In late September, the ITC's meanwhile-retired Administrative Law Judge (ALJ) Thomas B. Pender recommended that the U.S. trade agency refrain from banning Intel-powered iPhones he deemed to infringe a Qualcomm patent, given Qualcomm's overtly anticompetitive litigation tactics of targeting only Intel-powered iPhones. In late October, a heavily-redacted version of his findings became available. On Halloween, the parties filed their public interest statements.
The parties, government agencies, and the general public have multiple opportunities to submit public interest statements to the ITC. I've created a three-page diagram that shows at which procedural milestones the ITC requests and/or invites such statements.
On Thursday (November 8), the latest round of statements by the general public was due. A total of thirteen statements were filed that day. Here are some observations:
Intel's statement is particularly relevant. Its testimony on what would happen if Qualcomm could successfully exclude Intel-powered iPhones from the U.S. market is at the heart of ALJ Pender's factual findings relating ot the public interest.
Intel's public interest statement reinforces its testimony (this post continues below the document):
18-11-08 Intel Public Inter... by on Scribd
The Computer & Communications Industry Association (CCIA) is an industry body whose members include many major hardware and software companies (including Intel). CCIA supports ALJ Pender's recommendation against a U.S. import ban of Intel-powered iPhones.
ACT | The App Association speaks for many app developers and receives funding from some large corporate sponsors including Intel. ACT's statement contains the following passage:
"And the fact that Qualcomm is seeking an exclusion order only for Apple's iPhones that contain Intel modem chips, and not all iPhones, strongly suggests that damages available in the district court for any infringement of its patents should be adequate compensation."
It's true that an Apple competitor like Samsung or Huawei wouldn't discriminate between Qualcomm-powered and Intel-powered iPhones (except if some license agreements required differentiation). But Qualcomm just wants 100% of Apple's baseband chipset business.
The joint statement of the Electronic Frontier Foundation (EFF), Engine Advocacy, the R Street Institute, and the (conservative/libertarian) Lincoln Network connects the dots between Qualcomm's behavior in its dispute with Apple in the Southern District of California (where it's willing to give up on a host of patents just to avoid a ruling on the question of patent exhaustion) and its insistence on an ITC import ban over a single patent:
"Second, there is strong reason to believe that Qualcomm is not even interested in compensation for any patent infringement. In a related district court case, Apple sought declaratory judgment that it did not infringe several Qualcomm patents. Rather than countersuing for infringement, Qualcomm voluntarily gave Apple a covenant not to sue for infringement. Certainly the patents at issue before the Commission are different, but Qualcomm's willingness to forego any remedy on a large portion of the company's patent portfolio strongly suggests that recompense for its patent rights is not Qualcomm's motivation."
Public Knowledge and the Open Markets Institute focus on the discriminatory nature of Qualcomm's decision to target only Intel-powered iPhones:
"Qualcomm's anticompetitive intent is obvious. [...] Because many of the disputed patents are common to all iPhones and do not concern baseband technology at all, it’s clear that Qualcomm is choosing to selectively enforce its patents in a way designed to maintain its monopoly position in the baseband market."
But this time around, unlike in the context of the FTC's successful summary judgment motion, Qualcomm has also received broadbased support from stakeholders.
France Brevets (a governmental patent troll) is obviously interested in maximizing patent holders' leverage, as are IP Europe (Qualcomm is a member of its "Global Innovation Taskforce") and the Innovation Alliance (co-founded by Qualcomm), which pretty much represent the interests of the Qualcomms, Nokias, and Ericssons of the world, and Inventors Digest, a magazine for patentees.
Then there are four conservative groups supporting Qualcomm. In three of those cases it's hard to reconcile those organizations' names with what they're advocating here:
Americans for Limited Government ("if they were asking for a subsidy or hand up, we would likely oppose it") wants a government agency, the ITC, to instruct another government agency (Customs & Border Protection) to give Qualcomm leverage over its competitor
Frontiers of Freedom says "[i]t is outrageous that a judge can conclude that a company has violated the patent rights of another company but then impose no punishment or remedy whatsoever," when it's just due to the statute that the ITC doesn't have more flexibility regarding remedies. In any event, import bans are not a matter of freedom.
Conservatives for Property Rights submitted its IPWatchdog article and complains about "the highly irregular outcome in this matter" without attributing it to Qualcomm's highly unusual litigation tactic of specifically targeting Intel-powered iPhones. But more fundamentally, what about the property rights of Apple and Intel--two companies that definitely have invested and continue to invest a lot in innovation?
What disappointed me more than anything else is that an organization I actually like a lot--the American Conservative Union, famous for organizing CPAC--ignores the unusual parameters (due to Qualcomm's litigation tactics) of this ITC investigation and blows things completely out of proportion:
"A recent ruling at the International Trade Commission (ITC) just put all American companies on notice: 'We are all socialists today.'"
That term reminded me of a story that is exactly 13 years old. A then-SAP executive described open-source software as "IP socialism," and I disagreed then as I do now.
First, neither ALJ Pender nor Apple said Qualcomm's innovations should be socialized. The question here is just about the appropriate remedy. It's not about whether or not Qualcomm would get paid. If it prevailed in district court, it absolutely positively would be entitled to damages.
Second, it's perfectly conservative to prevent companies from monopolizing markets. Two great Republicans from Ohio were key to the creation of antitrust law: Senator Joseph Sherman sponsored the namesake law, and President Benjamin Harrison signed it into law. In its 1993 Spectrum Sports v. McQuillan decision, the Supreme Court explained what the Sherman Act always was about: "The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself."
The public-interest issue in ITC investigation no. 337-TA-1065 is about preventing Qualcomm from leveraging patents to destroy competition itself. Conservatism is all about fair competition, not about its destruction.
Share with other professionals via LinkedIn:
