Thursday, June 7, 2012

HP, Nokia and industry associations write to ITC supporting Apple and Microsoft against Google

Google's (Motorola's) pursuit of U.S. import bans against the iPhone, the iPad and the Xbox over standard-essential patents has large parts of the information and communications technology industry concerned. Simultaneously with the Federal Trade Commission's public interest statement asking the ITC to refrain from outright exclusion orders over standard-essential patents (full text available here), industry leaders including Hewlett-Packard and Nokia as well as influential industry organizations including the Business Software Alliance (BSA), the Retail Industry Leaders Association (RILA) and the Association for Competitive Technology (ACT) have submitted letters that advocate strong intellectual property enforcement but argue at the same time that import bans should not be ordered against implementers of standard-essential patents (SEPs).

Here's an overview of the public interest statements that have shown up on the ITC docket thus far:

  • Hewlett-Packard:

    HP filed the same statement in connection with the investigation against Apple as well as the one against Microsoft, asking the ITC to "decline to issue an exclusion order in these investigations":

    "While the Commission has viewed enforcing patent rights as important public interest, these investigations involve unique facts that weigh heavily against (and indeed override) the issuance of an exclusion order in these cases. First, as a participant in a standards-setting body, the complainant previously would have pledged to license the standards-essential patents at issue in these investigations to the respondents on 'fair, reasonable, and non-discriminatory' ('FRAND') terms. Permitting the complainant now to use these patents as a weapon to block the importation of respondents’ products into the United States, merely because they implement the standards at issue, would thwart competition, stifle innovation, and result in higher prices for consumers--thereby causing precisely the harms that Congress directed Section 337 should not inflict."

    HP, which is not a party to any of the current smartphone and tablet computer patent disputes between large players, is a major patent holder. Among other things, it holds a number of wireless patents thanks to its acquisition of Palm and its own R&D efforts.

    In addition to the FRAND issue, HP also points to the ecosystems around Apple's iOS products and Microsoft's Xbox that would be affected.

    HP argues that holders of SEPs should sue in federal court instead of excluding devices from the U.S. market.

  • Nokia:

    Nokia's letter in support of Apple is remarkable for several reasons. The companies are competitors. Nokia and Apple were suing each other for almost two years until they settled in June 2011, and part of the dispute was that Nokia wanted to be paid for Apple's use of its SEPs on FRAND terms. Unlike Motorola, Nokia asserted only non-standard-essential patents in its ITC complaint. Very recently, Apple and Nokia disagreed on the next SIM card standard (Apple's proposal was adopted by ETSI, after modifications). On that issue, Nokia was actually on Motorola's (and RIM's), not Apple's, side.

    As a long-standing participant in standard-setting processes overseen by ETSI, Nokia is well aware of the FRAND rules relating to the 3G-essential patents Motorola is trying to enforce against Apple at the ITC. Nokia explains the "FRAND bargain" in detail and sums it up as follows:

    "In return [for contributing IP to a FRAND standard], the patent holder is entitled to FRAND compensation, terms, and conditions from those who implement the standard and practice its essential, valid, and enforceable patents. But where a manufacturer is a willing licensee under such essential patents, the patent holder is not entitled to other remedies -- such as an injunction or an exclusion order -- that would bar implementers from the market. This is the FRAND bargain and obligation."

    Nokia warns against the costs that would result from allowing SEP holders to abuse their rights for the purpose of hold-up.

    Last week, Google filed an EU antitrust complaint against Microsoft and Nokia. In its initial reaction, Nokia said that it didn't understand Google's concern since anyone interested in a FRAND license to its SEPs should simply call and sign up, as dozens of companies already have.

  • Verizon:

    Verizon also supports Apple, but it is generally against ITC import bans, whether or not FRAND-pledged SEPs are involved. It also supported Samsung against Apple in a federal lawsuit in California.

  • Microsoft supports Apple:

    Microsoft filed a letter in support of Apple. Microsoft faces the same kinds of royalty demands and lawsuits from Motorola.

  • Business Software Alliance (BSA):

    The BSA filed letters in both investigations (Apple and Microsoft). The organization's members include: Adobe, Apple, Autodesk, AVEVA, AVG, Bentley Systems, CA Technologies, CNC/Mastercam, Cadence, Compuware, Corel, Dell, Intel, Intuit, McAfee, Microsoft, Minitab, Progress Software, PTC, Quark, Quest Software, Rosetta Stone, Siemens PLM, Dassault Systemes SolidWorks, Sybase, Symantec, and The MathWorks.

    While the BSA is known for a clearly pro-intellectual-property stance and notes that its members "hold hundreds of thousands of patents around the world" and "participate widely in standards-setting organizations", it "believes that the public's interest will be best served if an exclusion order is not issued in this investigation or any other investigation resting on similar facts and circumstances" and concludes:

    "When a patentee makes a commitment to license its technology for FRAND terms during a standard setting process if that technology is made part of the standard, the patentee should be held to its promise. Allowing companies to circumvent their promises by using the Commission's sole remedy of an exclusion order would have a detrimental effect on internationally recognized standards systems. The ultimate result of a less robust standards system will be fewer choices for consumers, higher prices, and diminished innovation. Thus, the public's interest will be best served if an exclusion order is not issued in this investigation or any other investigation resting on similar facts and circumstances."

  • Retail Industry Leaders Association (RILA):

    RILA's member companies include some of the world's most well-known retail chains ("more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad").

    RILA's letter "urges the Commission to carefully consider how granting owners of standard-essential patents exclusion orders pursuant to section 337 investigations could undermine the process to license such patents on fair, reasonable and non-discriminatory terms and standard setting more generally". RILA declares itself "a strong supporter of enforceable intellectual property rights" and of the possibility of ITC import bans against infringing goods, but "in the case of standard-essential patents in particular, complainants could transform [Section] 337 exclusion orders from shields into swords, and use the process to undermine the balance between compensation for use of the technology and the public interest that the FRAND regime seeks to achieve".

    According to RILA, "[i]t would be antithetical to the public interest, consumer choice and affordability to permit the use of exclusion orders to force companies selling standard-compliant products to license asserted patents on non-FRAND terms (e.g., artificially high royalties) in order to sell those products in the U.S. market".
  • Association for Competitive Technology (ACT):

    While ACT has support from large companies including Microsoft, Oracle and eBay, most of its members are small and medium-sized technology creators.

    ACT advocates strong intellectual property rights in order to protect innovative entities against infringers. In this spirit, ACT also submitted a public interest statement contradicting Google's and HTC's public interest arguments against a ban of Android devices over non-standard-essential patents asserted by Apple.

    ACT's letter stresses the organization's concern for "mobile app" companies. ACT notes that technology standards are "critical for independent app developers and the public", and says its "members are deeply concerned about the impact of an exclusion order in a case where a patent is the subject of a commitment to license on 'Reasonable and Non-Discriminatory' terms as part of a standard". ACT's letter concludes with the following statement:

    "We submit that the public interest should preclude any issuance of an exclusion order for a RAND committed patent. The appropriate remedy for infringement of a patent subject to a RAND commitment is RAND royalties collected in district court."

It's possible that additional public interest statements have been filed, or will be filed, in these investigations. I have just reported on all those that have shown up in the public record by the time I published this post. So far, there hasn't been even one third-party public interest statement in support of Motorola's pursuit of injunctive relief. If I ever see one, I will certainly report on it.

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