[A2k] Letter from USTR Ambassador Froman to ITC overturning ban on certain Apple products

Thiru Balasubramaniam thiru at keionline.org
Sun Aug 4 06:09:16 PDT 2013

On June 4, 2013, the United States International Trade Commission
(“Commission”) determined that Apple Inc. (“Apple”) had violated Section
337 of the Tariff Act of 1930, as amended, in the importation of certain
devices, e.g., certain smartphones and tablet computers that infringe a
U.S. patent owned by Samsung
 Co. Ltd. and Samsung Telecommunications America Inc. (“Samsung”).
Following this determination, the Commission issued an exclusion order
prohibiting the unlicensed importation of infringing devices, manufactured
for or on behalf of Apple. The Commission also issued a cease and desist
order that prevents Apple from engaging in certain activities, such as sale
of these products in the United States.

Under section 337, the President is required to engage in a policy
evaluation of the Commission’s determinations to issue exclusion and cease
and desist orders. The President may disapprove an order on policy grounds,
approve an order, or take no action and allow the order to come into force
upon the expiration of the 60-day review period. This authority has been
assigned to the United States Trade Representative. The legislative history
of section 337 lists the following considerations relevant to the policy
review of the impact of the Commission’s determination to issue an
exclusion order: “(1) public health and welfare; (2) competitive conditions
in the U.S. economy; (3) production of competitive articles in the United
States; (4) U.S. consumers; and (5) U.S. foreign relations, economic and

In addition, on January 8, 2013, the Department of Justice and United
States Patent and Trademark Office issued an important Policy Statement
entitled “Policy Statement on Remedies for Standard-Essential Patents
Subject to Voluntary FRAND Commitments” (“Policy Statement”). The Policy
Statement makes clear that standards, and particularly voluntary consensus
standards set by standards developing organizations (“SDO”), have
incorporated important technical advances that are fundamental to the
interoperability of man of the products on which consumers have come to
rely, including the types of devices that are the subject of the
Commission’s determination. The Policy Statement expresses substantial
concerns, which I strongly share, about the potential harms that can result
from owners of standards-essential patents (“SEPs”) who have made a
voluntary commitment to offer license SEPs on terms that are fair,
reasonable, and non-discriminatory (“FRAND”), 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 use
of the patent than would have been possible before the standard was set,
when alternative technologies could have been chosen. At the same time,
technology implementers also can cause potential harm by, for example,
engaging in “reverse hold-up” (“hold-out”), e.g., by constructive refusal
to negotiate a FRAND license with the SEP owner or refusal to pay what has
been determined to be a FRAND royalty.

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