The Obama administration has vetoed a sales and import ban on some models of Apple's iPhone 4 and iPad 2 that had been scheduled to go into effect on Sunday, August 4th. On Saturday, White House Trade Representative Michael Froman overturned the U.S. International Trade Commission's ban citing concerns that the patent in question was a standards-essential patent (SEP).
This is the first such veto from the White House since Ronald Reagan's administration overturned a veto ban in 1987. That ban involved Samsung memory chips.
The U.S. Presidential Seal
In a letter explaining his decision, which was published by The Wall Street Journal, , Mr. Froman said that he "strongly shared" the "substantial concerns" laid out in a U.S. Department of Justice (DOJ) and U.S. Patent and Trademark Office Policy Statement over the practice of using SEPs to gain import bans.
We'll break down his argument in an easily digestible format:
- SEP holders commit to licensing those SEPs on a fair, reasonable, and non-discriminatory basis (FRAND).
- FRAND terms are not defined, regulated, or codified.
- Once accepted into a technology standard, SEP holders can use import bans to get higher licensing terms—terms that are essentially not FRAND—than they would have been able to get otherwise.
- There have been increasing occurrences of this happening, and it needs to stop.
- Samsung is welcome to continue pursuing its claims against Apple in the U.S. court system.
Unstated in that last bullet point is that Samsung has had no more luck there trying to assert its SEPs against Apple than it has anywhere else in the world.
Mr. Froman also said that he consulted with all of the interested parties in the case, including the DOJ and Federal Trade Commission.
Commenting on the case to The WSJ, former FTC Chairman Jon Leibowitz said, "When a company agrees to license what is known as a standard-essential patent at fair and reasonable terms, it shouldn't be able to ban importation of a product into the United States simply because it wants a better deal."
Samsung issued a statement condemning the decisions, saying, "We are disappointed that the U.S. Trade Representative has decided to set aside the exclusion order issued by the U.S. International Trade Commission (ITC). The ITC’s decision correctly recognized that Samsung has been negotiating in good faith and that Apple remains unwilling to take a license."
Image courtesy of Shutterstock.