Friday, February 4, 2022

Ericsson to ITC: Apple mischaracterizes our position on patent enforcement, and base stations are way harder to replace than smartphones, especially after Huawei ban

This week is "Public Interest Statement Week" between Apple and Ericsson. Statements on the public interest with respect to the effect of import bans help the U.S. International Trade Commission (USITC, or just ITC) as it determines whether to institute investigations and can delegate to the Administrative Law Judge (ALJ) in charge of the investigation the analysis of potential public-interest concerns.

Ericsson filed three ITC complaints against Apple (one over SEPs and two over non-SEPs). Apple brought one countercomplaint.

So far, the most interesting part was that Apple described the iPhone as irreplaceable by other devices, even by Android smartphones, while it's a cornerstone of its antitrust defenses in the App Store context that it allegedly faces fierce competition in the device market. Certain "Apploturfers" filed a public interest statement without telling the ITC who foots the organization's bills. Hint: it's not 5,000 small app developers and IoT device makers.

Meanwhile, Ericsson has filed a public interest statement regarding Apple's countercomplaint (this post continues below the document):

22-02-03 Ericsson ITC-3599 ... by Florian Mueller

In its own complaint, Apple basically said "we don't want to do this but Ericsson's actions force us to." Ericssonn interprets this as "pure retaliation, intended to distract and deflect from Apple’s own improper and unlicensed import of articles covered by Ericsson’s patents." Given that the parties will ultimately have to agree on a cross-license, I don't think that categorization as "retaliatory" is a defense to the infringements Apple alleges. However, footnote 1 interestingly disputes Apple's claim that Ericsson had sort of committed to having the terms of a global deal set by the United States District Court for the Eastern District of Texas:

"Apple also mischaracterizes the state of the global litigation between itself and Ericsson. [...] Ericsson never agreed to forego its right to prevent Apple’s unlawful importation of infringing products in favor of any other proceeding and the parties’ other litigation has no impact on whether this, or any other, investigation should be instituted."

That, too, is just "color" and doesn't go to the merits in any way.

Where Apple does face a potentially high hurdle, however, is that mobile base stations (the type of Ericsson product Apple wants banned) are critical infrastructure components. Let me quote from Ericsson's public interest statement:

"Public interest concerns in telecommunications network infrastructure—and the investment made by carriers—is much more pronounced compared to the market for handsets. The handset market is robust as it supports multiple competing providers, and market studies show that most consumers change handsets every few years. In contrast, there are a limited number of network infrastructure providers. Moreover, network operators in the United States, including Verizon, T-Mobile, and AT&T, design and develop their networks to use particular network infrastructure equipment well before they deploy that equipment. Rollout and implementation of those networks is already underway, and substitution of network equipment is not a simple plug and play exercise. Network operators will have to expend significant resources redesigning their networks, testing new equipment, and deploying new equipment to their network if the Accused Products are excluded. Network operators will lose substantial capital in expenditures already incurred in designing networks that rely heavily on the Accused Products and the rollout of 5G service to many users and geographic regions will undoubtedly be delayed."

In a footnote, Ericsson points to media reports on the exclusion of Huawei equipment "from the marketplace due to security risks leaving only Ericsson, Nokia, and Samsung to supply the market." It is a fact that the U.S. government--already under President Trump--regarded Ericsson an important supplier in a national-security context. Initiatives like O-RAN won't change that during the time frame that matters here.

Should Apple prevail on any of those mmWave patent infringement claims, it still wouldn't necessarily win an import ban.

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