Over the weekend, the Obama administration made an extraordinary decision: The U.S. Trade Representative overturned a U.S. International Trade Commission injunction barring the import of Apple iPhones found to infringe Samsung standard-essential technology. It’s been almost 30 years since the ITC commissioners were previously overruled by the White House, but, as I told you last month, Apple argued that the ITC’s injunction was contrary to the emerging consensus among federal courts and executive-branch agencies that injunctions should not, except in rare instances, be based on standard-essential patents.
In a less dramatic but also consequential filing Friday, the Justice Department responded to a complaint Microsoft filed in federal district court in Washington on July 12, demanding that the U.S. Bureau of Customs and Border Protection enforce an ITC exclusion order barring the import of Motorola smartphones that infringe a Microsoft patent on Outlook calendar synchronization. Motorola, which is appealing the ITC’s determination that the patent is valid, evaded the ITC injunction by convincing Customs that it had removed the infringing feature from its phones. Microsoft argued that Customs made an improper ex parte determination and effectively undermined the ITC exclusion order. In the government’s response, the Justice Department cited a host of supposed procedural deficiencies in Microsoft’s suit, including the district court’s lack of jurisdiction to hear a case that should have been brought as an administrative proceeding.
But that’s not all. Justice said Microsoft’s suit is against public policy – and against Microsoft’s own arguments in other smartphone litigation. The U.S. Supreme Court’s test for injunctions requires a showing that the injured party would otherwise suffer irreparable harm. Here, the government brief said, damages based on a reasonable licensing fee from Motorola are a perfectly adequate redress for Microsoft. When the shoe has been on the other foot and Microsoft has been accused of infringing Motorola smart device IP, the Justice Department said, Microsoft itself has contended that relief should come through money damages. (I’m sure that Microsoft would argue that the situations are different in the two cases, since the Motorola technology at stake in the Microsoft case being litigated in federal district court in Seattle is standard-essential IP and the ITC exclusion order Microsoft is suing Customs to enforce concerns non-essential tech.)
Nevertheless, if you take a step back from the specifics of the Apple/Samsung and Microsoft/Motorola cases – and even from their common origin at the ITC – you can discern a message from the executive branch to smart device makers: Stop wasting your money on litigation that’s not going to result in a long-lasting, market-shaping bar on your competitor’s products. Negotiate fees like adults and let consumers, and not the courts, determine winners.
That’s a message device makers have already heard from federal district courts overseeing smartphone litigation. Regardless of whether allegedly infringed patents cover standard-essential technology or simply a few features of a multifaceted smart device, the Federal Circuit Court of Appeals and trial judges implementing its precedent have been reluctant to issue injunctions that would disrupt the smartphone market. Judge Richard Posner of the 7th Circuit, in his 2012 stint as a trial judge in litigation between Apple and Motorola, said Motorola wasn’t entitled to an injunction based on standard-essential patents – and, more broadly, that patent holders obligated to license essential technology on reasonable terms should not be able to enjoin competitors for infringing those patents. U.S. District Judge Lucy Koh of San Jose, who presided over the celebrated trial of Apple’s infringement claims against Samsung, similarly refused last December to permit Apple to torpedo Samsung products that infringed a limited number of Apple patents, denying Apple an injunction under Federal Circuit Court of Appeals precedent that holds injunctions must be based on a “causal nexus” between infringed patents and consumer demand. The Federal Circuit, by the way, established that standard in yet another dispute between Apple and Samsung that ended without an injunction on infringing products.