Tech companies have been busy jockeying for position behind the scenes in Apple's ongoing patent battle with South Korea's Samsung. The Wall Street Journal reported that some of the top companies in U.S. technology have been aligning themselves for and against an import ban the ITC issued against Apple's iPhone 4 after the trade agency found that it infringed on a standards-essential patent (SEP) owned by Samsung.
In June, Samsung won the import ban, the first such ban the company had been able to secure for a SEP in any court or regulatory body on the planet. As such, it's been the focus of much attention from IP holders in the tech industry concerned about the potential for precedents in the case whichever way it goes.
If you're familiar with the facts of the case, jump down below the fold. If not, allow us to explain.
How We Got Here
The background for this story is complex, but understanding how Apple and Samsung got here is important. It starts with Apple's enormous success with the iPhone, and the array of software, utility, and design patents the company secured covering both the look and feel of the iPhone as well as the innovative ways the company developed to allow the first ever multitouch interface smartphone to make sense.
Concerned with that success, Samsung set out to purposefully copy Apple's iPhone and iOS, as proved in a court of law in August of 2012. In the years since this patent fight began, Apple has secured many court and regulatory victories against Samsung, though its 2012 win in that U.S. court was the biggest.
In the world of technology, non-trolling patent battles normally work like this: one company asserts its patents against another. The accused company digs through its own patent portfolio looking for IP that will trump or disprove the accuser's claims. Failing that, the accused company looks for IP that it can counter-assert against its accuser.
Most of those cases get settled, with whichever company holding the strongest claims walking away with more royalties or some other benefit. Often the two parties will end up with cross-licensing agreements that not only protect them from each other, but from other third parties as well.
From the outside, it seemed like Samsung thought that's how things would go with Apple. The two companies were manufacturing partners, after all, and each needed the other.
That's not how things worked out, however; in addition to Steve Jobs not wanting to see what happened with Windows and the original Mac OS happen to his iOS, Samsung faced the problem that all of its IP strength was in standards essential patents.
Samsung doesn't have a history of innovative software or industrial design, and its patent portfolio reflects this. This is why the company worked so hard to copy Apple in the first place.
Its powerful portfolio of SEPs, however, was another story. Samsung has long developed technology used in the wireless industry, and here Samsung is a powerhouse...sort of.
We say sort of because it has that power as a result of its patents being part of industry standard. Since Samsung voluntarily offers up its patents to be included in those standards, the company is obligated to license them on a fair, reasonable, and non-discriminatory basis. That's the entire point of having these standards.
That's a problem when you want to turn to those patents as a defense against Apple's powerful-in-other-ways portfolio of design and utility patents. If Samsung licensed its patents to Apple, it wouldn't be able to use them to force Apple to the negotiating table.
And that's where things got tricky. Apple has successfully argued in several venues around the world that Samsung asked for licensing rates that were significantly higher than it charged Apple's competitors, the opposite of fair, reasonable, and non-discriminatory. Samsung did so for the sole purpose of then being able to say that Apple was infringing against those same patents.
Apple has also said it was willing to pay FRAND rates, but that Samsung (and Google's Motorola Mobility) refused to offer those rates.
Those arguments have worked out well for Apple until this case, when the ITC issued an import ban against Apple's iPhone 4 for infringing on a Samsung SEP. In its ruling, the ITC said that Apple failed to prove Samsung's requested rates were unreasonable.
The iPhone 4 is near the end of its commercial lifespan—Apple will retire the device when it releases the next round of iPhones later this fall—but the case is being closely watched, hotly debated, and fiercely attacked or defended by a variety of IP heavyweights.
The ITC, Tech Giants, IP, and Washington D.C.
The U.S. International Trade Commission is an arm of the executive branch and is designed to moderate trade disputes that involve goods coming into the U.S. Because such disputes can (and often do) have repercussions for U.S. diplomacy, the White House can reverse a final decision of the ITC.
U.S. Trade Representative Michael Froman is currently looking over Apple's iPhone 4 ban, which is scheduled to go into effect on August 4th. In effect, he could veto the trade ban on any number of grounds, but the last time that happened was in 1987, 26 years ago. It simply doesn't happen very often.
This is an unusual case, though, in part because it involves an SEP. In addition, the current administration has been investigating the use of patents to obtain import bans, and The Wall Street Journal said that the U.S. Department of Justice (DOJ) has specifically been looking into Samsung's practices.
Similarly, the FTC reached a settlement with Google in January over Moto's pursuit of import bans based on SEPs.
Lining up with Apple are companies like Microsoft, Intel, and Oracle, members of the BSA (called simply The Software Alliance these days) a lobbying and trade group. They have filed documents with the White House urging U.S. Trade Representative Michael Froman to overturn the import ban and arguing that IP holders should not be able to get bans based on SEPs.
AT&T has also filed documents arguing against the ban, while Verizon's top attorney penned an oped for The Journal making similar arguments.
Lining up with Samsung are players with significant stakes in the world of SEPs. Innovation Alliance, another lobbying and trade group, has urged the White House to leave the ban in place, arguing that not doing so would disrupt the status quo and that SEP holders would be put at a disadvantage if they couldn't use import bans to enforce their patents.
Innovation Alliance includes Qualcomm, which makes wireless chips for Apple and other cellphone makers, DigiMarc, LSi, Symyx, and others.
The Journal said that antitrust officials from the Justice Department and the Federal Trade Commission were also offering their input on the case.
All of which makes this is an interesting case, which is ironic considering the iPhone 4 will soon be discontinued.
The iPhone 4 does still sell well, but it would have only been on the market for a couple of months—at most—after the August 4th ban goes into effect.
It's the politics of the case that really matter. There are a lot of heavy hitters in the lobbying world weighing in on the case, and both Samsung and Apple have a lot of weight of their own. We'll know what the White House decides to do by the end of this week.