[A2k] Michael Froman's decision in the Apple/Samsung ITC patent dispute and the USTR trade agenda

Jamie Love james.love at keionline.org
Wed Aug 7 06:10:35 PDT 2013


Michael Froman's decision in the Apple/Samsung ITC patent dispute and
the USTR trade agenda

5. August 2013 - 13:18

On Saturday, August 3, 2013, USTR head Ambassador Michael B. G. Froman
wrote to the Chairman of the U.S. International Trade Commission
(ITC), to "disapprove the USITC's determination to issue an exclusion
order and cease and desist order" for Apple Inc. "smart phones and
tablet computers that infringe a U.S. patent owned by Samsung
Electronics," in the ITC Investigation No. 337-TA-794. (copy of letter
here [2]) According to press reports, this is the first time since
1987 that the White House has overturned an exclusion order by the

Froman's letter cited the legislative history of USC § 1337, which
includes a review of the impact on "(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 political."

By deciding that Apple would be allowed to import devices into the
United States that infringe a patent held by Samsung, the USTR
signaled that it would not back the exclusive rights in patents cases
where there are abuses or conflicts with the public interest, or other
domestic concerns. While written to address the narrow issue of
injunctions for "standards-essential patents" (SEPs), the decision
clearly has broader political significance, coming at the moment the
U.S. is trying to conclude the intellectual property chapter in the
Trans-Pacific Partnership (TPP) Agreement, and in the middle of a
major effort to dissuade India from granting compulsory licenses on
patents on drugs for cancer and other illnesses.

This is perhaps Froman's most high profile decision since formally
taking over leadership of the USTR following his confirmation on June
19, 2013. It raises a broader question of USTR policy on intellectual
property rights, at a time when some are questioning longstanding IPR
maximalist dogma embraced by many U.S. government trade negotiators.
While the decision is clearly an important data point, it is worth
remembering that Froman has long supervised the USTR's trade agenda
from the White House, and USTR may hope that the Apple/Samsung ITC
decision, released on a Saturday in August, will be seen as a narrow
and pragmatic effort to implement the existing DOJ/USPTO position on
standard-essential patents, and not a change in Administration policy.

In general, however, the USTR is faced with a broader challenge. Can
the USTR come to grips with the growing recognition that the existing
IPR regime is not not only flawed, but in need of new thinking and new
policies, including new trade policies?

In the past, the Obama Administration has floundered on IP policy,
much of this under Froman's discrete White House supervision. The
administration has frequently pandered to PhRMA and the hardliners at
the MPAA and the Chamber, when it comes to patents and copyright trade
policies, and staffed the USPTO (Permutter, Hughes, Ferriter, Reeves,
etc), USTR (McCoy) and Commerce (Wilson), OMB (Espinel) with IPR
hardliners. One of the great disappointments has been the failure of
the Obama Administration to embrace more rigor in developing policy
positions, and to evaluate intellectual property policy on the basis
of economic analysis. Instead, USTR and other federal agencies have
openly and without shame let lobbying efforts shape the discourse over
intellectual property.

In 2012, the former USPTO chief economist Stuart Graham collaborated
with economist and Acting Secretary of Commerce Rebecca Blank to
publish a report with the title "Intellectual Property and the U.S.
Economy: Industries in Focus." This report is now used endlessly by
lobbyists for publishers, drug companies and other right holder groups
to justify almost any expansion or defense of patent or copyright
holder interests, despite the fact that the report did a lousy job of
measuring intellectual property "intensity" in various businesses,
relied on superficial statistics on industries like grocery or
clothing retail stories that sold trademarked goods to blow up the
employment numbers, and made no claims whatsoever on the benefits or
negatives of expanding or contracting IP rights in any industry.
(http://keionline.org/node/1432 [3]) That this report was even
published at all was an embarrassment, and the way it has been used by
the Obama Administration in justifying trade policy is a travesty for
anyone who pretends to aspire more rational policy making.

For many years political figures found it easier to repeat talking
points from MPAA, PhRMA, BIO and other right holder lobby groups than
to understand or educate anyone on what is going on in the
increasingly competitive and complex global economy. The fact that
intellectual assets are often more valuable when widely accessible and
widely used was not something that has fit into the USPTO or USTR
talking points and it does not seem part of the internal understanding
of key agency staff. But why not? Is it smart to be stupid, if you
work for the government? Is Washington DC so under the thumb of
lobbyists that staff positions and promotions serve the most focused
lobbies rather than the public at large?

Assuming for a minute that the public could choose its own staff and
offer its own promotions, what types of questions would it like
answered, as regards intellectual property rights policies? These are
just a few suggestions:

Copyright terms
USTR is asking for copyright terms of life plus 70 in trade negotiations. Why?

