Yesterday I reported on the ITC staff's modification of its position on a potential ban of HTC's Android-based devices that could result from Apple's first ITC complaint against the Taiwanese company. In a blog post on the ITC staff's original position I also mentioned that an industry organization named Association for Competitive Technology (ACT) was preparing a submission on the public interest aspects of that case.
ACT's public interest comments were filed late on Monday and I reviewed them today. As I expected, ACT strongly opposes any weakening of patent rights, arguing that this would hurt innovative businesses, particularly the roughly 3,000 small and medium-sized companies that ACT represents. In addition, ACT receives sponsorships from some large players including Intel, Microsoft and Oracle. ACT officials have repeatedly testified in U.S. Congress on policy issues.
As I mentioned on a previous occasion, ACT and I had and continue to have disagreements on certain IP policy issues, but apart from an exclusively positive depiction of the impact of patent enforcement, I think ACT's submission highlights some important facts in a competent, thoughtful way and puts a spotlight on certain undeniable shortcomings of Google's and HTC's public interest arguments. That's why I believe ACT's filing is a useful source of information for everyone wishing to form an independent opinion on these issues.
I have uploaded the main document of ACT's filing to Scribd. If you read the whole 26-page statement (which comes with multiple supporting documents), you'll stumble upon numerous typos. My blog posts also tend to have some typos when they go online for the first time, but it's easier to fix typos post-publication on a blog than in an official filing.
In the following I'll outline the most interesting ones of the points ACT makes.
ACT argues that "[a] majority of mobile applications used worldwide are created by American small business developers" and refers to a study it recently conducted, according to which more than 88% of the best-selling mobile applications came from small businesses. ACT then goes on to say that "[t]hese small business developers are risk takers in high technology fields that depend on strong IP protection for a return on that risk.
I have in recent months been in contact with many app developers who were targeted by Lodsys and other patent holders. I think it's fair to say that patents are a doubled-edged sword for small mobile developers. But I have also seen cases in which large companies simply stole ideas of small app devs, and if those app devs had overcome their philosophical objections to software patents and sought intellectual property protection, they'd have been in a much better position to defend themselves.
I believe that small businesses developing mobile apps will increasingly seek patent protection (at least that's what I'd recommend every mobile app dev to do under the current framework), and ACT has a point that some mobile app development activities could be discouraged by a weakening of patent rights and their enforceability.
ACT basically says on page 1 of its filing that Google and HTC propose that the ITC give up its mission:
"Google and HTC effectively ask the Commission to abandon its core mission of stopping unfair practices, and instead venture into the business of setting national telecommunications, competition, and intellectual property policies of sweeping dimensions. Google and HTC argue that the Commission should somehow factor into their analysis in this case speculative assumptions about other pending Android cases, and grant the Android platform a categorical immunity from all [ITC] relief."
On a different page of the document (page 6), ACT puts it like this:
"Should [U.S.] Congress decide it prudent to grant Android patent law immunity under [the law governing ITC import bans], it can certainly do that."
In other words, if Google and its device maker partners want a free pass for Android's infringement, they need to change the law, but within the existing legal framework, ACT proposes that the ITC refuse to turn itself into a selective promoter of otherwise unlawful conduct. ACT, however, hopes that the ITC will continue to be an "arbiter of many of the most high profile and important patent disputes in the world [...] precisely because it has taken its legislative mandate to heart and has been steadfast in providing impartial, expeditious adjudication of infringement claims, and where warranted, effective remedies."
Some of ACT's rhetoric goes beyond my personal positions, but I agree that the ITC's credibility is at stake. Whether or not one likes that software is patentable, all patent holders and infringers must be treated equally. Public interest considerations should stand in the way of import bans (or give rise to far-reaching exceptions) only under the most egregious of circumstances, and it's hard to see such circumstances in this case.
ACT says that "there have been only three cases in the history of the [current ITC statute as amended most recently in 1988] where relief was denied on public interest grounds, the last being nearly 30 years ago".
ACT opposes Google's argument that Android deserves special protection because it's allegedly "open source".
