the kinds of issues laid out in
government policy statements.

Either way, this blow to Samsung likely won't have much impact in the
bargaining room with Apple, she said. ITC decisions typically don't have as
much of an impact in setting legal precedents as rulings in federal courts.

Samsung cannot appeal the veto, but it can continue to press its own court
cases against Apple. "Does it in any way end the dispute? No," Ms. Ross
said.

*Write to *Brent Kendall at brent.kendall at dowjones.com and Ian Sherr at
ian.sherr at dowjones.com



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