[A2k] WSJ editorial: Obama's Patent Trade Wallop

Thiru Balasubramaniam thiru at keionline.org
Tue Aug 6 03:10:36 PDT 2013


<SNIP>

Mr. Froman warns the ITC that "in any future cases" it ought to "examine
thoroughly and carefully on its own initiative public interest issues,"
including whether its own "particular remedy is in the public interest." Or
else it will be overturned again.

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   http://online.wsj.com/article/SB10001424127887324653004578649960511039562.html
   - REVIEW & OUTLOOK<http://online.wsj.com/public/search?article-doc-type=%7BReview+%26+Outlook+%28U.S.%29%7D&HEADER_TEXT=review+%26+outlook+%28u.s.>
   - August 5, 2013, 7:21 p.m. ET

Obama's Patent Trade Wallop

*The President intervenes to upbraid a protectionist agency.*

Finally, a unilateral Presidential action worth praising—and one that's
both legal and on behalf of economic growth. Over the weekend the White
House overruled federal regulators who were likely to prohibit the sale of
certain iPhones and iPads as part of a patent and trade imbroglio.

U.S. Trade Representative Michael Froman's four-page rebuke to the U.S.
International Trade Commission comes in response to its ruling that
Apple<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=AAPL>
had
infringed on a Samsung patent. The White House supervises the
Depression-era commission, and Mr. Froman's statement pointedly notes that
the ITC is required to consider the public interest, which by law includes
innovation and economic competitiveness. It conducted no such review. Ahead
of the curve on that point was Dean Pinkert, a Democrat and George W.
Bush<http://topics.wsj.com/person/B/George-W-Bush/5369> appointee,
who was the sole dissenter among the ITC's six commissioners.

That five of Mr. Pinkert's colleagues found the opposite is a reflection of
the ITC's growing senescence, not Samsung's claim in the smartphone patent
wars. The South Korean company was abusing what's known as a
standard-essential patent, which cover features and rules that tech
companies universally adopt so products can interoperate seamlessly. The
minor component at stake is in every mobile device, from a new tablet
computer to a burner purchased at the corner deli.

Standard patents are supposed to be licensed to everybody on fair and
reasonable terms, but Samsung demanded exorbitant royalties in a tactic
called patent hold up. The ITC ruling would have legitimized such blackmail
and thrown all standards into legal question—at least domestically. All
international regulators have adopted safeguards against standard patent
abuse, which makes the South Korean Ministry of Trade's criticism of the
veto as "protectionism" especially puzzling.

Apple is often an equal-opportunity offender in the increasingly petty
patent war, so the larger importance of Mr. Froman's letter is as a general
warning against such behavior. Patent litigants like going through the ITC
because under the Smoot-Hawley tariff act its only enforcement power is the
nuclear option of banning products. The ITC commissioners are more than
willing to turn the launch key, even if the economic harm is worse than the
alleged infringement.

Mr. Froman warns the ITC that "in any future cases" it ought to "examine
thoroughly and carefully on its own initiative public interest issues,"
including whether its own "particular remedy is in the public interest." Or
else it will be overturned again.

The practical result is that tech companies will need to vindicate their
intellectual property rights in the non-mutually-assured-destruction venue
of the civil courts. The ITC long ago outlived its usefulness and ought to
be abolished, but the first Presidential veto of the ITC in a
quarter-century is a good start.



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