Sunday, October 9, 2022

Apple uses its profitability as argument against U.S. import ban and opposes testimony by former ITC commissioner on Ericsson's behalf

The United States International Trade Commission (USITC, or just ITC) is currently investigating three patent infringement complaints by Ericsson against Apple, and one countercomplaint by Apple. Ericsson has made some progress and may indeed win one or more U.S. import bans on Apple gadgets.

In Ericsson's smallest ITC case (a non-SEP case), there is a dispute between the parties over the admissibility of the testimony of former ITC commissioner Ronald A. Cass (Federalist Society profile, CV on his consulting firm's website).

Mr. Cass left the ITC about 32 years ago, so there's no "revolving door" problem. Apple's attack vector is a different one: it says that Mr. Cass offers legal opinions rather than facts, and that he isn't qualified to testify on public-interest considerations in ITC investigations. Other respondents have previously challenged Mr. Cass's testimony, and failed--apart from some minor portions of his expert reports being stricken.

Most of Apple's pretrial motions in the dispute with Ericsson, both in the Eastern District of Texas and the ITC, have been unsuccessful. The latest rulings came down in the same investigation in which Ericsson and Apple are arguing over whether Mr. Cass can testify as an expert witness. Administrative Law Judge (ALJ) Cameron Elliot denied an Apple motion for summary determination (the ITC equivalent of what is called summary judgment in federal court) that Ericsson doesn't satisfy the technical prong of the domestic industry requirement (in the other event, Apple would have defended itself successfully even ahead of trial). Also, he granted in part an Ericsson motion to strike portions of two of Apple's expert reports.

I also doubt that Apple will get much, if any, of Mr. Cass's testimony excluded. But I wish to highlight one passage from Ericsson's opposition brief. First, the document:

Ericsson's Opposition to Apple's Motion to Strike the Expert Opinions of Ronald A. Cass (Motion Dkt. No. 1301-0027)

Toward the bottom of page 10 (page 16 of the PDF), Ericsson responds to Apple's challenges to Mr. Cass's opinions "regarding profitability, job loss, consumer preference, and the cost of switching devices." This here is rich:

"Rather, Mr. Cass's points rebut Apple's claims of being an American success story by pointing out that Apple's profitability and employment are not statutory elements considered in the public interest analysis." (emphasis added)

What one can infer from this is that Apple argues a U.S. import ban on products infringing Ericsson's patents would be against the public interest because Apple is wildly profitable.

Just like some banks and other companies have been deemed Too Big To Fail, Apple is now Too Rich To Fail.

Money: a shield and a sword.

Apple believes it should be allowed to infringe because it makes so much money, enriching the ITC's public interest analysis with an element of explicit plutocracy.

Not only don't I think that kind of argument will fly but I also doubt that the ITC will actually have to decide on whether to order an import ban. It would make a lot of sense for the parties to settle before or during the FRAND trial in the Eastern District of Texas in December.