1. At what point do the length of copyright terms become excessive, as
regards the incentives to create works, and as a barrier to access
2. If the willingness to pay collection societies is relatively
inelastic as regards the term, would shorter copyright terms result in
higher incomes to artists who are still alive (or the 1st generation
of heirs)?
3. For works-for-hire owned by corporate interests (such as motion
pictures, stories in newspapers, etc), how many decades of exclusive
rights are needed to stimulate production of new works?
4. What would be the practical benefits to society of re-introducing
or expanding the role of formalities in determining how rights in
works are exercised (or ignored)?
5. Which US industries and which US user groups would benefit from
broader access to older copyrighted works?

Copyright exceptions, copyright three-step test

USTR is asking that trade agreements narrow all copyright exceptions,
by making them subject to a "three-step test." Why?

1. If the all copyright exceptions were truly limited to a restrictive
implementation of the so-called "three step test" in copyright, how
much of current U.S. law would be subject to dispute resolution in
trade agreements?
2. Does the U.S. Fair Use legal framework fit within a restrictive
application of the three step test?
3. As a matter of law, how important at the Berne Convention
"particular" exceptions as regards the space for fair use in global
copyright norms? And, what would be the practical consequence of
eliminating their separate standards for copyright exceptions in favor
of a strict three step test approach?
4. What would be the consequences of a more restrictive global
framework for copyright exceptions on access to knowledge in the
context of the U.S. education system?
5. What would be the consequences of a more restrictive global
framework for copyright exceptions on access to knowledge for
businesses and government agencies?
6. Do U.S. businesses make more money globally by selling access to
copyrighted information, or by providing services that expand access
to copyrighted information?
7. How much of the U.S. and global market for journals and education
textbooks is foreign owned?
8. What would be the economic benefits of expanded exceptions for data
mining, and access to works not currently exploited commercially? What
is the enabling global legal framework to to implement such

Patentable subject matter, standards for granting patents

The U.S. wants to expand patentable subject matter in trade
agreements, and lower standards for granting patents. Why?

1. If the United States was to eliminate patents on software and
business methods, would the U.S. economy be better off, or worse off?
2. How much time and money is spent resolving disputes over the
validity of software patents?
3. What is the optimal term for software patents? Is 20 years excessive?
4. Can anyone build a complex software application without infringing
on third party patents?
5. If the USPTO granted far less patents every year, would the U.S.
economy be better off, or worse off?
6. Given the rate and acceleration of patent grants in China, at what
point in time will patents become a major barrier for U.S. firms
trying to selling goods and services in China?

Patents and other intellectual property protection for drugs,
vaccines, diagnostics and other medical technologies.
USTR is pushing for policies to make it harder to negotiate low
prices, expands IPR protections and shrinks exceptions for drugs and
other medical technologies. Why?

1. What does the US have to give up on other parts of trade
agreements, when it asks our trading partners to accept stronger IPR
and higher prices for medicine?
2. As regards pharmaceutical drugs, what percent of patents in the
U.S. Orange Book are foreign owned?
3. How do high prices for medicines impact access and outcomes in the
United States?
4. Can the US expand access to antiretroviral drugs for persons who
are HIV+, without dealing with high prices for drugs?
5. If the trend for prices in drugs for cancer and orphan illnesses
continues, can access be sustained in the United States?
6. How many U.S. jobs in the pharmaceutical sector involve sales and
marketing? How does this impact the competitiveness of other sectors
of the economy?
7. How much are prices increased by the IPR system, and what does the
public get back in terms of investments in R&D?
8. What would be the benefits to a switch to full de-linkage for R&D
on new drugs, and what trade rules would enable such a change?

Froman's leadership at USTR

There are two types of problems with US trade policy on intellectual
property rights. The first is that no one in the government is able to
provide answers to these types of questions. The second problem is
that no one in the government seems to think these questions are even
worth answering. Michael Froman can change this, or he can keep the
agency on its traditional lobbyist driven trajectory of anti-consumer
policies. Since Obama won't have a third term in his future, only a
legacy, it would be nice if Froman could begin something new, and more
thoughtful, as regards policy making on trade and IP.

Source URL: http://keionline.org/node/1785

[2] http://keionline.org/sites/default/files/USTR_ITC_Apple_Samsung_ITC_08032013
[3] http://keionline.org/node/1432

James Love.  Knowledge Ecology International
http://www.keionline.org, +1.202.332.2670, US Mobile: +1.202.361.3040,
Geneva Mobile: +41.76.413.6584, efax: +1.888.245.3140.

More information about the A2k mailing list