President Obama and U.S. Trade Representitive Michael Froman in 2011. Photo: Pete Souza/White House
In a letter from U.S. Trade Representative Michael Froman, the Obama administration overruled an import ban on older iPhone and iPad models issued by the International Trade Commission at Samsung’s request earlier this year. The action allows Apple to continue imports of AT&T models of the iPhone 4, iPad 3G, and iPad 2 3G.
The issue centers around patents held by Samsung for the cellular data chips used in those devices. Samsung claimed Apple infringed on those patents, while Apple argued that Samsung’s patents were so-called “standards-essential patents” (SEPs) that Samsung had agreed to license at “fair, reasonable, and non-discriminatory” (FRAND) terms.
In vetoing the International Trade Commission’s decision, Froman highlights concerns that owners of SEPs who have previously agreed to license patents under those FRAND terms can then engage in “‘patent hold-up’, i.e. asserting the patent to exclude an implementer of a 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.”
Such administration action to veto an action by the International Trade Commission is rare. According to The Wall Street Journal, this is the first time since 1987 that an administration has vetoed a ban ordered by the Commission. The action doesn’t impact Samsung’s ability to continue its legal battle against Apple on the issue, but it means that it will have to take place in court, rather than before the ITC.
Froman’s letter (.pdf) also signals the intent of the Obama administration to keep a close eye on the Commission in other cases involving SEPs, encouraging the Commission to determine “whether a particular remedy is in the public interest.”
In January, the Department of Justice and the U.S. Patent and Trademark Office issued policy guidelines around SEP enforcement (.pdf) that Froman cites in his letter. These guidelines indicate that the administration sees injunctions and exclusion orders like the one Samsung sought as potentially inconsistent with innovation and the broader public interest.