Friday, November 15, 2013

Third-party commenters try to dissuade the ITC from granting Nokia an import ban against HTC

In September, an Administrative Law Judge of the United States International Trade Commission (USITC, or just ITC) issued an initial determination (preliminary ruling) according to which HTC's Android-based devices infringe two Nokia patents. If affirmed by the Commission, the six-member decision-making body at the top of the U.S. trade agency, HTC will either have to work around those patents -- which it told the press it's trying (in conjunction with Qualcomm) -- or stop importing the targeted devices into the U.S. market.

HTC's ability to work around the patents is the key question now, and there's no way of finding out from the outside whether workarounds are a viable option in this case. Since the asserted patents aren't standard-essential, it's certainly possible to steer clear of infringement, but the question is at which cost.

If the workarounds HTC and Qualcomm are working on are technically and commercially viable, then there's actually no reason to have any public interest concern over the import ban Nokia is seeking. But regardless of what the answer to the workaround question may be, certain companies and lobby groups are up in arms and urging the ITC to deny or at least delay substantially (by a year) the entry into force of any import ban. If their agenda was case-specific, they'd focus on the availability of workarounds. But that's not what this is about. Those submissions, which mirror some of those already made in connection with other smartphone patent matters at the ITC, are part of a political campaign to raise the bar for the availability of injunctive relief from the ITC. The fifth one of seven legislative recommendations made by the White House Task Force on High-Tech Patent Issues in June was to "[c]hange the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied at the ITC and district courts" (emphasis in original).

I have uploaded the five third-party submissions discouraging an import ban against HTC to Scribd and will now comment on them briefly:

  • CTIA - The Wireless Association argues that no import ban should issue, but if it can't be avoided, then "the Commission should use its power and flexibility to appropriately tailor the remedy so that the start of any exclusion order is delayed, provide exceptions for repair or replacement devices, and otherwise adopt limitations to ameliorate the broad consumer harm described [in the statement]". Repair and replacement devices should not be an issue. But CTIA just makes a general argument about mobile broadband technologies and doesn't explain specifically why HTC should be allowed to infringe (if the final ruling is that it does).

    In addition to CTIA's submission, two of its member companies, Sprint and T-Mobile (next two items), have also commented on the same public interest considerations.

  • Sprint's submission makes reference to the aforementioned White House recommendations. It also recalls the delayed U.S. launch of an HTC phone due to the fact that U.S. Customs held shipments of products that it later determined were design-around devices that didn't infringe a particular Apple patent. Apple and HTC settled a year ago, so this was never clarified, but Apple definitely disagreed at the time with the claim that those products were workaround devices. Toward the end of its letter, Sprint itself notes that "Customs is ill-equipped to make this determination in the first instance".

  • T-Mobile's statement argues that "the nature of the remedy of the determined violation should remain consistent with well-established damages doctries". If Nokia prevailed on the same patents in the District of Delaware, where it brought a companion lawsuit mirroring its ITC complaint, Spring argues that it "would not be entitled to recoup damages using the value of the entire infringing mobiles [sic] devices". Therefore, Sprint feels an ITC exclusion order "would provide Nokia with disproportionate value, in terms of at least negotiation leverage and impact in the marketplace, that exceeds the benefit properly attributable to the infringed claims". None of this has been any consideration in previous ITC cases, of course.

  • An organization named Public Knowledge, which also testified at a Congressional hearing yesterday on patent troll demand letters, says in its filing that the ITC should "look to broad considerations of promoting innovation" in evaluating the public interest factors relevant to this remedy determination and "establish a multi-factor test for evaluating public interest concerns" in its Section 337 investigations. The first argument is about the ITC's wiggle room under the current framework; the second one is a proposal of a new framework, and obviously cites to the recommendations by the White House Task Force on High-Tech Patent Issues.

  • The Hispanic Leadership Fund's letter blows things out of proportion by urging the ITC to "refrain from issuing an order that could blunt the tremendous progress the Hispanic community has made in leveraging wireless broadband to close the digital divide". I can't see why any particular ethnic or language group would be more affected by an exclusion of devices like the HTC One from the U.S. market (with numerous other smartphones remaining available) than other parts of society.

Some of these arguments don't make sense to me, and some are worth discussing but should be directed to Congress.

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