Administration Refuses to Veto Decision Favoring Apple in Dispute With Samsung

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By Brian Flood  

Oct. 8 --The administration will not overturn a U.S. International Trade Commission (ITC) order blocking imports of certain smartphones and tablet computers manufactured by Samsung Electronics Co., which were found to infringe on patents held by Apple Inc., the United States Trade Representative announced.

The ITC determined Aug. 9 that imports of these products infringe certain of Apple's graphical interface and hardware patents, and that an order against their import under Section 337 of the Tariff Act of 1930 was warranted.

The USTR could have overruled the order on policy grounds, specifically the order's expected impact on competitive conditions in the U.S. and its effect on U.S. consumers. After weighing policy considerations, however, the USTR left the order in place, according to an Oct. 8 press release.

In the statement, USTR Michael Froman said, “I am continuing the practice of successive Administrations of exercising section 337 policy review authority with restraint.”

Second Apple Victory

The matter comes soon after Froman on Aug. 6 invoked the policy review authority to overturn a different order by the ITC that would have barred Apple Inc. from importing some older iPhone and iPad models that were determined to be in violation of patents held by Samsung.

That dispute concerned standard-essential patents (SEPs), patents that cover inventions that must be used to comply with an industry's technical standard. Froman there cited “substantial concerns” that SEP owners, such as Samsung, who make voluntary commitments to offer to license their technology on fair, reasonable and nondiscriminatory terms can thereby gain undue leverage and engage in “patent hold-up”--obtaining a higher price for use of a patent than the company could have gotten before the standard was set and alternative technologies were still available.

Possible Enforcement Problems

While Samsung expressed concerns about the clarity of the order at issue here and about possible problems that could arise in the order's interpretation by U.S. Customs and Border Protection (CBP), Froman recommended “close coordination between CBP and the USITC in addressing such enforcement issues.” He also announced that the Office of the Intellectual Property Enforcement Coordinator is conducting an interagency review “aimed at strengthening the procedures and practices used during the enforcement of USITC exclusion orders.”

A Samsung spokesperson told Bloomberg BNA, “We are disappointed by the U.S. Trade Representative's decision to allow the exclusion order issued by the U.S. International Trade Commission (ITC). It will serve only to reduce competition and limit choice for the American consumer.” Apple did not respond to a request for comment.

Alexander J. Hadjis and Kristin L. Yohannan of Morrison & Foerster, Washington, represented Apple before the USITC.

Charles K. Verhoeven of Quinn Emanuel Urquhart & Sullivan, Washington, represented Samsung.

To contact the reporter on this story: Brian Flood in Washington at bflood@bna.com.

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com.


The U.S. Trade Representative's press release is available at http://op.bna.com/itr.nsf/id/bfld-9calp4/$File/USTR%20Samsung.pdf.