Last week I reported and commented on public interest statements filed by Ericsson and the Innovation Alliance in the ITC investigation of InterDigital's June 2011 complaint against Nokia, Huawei, and ZTE. The Administrative Law Judge identified no violation, but he also rejected all FRAND defenses. Should the Commission (the six-member decision-making body at the top of the U.S. trade agency) overrule him on one or more standard-essential patents (SEPs), then the decision on whether to issue an exclusion order will depend on public interest considerations -- and in light of the Presidential veto of a SEP-based import ban won by Samsung, I can't see how InterDigital would get its way.
It's not 100% impossible that the ITC will at some point issue an exclusion order over FRAND-pledged SEPs. But I interpret the vagueness of the United States Trade Representative's veto letter as a clear sign that SEP-based import bans are acceptable only under very rare circumstances. InterDigital doesn't pursue Samsung's strategic objective (which is a cross-license involving non-SEPs), but that fact alone, though it is an important difference from an antitrust point of view, doesn't entitle it to an import ban either.
Three more public interest submissions -- made by Microsoft, Nokia and Huawei -- have become publicly available since my last post on this case, and I've uploaded them to Scribd. I can see that ZTE and InterDigital have also filed statements, but no public redacted versions of those submissions were available at the time of publication of this post.
Microsoft's statement stresses the importance of the Windows Phone platform as "the primary remaining competition for the Apple/Google 'duopoly' in the United States smartphone market". This claim is certainly supported by BlackBerry's decision to put its company up for sale, which was announced after Microsoft's submission to the ITC, which was made on August 7.
Microsoft's concern relating to SEP-based exclusion orders is well-known, but there's a five-page limit for such submissions, so Microsoft decided to focus on platform-specific considerations. At the end of its submission, Microsoft requests "that the Commission, should it find a violation of Section 337, take steps to allow further briefing and the development of a much fuller evidentiary record on the public interest implications of remedial orders". I believe the Commission could deny InterDigital's request for an import ban on SEP-specific grounds without even needing any further briefing. But I agree that at the very least there would have to be some further briefing on FRAND issues if an import ban would otherwise be ordered.
Nokia's filing starts with a reference to the Presidential veto in the Samsung-Apple case, in light of which "the Commission must decline, on public interest grounds, to issue an exclusion order" based upon patents declared essential to cellular standards (WCDMA and CDMA2000 in this case). I'm pleasantly surprised that Nokia takes such a clear "no exclusion order" position here, given that it supports Google's (Motorola's) appeal of the FRAND part of Judge Posner's ruling. In my observation Nokia's SEP-related actions have been far more reasonable than Motorola's, but its policy papers and public interest statements were closer to Google's position than that of, for example, Apple, Cisco and Microsoft.
Nokia mentions that it has asked the United States District Court for the District of Delaware to make a FRAND determination and says that "[t]he willingness to have a third party set a FRAND rate where parties cannot agree is tangible evidence that a licensee is willing, according to the US Federal Trade Commission".
Also, Nokia quotes Commissioner Pinkert's dissent from the majority ruling on Samsung's complaint against Apple.
The final part of Nokia's submission talks about Windows Phone, which it describes as "the only presently feasible alternative to iOS and Android". A footnote says that "[w]hen Nokia first announced its entry into the WP market in 2011 there were only 5,000 apps available for WP at that time; today, just 2 years later, there are 165,000 and counting".Huawei's submission says that in the event of a reversal of the preliminary finding of no violation, "the Commission would be obligated [as a result of the veto letter in the Samsung-Apple case] to undertake further proceedings to develop a comprehensive record [particularly with a view to a DoJ/USPTO policy paper] and to permit the parties to set forth their views on how the principlesin the Policy Statement should be applied to that record". Huawei interprets the Samsung veto the way I do: there are only "narrow exceptions to the general rule against issuance of 337 injunctive remedies in aid of [SEPs]", which Huawei (again, just like me) believes InterDigital's complaint fails to meet.
Like Nokia, Huawei declares itself a willing licensee who has requested a FRAND determination, and refers to Commissioner Pinkert's dissent in the Samsung case, which "represents the efforts of one Commissioner to create [...] a framework" relating to FRAND/SEP-specific public interest factors.
In connection with the collective U.S. market share of the respondents in this investigation (which is relevant to the public interest from the perspective of consumer choice and healthy competition), Huawei also mentions Samsung, against which InterDigital brought an ITC complaint earlier this year (in that investigation, Nokia, Huawei and ZTE are Samsung's codefendants).
The debate continues, and it appears that InterDigital is desperately trying to achieve the impossible and win an import ban over FRAND-pledged SEPs.
[Update] Right after publication of this post I found the public version of InterDigital's statement. InterDigital argues that the circumstances are completely different here from the Samsung case and that exclusion orders must remain the norm. Also, InterDigital says that "one of the asserted patents (the '970) is not even arguably essential as to any standard practiced by the accused products, and therefore no FRAND considerations are applicable to the ‘970 patent in any event." (emphasis in original) [/Update]
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