ACT points out that Android isn't truly open, which others have said before it, and recalls some of the information that showed up in the Skyhook lawsuit and proves that Google uses its control over Android to advance its business interests and restrict the extent to which its device makers can differentiate their products. ACT lists all of the closed applications that ship with Android: "Google Search, Google Maps, YouTube, Gmail, Talk, Messaging, Google Voice and the Android Market."
In my view, everything that ACT says in this context is spot-on and acknowledged by everyone who doesn't have a pro-Google bias.
Besides disputing Android's openness ACT also argues that even if Google were right on openness, open source software can't be put above patent law -- and it doesn't have to, given that it's very successful under the existing legal framework. In this context, ACT mentions the fact that the GPL (GNU General Public License) has an entire section on patents (§ 11 of GPLv3, which ACT attached as an exhibit to its filing).
ACT also refers to Red Hat's second quarter revenues of $281 million and IBM's "over 500 commercial prodcuts that run on Linux". Furthermore, ACT points to the Open Invention Network (OIN), "a patent cross-licensing effort that has its express and sole purpose to protect Linux".
Finally, ACT says that "[t]here is no reason for [which] a platform that enjoys such commercial success and industry support should be exempt from the patent rules that govern the rest of the technology marketplace".
It's hard to disagree with ACT on any of that. Non-ideological analysts all agree that open source is thriving under the current legal framework and that the rational forces in open source have found ways to coexist with the patent system.
ACT also dismantles Google's and HTC's arguments concerning emergency response and other use cases in the public interest ("all mobile devices and smartphones -- not merely HTC's devices -- benefit national defense, disaster relief, and medical applications"). ACT also points to, for example, the use of the iPhone by U.S. forces stationed in Afghanistan.
Since an ITC import ban always only affects products infringing certain patents but doesn't relate to products modified so as not to infringe, ACT argues that HTC should simply alter its products in order to steer clear of infringement, and in that case, there wouldn't be any public interest concerns. ACT also proposes that HTC might "perhaps" take a license to address any such infringement issues.
While Apple's willingness to grant a license is a different question, it's accurate that an infringement can be addressed through technical changes. The patents at issue in this investigation are not the kind of patents that would make it impossible for HTC to sell smartphones and tablet computers in the United States. To the extent that the parties' filings are in the public record, I haven't really seen any credible argument that modifying Android wouldn't be a reasonable way to respond to a potential import ban. Chances are that Google and HTC have been working on such modifications for some time.
Concerning the 4G argument (the basis for the ITC staff's latest recommendation of a limited exception to a potential import ban), ACT also makes some strong points.
ACT notes that "HTC jumped to a quick start in marketing its 4G mobile products" but "will likely have difficulty hanging on to its early market share as more 4G handsets come to market" as "competitors will surely battle for position in the 4G smartphnoe marketplace". This makes sense, and whenever I read those 4G-related public interest arguments (also in connection with Apple's motion for a preliminary injunction against four Android-based Samsung products), it strikes me as unrealistic that operators almost suggest that the next few months will be a make-it-or-break-it period for 4G as a technology. In my view, the adoption of 4G in two or three years will be pretty much the same whether or not the entirety of Android-based 4G devices is fully available during the next six months.
ACT argues that "the line between '3G' and '4G' on which HTC places heavy reliance is still highly debatable" and points out to a Congresswoman's initiative "to introduce legislation that would establish real guidelines for determining '4G' speed". As a result, ACT says that "HTC's claim to over 50% of 4G devices in the market may be overstated, or at the very least, is unreliable". In this context ACT also provides examples and notes that "[b]ecause leading national and regional carriers choose not to offer HTC products, HTC's devices are far from irreplaceable".
I believe the small business-focused argument and other well-reasoned points made by ACT will bear significant weight with the Commission. In a worst-case scenario, the ITC could ruin its reputation by weakening patent rights in an effort to play favorites with Google while ignoring the profound concerns of an organization representing approximately 3,000 small innovative businesses.
I'm very much in favor of public interest considerations in connection with patents, but I think Google, HTC and others picked the wrong forum to have that kind of a broad and general debate. The ITC's job is not to change the rules, but to apply them consistently and reliably. As far as the specific investigation at issue (no. 337-TA-710) is concerned, an import ban would simply be the normal course of business if the ongoing Commission review resulted in a finding that one or more valid Apple patents are infringed by HTC's Android-based devices.
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