Wednesday, December 5, 2012

Google contradicts itself in public interest statements on two Apple-Samsung ITC cases

This week various parties filed public interest statements in connection with the ITC investigations of Samsung's complaint against Apple, where FRAND issues play a key role, and Apple's complaint against Samsung over non-standard-essential patents. I may comment on some more of those submissions in the days ahead. In this post I'm going to show how Google contradicts in connection with one investigation its own statements made in connection with the other investigation.

The fact that both investigations just had their filing deadlines for public interest statements facilitates this comparison between what a given party says in one case versus what it says in the other case.

I have explained before that companies who are plaintiffs as well as defendants in similar cases obviously can't take consistent positions in both contexts, but I wish to reiterate my belief that there's a fundamental difference between pleadings and policy statements. No one can blame a lawyer for doing his job and advocating plaintiff-friendly rules when acting for a plaintiff and defendant-friendly rules when representing a defendant, but if the same lawyer wants to run for public office, he has to tell voters where he stands on the issues and contradictions are not acceptable. He can't advocate tax cuts for the rich in an affluent neighborhood and the opposite in another part of town.

Google is attempting to fool the ITC by filing an anti-IP (and anti-ITC) position in its own name and a position in favor of rigid enforcement of standard-essential patents in the name of its wholly-owned, micromanaged subsidiary Motorola Mobility. As a matter of fact, Google's statement in its own name is signed by the head of its litigation department, Catherine Lacavera, who last month represented both Google and Motorola, as a corporate representative of both, at three court hearings in Munich, Germany (here are my reports on the hearings in which Nokia was the plaintiff and Google participated as an intervenor and the one involving Google's Motorola Mobility as a party). But the Google statement to the ITC in Motorola's name was formally submitted by the law firm of Quinn Emanuel, though it was likely approved, if not even co-authored, by the same person(s). Furthermore, it's well-documented in the public record (I published a couple of related documents) that Google sends arbitration proposals concerning Motorola Mobility's standard-essential patents to Apple on Google stationery. This may have been the first time in the history of United States International Trade Commission that the same party, on the same day, submitted an anti-IP/weak-ITC policy statement and a pro-IP/strong-ITC one.

In the following I'll juxtapose some of Google's statements, and I believe the contradiction is so striking that it doesn't require a whole lot of explanation.


Inv. no. 337-TA-794
(Samsung's complaint)
Inv. no. 337-TA-796
(Apple's complaint)
Where [...] the Commission has found a violation of Section 337, the ordinary presumption in favor of issuance of an exclusion order should apply. In particular, where a party has been unwilling to license [...], a rule that would allow it to continue to import infringing products with impunity would undermine [...] the statutory mandate of the ITC. It would, in short, allow infringers to cause the exact harm on domestic industry and United States consumers that Congress intended the Commission to prevent.Apple seeks an exclusion order against Samsung, the largest manufacturer of devices running the Android mobile platform. To justify this extraordinary remedy, which would harm consumers and sellers alike in one of this country's most critical and fastest-growing industries [...]
The authorized remedies under 19 U.S.C. § 1337 promote the public good by creating appropriate incentives to license intellectual property and preventing the importation of infringing goods from harming domestic markets, and in particular, competitors who have properly invested in developing and licensing valuable intellectual property. [...] [T]his Commission should not upset the balance set by Congress and decide that general policy reasons should deprive a patent owner of a remedy for unlawful infringement. That is a decision for Congress to make. The "public interest" exception to the statute has historically been narrowly and rarely applied, reflecting the proper balance between the public’s interest in competition from imported goods and the enforcement of patent rights, which has furthered technological advancement in the nation.In determining whether to issue an exclusion order, the Commission must balance any harm to the public interest against what "would be gained by protecting the patent holder within the context of the U.S. patent laws." In this investigation, the Commission can and should conclude that an exclusion order would advance no public interest. [...] Should the Commission issue an exclusion order under these circumstances, it would reward only Apple's private interest [...] For the foregoing reasons, should the Commission find a violation of section 337 in this investigation, it should exercise its discretion and decline to issue an exclusion order or, in the alternative, allow a grace period of at least six months before issuing the exclusion order.
As the Federal Circuit has held, the Commission is therefore in a different position than the district courts, which are required to apply the traditional four-factor [eBay v. MercExchange] test for equitable relief before issuing an injunction[.] Commentators may argue that the Commission should take into account the recent order by the District Court for the Northern District of Illinois (Posner, J., sitting by designation) dismissing a patent action and stating in part that Motorola had not carried its burden of proving a right to injunctive relief [...] But as the Federal Circuit held in Spansion, those concerns should not apply here because [...] "Congress intended injunctive relief to be the normal remedy for a Section 337 violation and that a showing of irreparable harm is not required to receive such injunctive relief.""When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 396-97 (2006) (Kennedy, J., concurring). [...] This is just such a case: the patents underlying the requested exclusion order do not represent major innovations and do not drive consumer demand.
If an implementer of standards is not willing to pay license fees like its competitors, it should not be heard to complain when it faces exclusion orders for its unlawful importation of infringing devices. Indeed, to hold otherwise harms the lawful competitors who do pay license fees. Competition is served by barring unlawful infringement where others in the market are competing legally.Although an exclusion order would help Apple's private interest by eliminating its biggest competitor, it would greatly harm the public interest by significantly reducing consumer choice in smartphones, and by likely causing a significant smartphone shortage. [...] In short, since [...] the smartphone market has become increasingly marked by "few suppliers and limited availability of products to U.S. consumers," [...] it can ill afford an order excluding Samsung's Android devices.

Any of the statements on one side can be held against the ones on the other side. For example, the argument that there are "lawful competitors who do pay license fees" would also be a reason for banning Samsung's products since HTC is paying royalties to Apple. The most striking contradictions are that Google describes an import ban as an "extraordinary remedy" in one case and refers to the "ordinary presumption in favor of issuance of an exclusion order" in the other (emphasis mine in both quotes), and that Google wants the ITC to apply the eBay injunction factors in one case (even adding a causal nexus requirement to eBay) and to ignore them completely in the other. And all of this is even more astounding when considering that the public interest discussion relating to Samsung's complaint is all about standard-essential patents. Google wants SEP holders (who made a FRAND pledge others relied upon) to have easy access to import bans and other injunctions while it wants to raise the bar for those who don't have any licensing obligation (FRAND or whatever) at all.

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