Import Ban Looms for Samsung in Apple Patent Fight
From Litigation Daily:
Samsung Electronics Co. is hoping the White House will veto an order that would bar the company from importing some of its smartphones and tablets. But observers say the company and its lawyers shouldn't hold their breath.
Tuesday is the deadline for the Obama administration to step in and nix the exclusion order, which was issued by the U.S. International Trade Commission in August. In a submission to U.S. Trade Representative Michael Forman urging a veto, Samsung's lawyers at Quinn Emanuel Urquhart & Sullivan argued that an import ban is an excessive remedy for the ITC's findings that "minor" features of Samsung devices infringe two Apple Inc. patents.
If the White House declines to act, the ITC's order could keep certain older Samsung phone and tablets from entering the U.S. after midnight on Oct. 8. But Samsung said the volume of products affected by the order is small, since the ITC also ruled that the company's design workarounds did not infringe the Apple patents.
Apple faced a similar situation this summer, after the ITC found that it infringed a Samsung patent and ordered a ban on importation of older versions of the iPhone 4 and iPad 2. On Aug. 3, however, the U.S. Trade Representative overturned the ITC decision — the first such move by the executive branch in more than 25 years.
Skeptics say the Apple precedent isn't likely to make a difference for Samsung's veto bid. In Apple's case, the ITC found that Samsung infringed a so-called standards essential patent (SEP) — a patent covering an industry technical standard that patent holders are obligated to license on fair, reasonable, and non-discriminatory (FRAND) terms. The Federal Trade Commission, the Department of Justice, the U.S. Patent and Trademark Office, and the federal courts have all indicated in the past year that using SEPs to exclude products is harmful to consumers, distorts competition, and undermines the public interest. The ITC became the only venue where patent holders could successfully bring claims related to standards essential patents.
The ITC's exclusion order against Samsung, on the other hand, dealt with two distinctive Apple patents related to multi-touch software and headphone detection.
"The veto in the previous case pivoted entirely on standards essential patents and a FRAND promise," said Jay Jurata, a partner at Orrick, Herrington & Sutcliffe who specializes in antitrust and intellectual property law but wasn't involved in either ITC case. "This case is completely different."
In their submission seeking a White House veto, Samsung's lawyers took aim at several aspects of the ITC order. "Overly-broad remedial orders covering complex products, of which only minor features are found to infringe, threaten legitimate trade and stifle innovation," they wrote. "There is a strong policy interest in ensuring that a patentee cannot hold an entire market hostage because of insignificant improvements to minor features or components."
Samsung also expressed concern that the ITC's order, which covers "certain electronic devices" but doesn't name specific products, is so broad that Apple will try to use it to block importation of products that do not infringe. And the company even invoked global economics: "The world is watching how Samsung is treated by the United States in this 'smartphone war' and the Administration has a significant interest in avoiding the perception of favoritism and protectionism toward U.S. companies," Samsung wrote.
Observers said charges of protectionism are not uncommon, and such claims would not likely sway the administration.
"That argument would resonate" if the Samsung's patents were standards essential, like Apple's, Jurata said. "But they are just completely different, so the argument is likely to fall on deaf ears."
Samsung is represented in the case by Quinn Emanuel partners Charles Verhoeven, Kevin Johnson and Paul Brinkman.