President Disapproves ITC Exclusion Order In -794 Investigation On Public Interest Grounds


On August 3, 2013, the President acting through the U.S. Trade Representative (USTR) disapproved the decision of the U.S. International Trade Commission (ITC or “Commission”) to issue an exclusion order in Certain Electronic Devices, Including Wireless Communication Devices, Portable Music And Data Processing Devices, And Tablet Computers, Investigation No. 337-TA-794 (“the 794 investigation”). This is the first such Presidential disapproval of an ITC exclusion order since 1987 and heralds a new era for examining the public interest impact of ITC exclusion orders. It could lead to significant changes in Section 337 practice.

Background -

On June 4, 2013, the Commission issued its Notice of Final Determination in the - 794 Investigation finding that Apple had violated Section 337 with respect to one of Samsung’s patents (the ‘348 patent). The Commission issued both a limited exclusion order and cease and desist order barring Apple from importing its iPhone 4, iPhone 3GS, iPad 3G, iPad 3 and iPad 2 models for sale in the U.S. before June 3, 2015. The Commission postponed its ruling in March and again in May so that it could consider comments from the companies and public on the potential public interest harm of a ban arising from standard essential patents subject to a FRAND commitment. A FRAND commitment is a commitment by a patent holder to a Standard Setting Organization (SSO) to license its standard essential patents on fair, reasonable, and non discriminatory terms in exchange for the SSO’s agreement to adopt the patented technology into the standard. The Commission determined that “the public interest factors enumerated in section 337(d)(1) and (f)(1) of the Tariff Act did not preclude issuance of the limited exclusion order and cease and desist order” and that “Samsung’s FRAND declarations do not preclude that remedy.” The Commission also found that Apple failed to prove an affirmative defense based on Samsung’s FRAND declarations. Commissioner Pinkert dissented on public interest grounds from the determination to issue an exclusion order and cease and desist order.

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