The Never-Ending Apple v. Samsung Patent Battle

Andrew Strauss

Certain Electronic Devices, Including Wireless Communication Devices, Portable Music and Data Processing Devices, And Tablet Computers, Inv. No. 337-TA-794 (June 4, 2013).

Apple and Samsung have been frequent foes in the courtroom for the last few years. The two tech giants have continuously accused the other of infringing on patents, the vast majority of which are connected to smartphones and tablets. Apple’s iPhone and Samsung’s Galaxy are two of the most popular smartphone brands with concomitant and ongoing legal battles over the infringement of both companies’ patents for touchscreen technology. The most recent fights were before the International Trade Commission (ITC).  This time, Samsung first alleged that Apple had infringed on patents. The ITC ruled in favor of Samsung in June by concluding that Apple infringed on one of Samsung’s patents.[1] When the ITC finds a patent infringement, it can issue exclusion orders. These orders ban the importation and sale of the product that was found to be infringing on another company’s patent. After the exclusion order is issued, the President has 60 days to allow the order to take effect or to veto it. During the 60-day presidential review period following the ITC’s decision that Samsung had violated Apple’s patent rights, US Trade Representative Ambassador Michael B. G. Froman vetoed the exclusion order issued against Apple. This veto represented the first time an ITC exclusion order has been vetoed since the Reagan Administration.

The Tariff Act of 1930 provides the ITC with the power to effectively ban products from entering the United States if they are found to be infringing on patents.[2] The ITC reviewed Samsung’s claim that Apple infringed Samsung’s patented technologies used in the iPhone 4, iPhone 3GS, iPhone 3, iPad 3, and iPad 2. ITC agreed with Samsung and subsequently issued an exclusion order banning the importation of the aforementioned Apple devices[3] and sent shockwaves through the tech industry. Samsung saw its stock soar while Apple’s ticked down. Under administrative law, the ruling was set to go into effect 60 after issuance pending review by the President who ultimately has the power to veto ITC orders.

This all came to a head last week. On the eve of the importation ban, President Obama vetoed the ITC’s ruling.[4] The decision was arguably economically based because Apple is an American company that employees thousands around the globe and in United States.[5]Ambassador Froman, however, mentioned none of these concerns in his letter to the ITC explaining the decision to veto the order.[6] The Ambassador’s justification for the veto was based on Fair, Reasonable, and Nondiscriminatory (FRAND) licensing of Standard Essential Patents (SEPS).[7] SEPS are technologies that an entire industry uses together.[8] Since the same technology is used, different products can work together seamlessly.[9] Therefore, SEPS encourage compatibility among rivals, promote interoperability across different devices, and lower the cost for consumers.[10] When a company holds a SEP, they license it to other companies in their field under a FRAND agreement. The Ambassador explains that by granting an exclusion order, the ITC could actually be letting companies who license SEPS to gain a greater market share, resulting in less competition.[11] The Ambassador actually cites to Section 337’s explanation of Presidential review.[12] It specifically explains that the President must consider public welfare and competitive conditions in the U.S. economy when he decides whether to uphold or veto an ITC ruling.[13] Effectively, the Obama Administration’s veto of the ITC’s ruling here is based on a possible violation of competition law. The Administration believed that if the ban of Apple products were to occur, overall competition in the tech industry would suffer.

On August 9, 2013, the ITC ruled in another Apple v. Samsung case dealing with patent infringement.[14] This time, however, the ITC ruled in Apple’s favor and banned the importation of certain Samsung devices. The Apple patents that Samsung infringed on here were the location of Apple’s headphone jack and more touchscreen technology.

If President Obama does not veto this latest ITC ruling, Samsung will be banned from selling certain products on U.S. shelves. Whereas the patents in the first ITC decision dealt more with the actual interface of the products, the patents at issue in the latest ruling deal more with unique features of the devices. It will be interesting to see if the Obama Administration deems these patents worthy of SEP status. The Administration will also need to decide if banning Samsung from U.S. markets would result in anti-competitive behavior. It seems clear that banning one company from a market will always result in harm to consumers via less competition, but will the Administration protect a non-U.S. company? If they let Samsung be banned from the market it may also appear that bias towards Apple played a factor in the veto. Even if the patents are deemed not worthy of SEP status, eliminating an entire company’s products from the market is bad for consumers. Competing for consumers’ business results in better, cheaper products. Thus, based purely on competition law, the Administration should veto the ITC ruling.

It is also worth noting that the ITC battle is just the tip of the Apple v. Samsung iceberg. The two companies made headlines last year when a California jury awarded Apple nearly a billion dollars in damages due to patent infringements by Samsung.[15] Samsung is appealing the ruling to the Federal Circuit.[16] Should Samsung win the appeal, an argument before the Supreme Court is a plausible possibility.

For consumers, the best solution is for Apple and Samsung to find a way to cross license technology and eliminate the litigation cycle. By sharing technology, Apple and Samsung could both develop better products if the two spoke to each other about something other than their legal battles. It will be intriguing to see how this ongoing dispute plays out because it does not appear that either side believes the end is in sight.



[1] Certain Electronic Devices, Including Wireless Communication Devices, Portable Music and Data Processing Devices, And Tablet Computers, 78 Fed. Reg. 16,865 (June 4, 2013) (Notice of Final Determination).

[2] 13 U.S.C. § 1337 (2012).

[3] 78 Fed. Reg., supra note 1.

[4] Letter from Michael B. G. Froman, U.S. Trade Rep, to Irving A. Williamson, Chairman of the U.S. Int’l Trade Comm’n (August 3, 2013) (explaining the President’s decision to veto the USITC’s ban on importing Apple products), http://www.ustr.gov/sites/default/files/08032013%20Letter_1.PDF.

[5] Nick Wingfield, Apple Study on Job Creation Spurs an Economic Debate, N.Y. Times,(March 4, 2012), http://www.nytimes.com/2012/03/05/technology/apple-study-on-job-creation-spurs-an-economic-debate.html?_r=0.

[6] See Letter from Michael B. G. Froman, supra note 4.

[7] See id.

[8] See Fed. Trade Comm’n, Why Standardized Technology Matters (2013), http://www.ftc.gov/os/2013/01/130103google-seps.pdf.

[9] See id.

[10] See id.

[11] See Letter from Michael B. G. Froman, supra note 4.

[12] See id.

[13] See id.

[14] Certain Electronic Digital Media Devices and Components Thereof, 78 Fed. Reg. 49, 764 (August, 9, 2013) (Notice of Final Determination).

[15] Nick Wingfield, Jury Awards $1 Billion to Apple in Samsung Patent Case, N. Y. Times (August 24, 2012), http://www.nytimes.com/2012/08/25/technology/jury-reaches-decision-in-apple-samsung-patent-trial.html.

[16] Ashby Jones, Apple-Samsung Patent Battle Heads for Next Round, Wall St. J. (August 8, 2013), http://online.wsj.com/article/SB10001424127887323838204579001070722801840.html.

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