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What's the difference between public interest and protectionism?

Peter Leung

The Obama administration’s veto of the ITC’s ban on iPhone 4 imports has sparked accusations about protectionist policies. Are these claims justified?

President ObamaThe latest development in the global patent war between Apple and Samsung took another dramatic turn this week. The International Trade Commission (ITC), set to ban imports of Apple’s iPhone 4 for infringing Samsung’s patents, was overruled by US Trade Representative Michael Froman, citing concerns about the dangers of holders of standards-essential patents (SEPs) gaining undue leverage over the market and the associated public interests.

In his letter to ITC chairperson Irving Williamson, Froman points favourably to a position statement the Department of Justice and the USPTO issued in January discussing the potential dangers of issuing injunctions based on SEPs with FRAND commitments. Noting that exclusion orders are sometimes proper, the position paper said that bans are inappropriate where it “appears to be incompatible” with its FRAND commitments, or where the patent holder is attempting to use an exclusion order to “reclaim some of its enhanced market power” over companies relying on the patent.

These considerations are reasonable, but one issue is that though Froman cites these concerns in his letter, he does not provide any analysis or facts showing or even necessarily arguing that Samsung was using its SEP patents inappropriately. This is particularly striking since he also states that "whether public interest considerations counsel against a particular exclusion order depends on the specific circumstances at issue".

iPhoneThis has bolstered accusations that the US is protecting one of its most valuable brands and by extension its own economic interests, a charge that it has levelled against countries such as India and China. South Korea has expressed “concerns” over US patent protection for its largest company. Korean newspaper Donga-Ilbo used stronger language, blasting the Obama administration for being “oblivious” to the dangers of trade protectionism.

Critics outside Korea also weighed in. The Financial Times warned that the ITC veto may undermine US efforts to strengthen IP protection. Meanwhile, SpicyIP scoffed that while India’s national interest of providing access to medicines is supposedly problematic, the US interest of “ensuring iPads and iPhones are available to its citizens” is apparently acceptable.

To be sure, some defend the Obama administration’s move. One such person is Bill Reinsch of US lobbying group National Foreign Trade Council, who argued to the Financial Times that in this matter, “the US has employed an extensive legal process, and Samsung can continue to pursue the matter in court”.

Such an argument is consistent with the US position that rule of law is paramount there, a point that it often makes when criticising China. Yet, defenders of India’s much criticised patent regime can make the exact same argument by pointing to statutes and court decisions justifying its compulsory licensing and patent revocations. Without more explanation than that the ban against Apple was overturned only after having “reviewed various policy considerations” and “extensive consultations”, the rule of law argument sounds a bit hollow.

Of course, the Apple-Samsung battle is far from over, even at the ITC which will issue its decision on whether Samsung violated Apple’s patents this Friday. As the saga unfolds, it will be interesting to see what effect this dispute will have on not only patent and design rights, but also international trade in what is believed to be an increasingly globalised world.


Article Comments

I would love to say that this veto is based on some sort of analysis unrelated to the amount of lobbying Apple is doing, however, the USTR cannot cite the position paper about the use of standard essential patents being proper or improper as a basis for its decision when the ITC did not find the patent in question was an SEP. This issue was hotly contested yet no finding issued...I take that to mean at the least that reasonable minds could differ as to whether the patent in question was an SEP.

So thanks for the guidance USTR, but you are just not credible. The rest of us patent holders are left holding the the bill for your one-sided trade practices when we go to enforce overseas. Perhaps you can try to redeem yourself with an even-handed decision when deciding to uphold the ITC's ban last week of Samsung products found to infringe an Apple patent...perhaps not. We shall see.

Jeff Aug 14, 2013

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