President Obama Rightly Denies Samsung Request to Veto a Patent Ruling Favoring Apple


Back on August 15, 2013, we wrote an article that focused on the fact that President Obama opted to get involved with an ITC (International Trade Commission) ruling concerning a Samsung victory in a FRAND patent dispute with Apple. The upshot was that the president essentially overturned the ITC ruling, denying Samsung any relief on its patent win. It also meant that Apple of course was spared any sort of punishment in the matter.

It's worth re-reading the article if your memory is hazy on what a FRAND (or core essential) patent is, what the possible outcome for Apple would have been had the president not overturned the ruling, and what the likely upshot of the whole thing would likely end up being. We pointed out as well that we wondered what would happen if Samsung also came up against an ITC ruling from the other side of things - that is, losing an ITC ruling against Apple and then turning to the president to gain its own relief.

How would it look if our home town team won one and the visiting team ended up losing one? We knew that there was exactly such a scenario lurking and, well, the scenario became real. And today it was announced that President Obama has in fact opted to veto Samsung's request to have the ITC ruling overturned, so the home team/visiting team scenario played out exactly as anticipated.

On the surface it certainly might look like the president was playing home town favorites, but in fact the cases have no real comparison to each other and never did. The basic rule of thumb is that FRAND patents are rewarded with only minimal levels of associated licensing fees. When such a patent is deemed infringed the remedy never quite adds up to what the winning side might have anticipated. 

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A recent and contemporaneous example of this is Microsoft's rather huge win over Google and Motorola Mobility in exactly the same sort of case. Google and Motorola had sued Microsoft on patent infringement and had demanded - and was anticipating - winning a multi-billion dollar remedy. Microsoft successfully proved that the patents in question were FRAND patents and won its case. As such, Google's and Motorola's anticipated billions in hoped for remedy instantly evaporated.

In the former instance of Samsung's victory being overturned by President Obama he and his advisors correctly surmised that the ITC's remedy award to Samsung in the FRAND patent case was onerous for a FRAND dispute. We certainly applauded that decision - it was absolutely the right call to make. Now today we find ourselves once again having to applaud the president and his advisors for yet again making the correct call in denying Samsung any relief relative to its patent loss against Apple. Why?

In the latter case of Samsung's patent infringement loss, we are speaking about a very real and very differentiated patent that Apple holds. We are not speaking about FRAND patents here. Apple is indeed entitled to its remedy and relief and we are quite glad to see that the ruling has been resolved in the manner it has.

Fast and Loose with the Rules

We are not particularly thrilled with Samsung's behavior over time with regard to patents. The company has, without a doubt, played a game on this front - willfully copying Apple designs early on and then hoping to simply and quietly settle any patent issues with minimal remedies imposed. This of course escalated into the "patent wars" that, until last week, had finally died down a bit. But it turns out that last week we discovered that Samsung had once again opted to play games with the patent courts - this time around essentially ignoring court etiquette on handling extremely sensitive and highly confidential patent licensing information between Apple and Nokia.

Samsung actually sought to use the ill-gotten licensing information to try and hammer Nokia during negotiations between Samsung and Nokia on a subsequent licensing deal between the two companies. Samsung's behavior was outrageous in our opinion and we hope the courts are able to put serious sanctions in place relative to Samsung's behavior on this front.

Finally we can hardly shed a tear for Samsung and its feeling that Obama is playing hometown favorites. Samsung needs to understand that flaunting patent laws and related court etiquette leads to real consequences. Period.

U.S. Trade Representative Michael Froman, President Obama’s designee in the matter, noted the following in a statement this afternoon: “After carefully weighing policy considerations, including the impact on consumers and competition, advice from agencies, and information from interested parties, I have decided to allow [the import ban]."

There is a bit of perspective required. The patent ruling in question is related to the "willfully copying Apple" lawsuit we noted above. In fact the entire thing is, to a great degree, symbolic in that the infringing hardware is so old as not to matter. Winning the patent dispute however is critical for Apple in terms of ensuring there is a clear precedent in place for preventing Samsung from repeating its transgressions. There are indeed consequences to one's actions.

We'll next be keeping our eyes on how the latest development evolves concerning Nokia and Samsung's use of confidential information to gain negotiating advantages over Nokia.

TechZone360 Senior Editor

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