The United States International Trade Commission (USITC, or just ITC) has given notice of a scheduling decision concerning the investigation of Samsung's complaint against Apple. Originally, the U.S. trade agency was scheduled to hand down its final ruling on January 14, 2013, four months after Administrative Law Judge E. James Gildea's September 14, 2012 preliminary ruling that recommended the wholesale dismissal of Samsung's complaint. But in a determination signed on Friday (which entered the electronic docket of the case only today), it extended the target date for this investigation until February 6, 2013 -- which would represent a delay of two and a half weeks.
For my detailed analysis of Judge Gildea's initial determination, check out this early-October post. On November 19, the Commission (the six-member decision-making body at the top of the ITC) gave notice of a thorough review, with FRAND licensing issues being potentially outcome-determinative given that Samsung may prevail on one of its asserted standard-essential patents. The latest scheduling order mentions that "[t]he Commission has received numerous submissions in response to the notice [of review]", which invited not only the parties but also third-party stakeholders to express their views on FRAND issues of transcendental relevance.
Those "numerous submissions" included one filed by Google in the name of its wholly-owned subsidiary Motorola Mobility and advocating policies that clearly run counter to the positions Google advocated in its own name in connection with Apple's case against Samsung. Filings were also made by various other parties. I didn't report on all those submissions. One filing I did comment on was made by Research In Motion.
The fact that the order postponing the final ruling mentions "numerous submissions" on the FRAND issues raised could be due to the fact that the SEP-specific aspects of the case have become outcome-determinative. If the Commission knew at this stage that Judge Gildea's holdings would be affirmed, there would be no violation and thus no need to give any consideration to "numerous submissions" on FRAND. It's purely conjectural, but the Commission may at this point either have decided to reverse Judge Gildea's decision with respect to at least one SEP, or it may consider this such a close case that two weeks prior to the original ruling date such a reversal is at least possible.
Should the ITC order an import ban against Apple over FRAND-pledged SEPs, it faces serious blow-back from U.S. lawmakers. The ensuing political process could result in a far-reaching reform of the statute governing the ITC that could generally curtail its jurisdiction over patent infringement cases. The fact that Samsung just felt forced to withdraw its European SEP-based injunction requests and the development of case law in U.S. federal courts would turn the ITC into a huge loophole for SEP abusers.
Ten days ago, Apple filed a "notice of new facts" informing the Commission of Samsung's EU antitrust problems and pointing to an implicit admission on Samsung's part that SEP-based sales ban are not in the interest of consumers. Samsung's response entered the electronic file system today and argues that Apple's December 21 filing was out of time, given that the deadline for briefs on the FRAND issues in this case was December 10 and that Apple did not obtain permission to file such notice. I'm not sure this procedural argument matters given that Apple's notice merely pointed to developments in another jurisdiction that have some persuasive value and are not necessarily subject to any deadline. Also, if Samsung obtained a favorable decision (for example, a tentative rejection of patent claims by the USPTO) after a briefing deadline, it would likely also try to inform the Commission of any such development.
For the event that the Commission does not strike Apple's notice, Samsung provides the following short response -- I'll quote it paragraph by paragraph and comment below each paragraph:
"Samsung's decision to forego injunctive relief for certain declared-essential patents asserted against Apple in Europe has no bearing on any issue presently before this Commission and there is nothing inconsistent with Samsung's decision to seek redress here for Apple's violation of Section 337. As reflected in the press release cited by Apple, the European Commission is not advocating a per se rule barring 'the availability of injunctive relief for SEP holders.' (Apple's Notice of Dec. 21, 2012, Ex. B, European Commission Press Release of Dec. 21, 2012 at 2.)"
It's true that the European Commission does not say injunctive relief should never ever be available to SEP holders, but the Commission's press release makes clear that in this case, Apple is a willing licensee against whom the pursuit of the injunctive relief is, according to the EU antitrust regulator's preliminary ruling, a violation of competition rules. While Apple would prefer a bright-line rule against SEP-based injunctions, the European state of affairs is all that it needs to fend off Samsung's current wave of attacks. Also, there's no indication that Samsung has made Apple a different offer in the U.S. than elsewhere: it appears to have always demanded a worldwide 2.4% royalty rate.
"Here, unlike in Europe, a full trial on the merits has been held and an extensive evidentiary record developed. At the hearing, Apple had every opportunity to introduce whatever evidence it might have had to support its well-publicized assertions that Samsung acted in a manner contrary to obligations it may have owed to the European Telecommunications Standards Institute ('ETSI'). Yet Apple failed to meet that burden, and each and every one of its FRAND-related defenses was categorically rejected by the ALJ for failure of proof. Significantly, the ALJ concluded that Apple had failed to show that it was willing to negotiate a FRAND license for Samsung's declared-essential patents. (Initial Determination at 470.) That finding is directly contrary to the assumption being made by the European Commission at this very preliminary stage of its investigation. The evidence of record here demonstrated that Apple never had any intention of voluntarily entering into a FRAND license for any of the asserted Samsung declared-essential patents and Samsung expects the evidence to be developed in Europe to support a similar conclusion."
The above paragraph grossly misrepresents the stage of the EU investigation. The European Commission's Statement of Objections (SO) is certainly not final, but it's far beyond what can be reasonably labeled as "very preliminary". When the European Commission sent out (formally at its own initiative without an official Apple complaint) questionnaires about Samsung's conduct in the fall of 2011, it was conducting the equivalent of a preliminary investigation in the United States. In January 2012, the EU launched a formal, full-blown investigation after the preliminary one had shown that there was cause for concern.
An SO that comes down after almost a year of formal investigations means something, even though it's true that Samsung has the right to present its case at a hearing. Make no mistake: we're not talking about a situation in which Samsung is just now facing charges and gets to respond to them for the first time. Samsung's lawyers have had the opportunity now for well over a year (considering that the company also received at least one questionnaire in the fall of 2011 at the preliminary stage) to argue their case and to present all the evidence they believe exonerates their client, and they have been unable to dissuade the European Commission from taking action. In fact, even their client's last-ditch unilateral withdrawal of its European injunction requests didn't make the case go away.
"For the above reasons as well as those set forth fully in Samsung's briefs in response to the Commission's Questions, Samsung submits that there is no statutory or regulatory impediment that would prevent the Commission from granting the requested exclusion order in this Investigation."
While the ITC can order an import ban, the question is whether it will disagree with others who have concluded that Samsung's pursuit of injunctive relief is problematic. More than two months ago it also became known that the United States Department of Justice is investigating Samsung's conduct.
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