Out-Law / Your Daily Need-To-Know

Apple devices sales ban order overturned by US President

Out-Law News | 06 Aug 2013 | 3:06 pm | 2 min. read

A ruling by the US International Trade Commission (ITC) to ban the sale of certain smartphones and tablet computer devices made by Apple in the US has been overturned by the US President's administration.

Barack Obama used a power available to him under US law to overturn the sales ban on some models of iPhone and iPad devices which was imposed by the ITC in June. The ITC issued the order after determining that Apple had infringed on patent rights owned by South Korean rival Samsung.

However, the President ruled to overturn the ban after citing concerns about how it might impact on competition in the US device market. The President had assessed US policy on remedies for standard-essential patent (SEP) infringements when coming to his decision, Ambassador Michael Froman said in a letter to the ITC (4-page / 88KB PDF). Under US law the US President has a right to overturn ITC 'cease and desist' orders within 60 days of such an order being issued.

"This decision is based on my review of the various policy considerations ... as they relate to the effect on competitive conditions in the US economy and the effect on US consumers," Froman said in his letter.

The ITC ruled that Apple had infringed on a standard-essential patent owned by Samsung for '3G' wireless technology. Froman said that the decision by the Obama administration to disapprove of the sales ban order on certain Apple device models did not signal any view on the ITC's findings in relation to infringement and said it was open to Samsung to "continue to pursue its rights through the courts".

Standards are agreed technical specifications to ensure that a single technology is used across an industry, often with the goal of achieving interoperability of products regardless of the manufacturer. Companies can opt to send experts to help develop standards but, in return, most standards setting organisations insist that companies agree to license any intellectual property they own that is essential to implementation of that standard on fair, reasonable and non-discriminatory (FRAND) terms.

Froman said that concerns both in the relation to the possibility of SEP holders asserting their rights to 'hold-up' the launch of rival products to market and with the practice of SEP users refusing to enter into negotiations for a FRAND licence or pay a pre-determined FRAND royalty had been considered before the decision to overturn the ITC's sales ban was made. He called on the ITC to review "thoroughly and carefully on its own initiative" whether potential remedies to SEP-infringement cases are in the public interest in future cases.

"The Administration is committed to promoting innovation and economic progress, including through providing adequate and effective protection and enforcement of intellectual property rights," Froman said. "Relief available to the owners of intellectual property rights [under US law] is an important facet of achieving that objective. At the same time, standards, and particularly voluntary consensus-bases standards set by SDOs, have come to play an increasingly important role in the US economy."

"Important policy considerations arise in the enforcement of those patents incorporated into technical standards without which such standards cannot be implemented as designed, when the patent holder has made a voluntary commitment to offer to license these SEPs on FRAND terms. Licensing SEPs on FRAND terms is an important element of the Administration's policy of promoting innovation and economic progress and reflects the positive linkages between patent rights and standards setting," the Ambassador added.

Samsung has been granted the right to appeal against the ITC's original verdict, according to a report by the Financial Times. The company is unhappy that the ITC ruled that only one of its patents had been infringed by Apple rather than the four it said had been violated.

South Korea's Ministry of Trade, Industry and Energy has expressed concern about it sees as the potentially "negative effect" of the Obama administration's decision to overturn the sales ban order, according to a report by the Xinhua news agency