Federal Government Faces Decision Whether to Veto ITC Order

In June, the International Trade Commission found that Apple infringed on a Samsung patent, and declared a ban on some older iPhone and iPad models. The trade agency oversees certain unfair trade practices and can block imports and sales of products. The Justice Department and the Federal Trade Commission have been concerned with companies using essential technology patent lawsuits to block rivals, and are troubled with the ITC ruling. The Obama administration is now faced with whether it should veto the order.

“The main point of contention centers on the legal weapons available to companies that hold patents incorporated into industrywide technology standards,” explains The Wall Street Journal. “Should they be able to use those patents to block rival products, or is monetary compensation enough?”

When companies allow their patents to be used in industry standards, such as for mobile devices, they typically must license those patents to competitors with reasonable terms. Without a licensing requirement, companies could wield control over others.

Samsung sought the ban after Apple sued them first due to patents, and later attempted to avoid paying license fees, according to Samsung. The ITC said that Apple’s stance could make it easier for companies to use a competitor’s patents without paying a license.

“U.S. Trade Representative Michael Froman has the authority to make the final decision on whether to allow the ITC ban,” according to the article. “It is rare for a presidential administration to veto an ITC order, the most recent instance occurring in 1987. If Mr. Froman doesn’t intervene, the ban would take effect on Aug. 4.”

Trade group BSA, which represents companies such as Microsoft, Oracle and Intel, suggests that the use of essential industry patents to ban products should not be permitted, unless under unusual circumstances.

The case is being closely monitored by U.S. officials, and the Justice Department and U.S. Patent and Trademark Office caution the ITC on its approach to product bans involving essential patents. There is also an investigation on how Samsung has used essential patents in litigation.

“The White House itself has advocated for Congress to change ITC legal standards to make it tougher for patent holders to obtain product-exclusion orders,” explains WSJ. “The administration made the recommendations the same day the ITC issued its ruling against Apple.”