The ITC Should Consider the Public Interest in Patent Decisions
The ITC Should Consider the Public Interest in Patent Decisions
The ITC Should Consider the Public Interest in Patent Decisions

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    Note: This post was co-written with Rashmi Rangnath, Director of Global Knowledge Initiative, and Staff Attorney

    The Administration overturned a decision to ban imports of technology products that infringe patents. This reaffirms the principle that an automatic ban on product importation is not in the public interest.

    The public interest has to be a central concern in decisions
    about technology policy. The Obama Administration, through the United States
    Trade Representative (USTR), reaffirmed this principle this past Saturday when
    it overruled a recent International Trade Commission (ITC) decision to ban
    imports of certain Apple products including the iPhone 4.

    The ITC is a specialized court that decides patent
    infringement cases. If the ITC finds that a product infringes a patent in
    certain circumstances, then the ITC will, as a matter of course, ban
    importation of that product. This is exactly what happened as part of the Apple
    /Samsung litigation: the ITC ordered a ban of the iPhone 4 and other Apple
    products on the ground that they violated patents owned by Samsung and relating
    to CDMA encoding and decoding (CDMA is a cell phone network technology used
    mostly by Verizon and Sprint in the US.)

    The problem, as recognized by the USTR, is that the ITC
    imposes these bans without consideration of the public interest. In the case of
    the iPhone4, the injunction would have cut consumers off from access to phones
    that are significantly cheaper than the latest models of iPhones, effectively
    raising the prices for a significant market share of smartphones. A ban on
    their import would have been particularly unjust given that Samsung’s patented technology
    made up only a small part of the many technologies in the iPhone 4.

    We applaud the USTR for directing the ITC to consider the
    public interest in the Apple/Samsung litigation, as it recognizes the direct
    impact that patents have on consumer access to technology. Significantly, the
    USTR also urged the ITC to apply this standard to future cases noting that:

    “in any future cases involving SEPs [standards-essential
    patents], the Commission should be certain to 1) examine thoroughly and
    carefully on its own initiative the public interest and 2) seek proactively to
    have the parties develop a comprehensive factual record related to these issues
    in the proceedings before the Administrative Law Judge and during the formal
    remedy phase of the investigation before the Commission ….” 

    Standards-essential nature of patents should not be the sole factor in determining impact on public interest.

    But a lingering
    question remains relating to the nature of Samsung’s patents as “standards-essential
    patents.” One of the factors that influenced the USTR’s decision was that the
    patent Samsung claimed was a standards-essential patent. In
    this context, a “standard” is a technology that many product makers across
    different companies agree to use in order to make interoperable products. For
    example, USB ports follow a particular standard so that the same plugs fit all
    sorts of different devices. The advantage is that
    products can interoperate and consumers would not have to buy a whole
    range of accessories when they buy one new device. Thus, standards facilitate
    interoperability and facilitate greater consumer choice.

    Often technologies that become part of standards are
    patented. In the development process, patent owners of these
    standards promise to license their technology to anyone who wants to employ that standard on Fair, Reasonable, and Non-Discriminatory terms (FRAND terms).

    Standards-essential patents, like those covering WiFi or USB, have a
    particularly prominent impact on the consumer interest. Those patents
    affect whole classes of technologies, and assertion of those patents can
    obstruct interoperability and market competition. The USTR considered the
    adverse impact of such behavior to be especially grave.

    But whether a patent is standards-essential or not should
    not be the only thing, or even the most important thing that determines what
    is in the public interest. The ultimate determinative factor must be the
    public’s interest in access to valuable and beneficial technologies whether or
    not those technologies are approved by a standards board. Indeed, consider the
    following factors that could militate against an importation ban of the iPhone
    4 or other products, none of which have anything to do with technology

    • Whether the iPhone 4 has far more features than
      the scope of the patent, so an importation ban would exclude those additional
      features with no justification
    • Whether the alternative products made by Samsung
      are an adequate alternative to the products being banned
    • Whether Samsung is actually making any products
      available, rather than just engaging in a “domestic industry of licensing”

    As is apparent, the public interest is much more expansive
    than the question of whether a patent is standards-essential or not. Accordingly,
    where the ITC’s duty, according to the USTR, is to consider importation bans in
    view of the public interest, the ITC’s inquiry must be much more expansive as

    Original image by Flickr user sidduz.