It’s Monday morning, and you can still walk into an AT&T store in the United States and buy an iPhone 4, thanks to a weekend ruling from the Obama administration that stopped a sales and import ban on older Apple devices on AT&T's network. The ban, ordered by the U.S. International Trade Commission, was set to go into effect Monday.
That’s happy news for consumers looking for cheaper iPhones — and for Apple, which saw the iPhone 4 drive a lot of sales in the past quarter. It also is the latest step in an ongoing tussle between regulators in the United States and elsewhere, with consequences for consumers that result from technology patent battles.
Aggressive patent lawsuits don’t sit well with many folks, as my colleague Timothy B. Lee has extensively covered in his own writings on the subject. The ITC is the only place where companies can ask to have products banned for alleged patent violation.
Regulators have been particularly focused on determining when it’s appropriate for companies to sue based on patents considered to be “standard-essential” — a classification that means they cover a technology that any company needs to compete in a given field. Companies that hold these kinds of patents are expected to license them to competitors as “fair, reasonable and non-discriminatory,” or FRAND, rates.
For months, U.S. officials have been raising concerns about using these kinds of patents in litigation, since it not only gives those patent-holders an unfair advantage over competitors, as Lee points out in his piece on the ruling, but also could seriously limit consumer choice by pulling popular products off shelves.
Last year, the Federal Trade Commission urged the ITC not to ban the iPhone and Microsoft’s Xbox for similar reasons when Google’s Motorola division cited patent infringement of standard patents when asking for a ban on those products. In January, the Justice Department and the U.S. Patent and Trademark Office issued a policy statement that said that orders on these kinds of patents should only take place when patent-holders can’t get competitors to agree to FRAND conditions.
In Samsung’s case, the South Korean company has said Apple was not willing to negotiate a fair rate to use Samsung-patented technology, leading to the ITC complaint and request for a ban. Apple, for its part, has said that Samsung was trying to abuse the system. While the companies themselves have not elaborated on what their negotiations have been, a dissenting opinion from the original case transcribed by noted patent blogger Florian Mueller indicates that Samsung may have asked Apple to license non-standard Apple patents to Samsung as part of the negotiations.
The administration’s Saturday ruling, at least, shows that whatever the details of that negotiation, regulators don’t think its problems outweigh the impact on consumer choice of pulling older iPhones and iPads off the shelves.
That sentiment was backed by the nation’s highest consumer protection bureau. FTC chairwoman Edith Ramirez affirmed her support for the administration’s decision, saying in a statement, “The Administration’s action sends the right message. Firms should not be able to use an ITC exclusion order to do an end-run around a FRAND commitment.”
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