USTR Rejects Import Ban On Apple Inc. Products

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For the first time in 26 years, the White House exercised its veto authority over an International Trade Commission ("ITC") Exclusion Order. On June 4, 2013, the ITC determined in Investigation No. 337-TA-794 that Apple had infringed Samsung patents, warranting an exclusion order against importation of certain Apple iPhones and iPads. The decision attracted the attention of a number of firms the mobile communications industry because of its implications for the ITC's treatment of standard-essential patents ("SEPs) that the patentees committed to license on fair, reasonable, and non-discriminatory ("FRAND") terms.

In an August 3, 2013 letter from Ambassador Michael Froman of the Office of the U.S. Trade Representative ("USTR") acting on behalf of the White House, USTR vetoed the ITC's exclusion order. In his letter, Mr. Froman cites the Obama Administration's January 8, 2013 policy statement, which expresses the administration's concern that owners of SEPs might gain undue leverage and engage in "patent hold-up" of firms voluntarily using their patented technology using the threat of an ITC exclusion order. SEPs are chosen by standard setting organizations ("SSOs") representing various industries with an aim towards promoting interoperability of similar products manufactured by various firms. In exchange for its technology receiving SEP status, the patent holder agrees to license it throughout the industry for what is determined to be a FRAND royalty. In this case the administration and a number of other interested parties felt that Samsung failed to live up to FRAND commitment and, as a consequence, an exclusion order was unwarranted.

While Mr. Froman concluded that this exclusion order is not in line with the public interest, he points out that the Administration does not rule out exclusion orders in all cases involving SEPs. Specifically, the administration's policy statement expressed that, "[a]n exclusion order may still be an appropriate remedy in some circumstances, such as where the putative licensee is unable or refuses to take a FRAND license and is acting outside the scope of the patent holder's commitment to license on FRAND terms." An analysis regarding the "Latest Developments On Injunctive Relief For Infringement Of FRAND-Encumbered SEPs", including a summary of the current case law, is provided
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Justin Enck and Jeff Telep