Obama’s ITC Veto Could Spark New Debate Over Patents

The Obama administration has reversed a U.S. International Trade Commission (ITC) ruling that would have banned sales of older iPhone and iPad models in the United States.

It’s been 26 years since a presidential administration has vetoed an ITC ruling. In a letter to the chairman of the ITC (PDF), U.S. trade representative Michael Froman (acting as the Obama administration’s representative) suggested that the reversal was based on policy considerations “as they relate to the effect on competitive conditions in the U.S. economy and the effect on U.S. consumers.”

Froman also cited concerns about firms using patents to gain “undue leverage” over competitors. “Licensing [standards-essential patients] on FRAND [fair, reasonable and non-discriminatory] terms is an important element of the Administration’s policy of promoting innovation and economic progress,” he wrote, “and reflects the positive linkages between patent rights and standards setting.”

Despite the veto, Froman assured the ITC that its banning power remains intact. “This policy decision is not an endorsement or a criticism of the Commission’s decision or analysis,” he added. “My decision to disapprove this determination does not mean that the patent owner [Samsung] in this case is not entitled to a remedy.” In fact, he added, “the patent owner may continue to pursue its rights through the courts.”

Samsung will almost certainly do so. It’s already spent the past several quarters engaged in a series of vicious patent suits with Apple in courtrooms around the world. In 2012, a California court ordered Samsung to pay Apple $1 billion for intellectual-property violations, although that award was subsequently reduced by several hundred million. Undeterred by that setback, Samsung has pressed its case in other venues—including the ITC, where it finally won a ban on older Apple products in June.

That ITC ruling (PDF) “determined that Samsung has proven that the accused iPhone 4 (AT&T models); iPhone 3GS (AT&T models); iPhone 3 (AT&T models); iPad 3G (AT&T models); and iPad 2 3G (AT&T models) infringe the asserted claims of [U.S. Patent No. 7,706,348].” The result, in the agency’s words, was “a limited exclusion order and a cease and desist order” that prohibited Apple from importing those devices into the United States.

Although the Obama administration has knocked down the ITC’s decision, the battle between Samsung and Apple will surely continue. Apple had already retaliated by filing its own patent-infringement claim against Samsung with the ITC, which will hand down a decision on that case later this week (unless the administration’s ruling forces some sort of delay). It also remains to be seen how the veto will ultimately affect patent law in the United States.


Image: Apple