Wednesday, November 23, 2022

Apple now even opposes telecommunications CARRIERS' right to repair in ITC patent case against Ericsson: who cares about critical infrastructure anyway?

Apple's long-standing opposition to consumers' right to repair (which doesn't mix with its statements on climate change) and its reliance on astroturfers in pursuit of that goal are not new. Just yesterday I published a document that proves Apple's deceptive lobbying of the cabinet of the European Commission's Executive Vice President in charge of digital policy (and competition enforcement as everyone knows), Margrethe Vestager, in the name of "small app developers."

It seems that some things just have to get worse before they get better. Apple stops at nothing to avoid paying Ericsson the patent royalties it's seeking, and which are merely consistent with what the United States Court of Appeals for the Fifth Circuit affirmed in the HTC case. And now telecommunications carriers could suffer collateral damage. Has collateral damage been of concern to Apple? At least not in recent history. At times, Apple even seeks to enrich itself from inflicting damage on third parties, such as in the App Tracking Transparency (ATT) context, where Apple's conduct has serious macroeconomic implications.

So, let the following sink in:

Apple has just asked Administrative Law Judge (ALJ) Monica Bhattacharyya of the United States International Trade Commission (USITC, or just ITC) to throw out Ericsson's allegedly "untimely" argument that any exclusion order (U.S. import ban) Apple might win against Ericsson's base stations over its mmWave patents should come with a "service and repair" carve-out. Based on how claim construction went, it can't be ruled out that Apple will prevail on the technical merits of one or more of its three patents-in-suit.

In that investigation, Apple wants to block any imports of Ericsson base stations into the U.S. market. That raises public interest concerns in its own right as it would mean that, after Huawei was forced out for geopolitical reasons, the only one of the traditional Big Three telecommunications network infrastructure makers that would remain in a position to ship base stations to U.S. carriers would be Nokia--and only until that company and Apple start their third patent infringement dispute (after 2009-2012 and 2016-2017), which may very well happen when their current license agreement expires. A "par for the course" argument is difficult to make here because mobile phones and network infrastructure are an apples-to-oranges comparison (at best).

It's too early to take a firm position on whether a hypothetical ITC import ban on Ericsson's base stations would have to be vetoed by the White House. The trial will take place next month, and thereafter it will still take many months before a decision. But the right to repair is a serious issue even at this relatively early stage. It will also be interesting to see what the Office of Unfair Import Investigations (OUII, commonly referred to as the "ITC staff") thinks; it did not take a position before Apple filed its motion, but reserved the right to take one later.

In its prehearing brief, which Apple's motion quotes, Ericsson said "it would be prejudicial to the customers of the Accused Products, cellular network operators, to prevent them from obtaining necessary parts in order to ensure the proper operation of their investment." Apple argues that "Ericsson should not be allowed to try to blunt the force of the limited exclusion order using theories it failed to disclose in discovery" and sees itself prejudiced because "Apple did not have the chance to test Ericsson’s contentions and theories aimed at denying Apple the appropriate scope of its remedy."

I struggle with "the appropriate scope of its remedy." First, we're talking about critical infrastructure for society, for the economy, for the government, for everyone. Apple should take its Corporate Social Responsibility (CSR) more seriously. Second, those carriers are Apple resellers, i.e., customers (though Apple has all the leverage in the U.S. smartphone market because Android is only gradually more open). Third, even if one supported Apple's request for an import ban to give them leverage and force Ericsson into a settlement, it really, really goes too far to advocate that carriers should even be prevented from repairing the infrastructure they already have in place.

This isn't necessarily a smart strategy. By taking this extreme position, Apple actually creates an even more pressing need for carriers to file public interest statements in Ericsson's support. Apple's market power over those carriers is a problem, but here Apple is going for the jugular and carriers can't take any chances now.

Apple doesn't make it clear in its motion what it would have done differently in discovery if it had anticipated a right-to-repair argument. And at next month's trial, Apple can ask Ericsson's and its own public interest experts questions about this. Even if there was any prejudice (which, again, is far from clear), they could be addressed without negating the right to repair.

Today the Munich I Regional Court will hold two Ericsson v. Apple hearings (not full trials yet), and I'll try to find out afterwards what the court's 21st Civil Chamber's inclination appeared to be. There will be some third parties watching the hearings.

Here's Apple's motion:

ITC Investigation No. 337-TA-1302: Apple's Motion in Limine No. 2 to Exclude Argument, Evidence, or Testimony Regarding Ericsson's Untimely Arguments Seeking to Narrow the Scope of a Limited Exclusion Order And to Strike the Corresponding Section in Ericsson's Prehearing Brief