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How the ITC ignoring Samsung's FRAND-abuse forced a veto in Apple's favor

How Samsung patent abuse forced

How did the ITC get the Samsung vs. Apple decision so wrong it forced the Obama administration to side with the lone, Bush-appointed dissenter on the commission and issue their first over-ruling in over a quarter century? Did they really not understand the difference between standards-essential patents, those pledged under FRAND (fair, reasonable, and non-descriminatory) and proprietary patents, those not required to be licensed at all? Based on their decision, when read against the dissenting opinion, that's about the only thing that makes any sense. Philip Elmer-DeWitt writes for Fortune:

Reading between the lines, it sounds like Samsung had refused to license its standard-essential patents (SEPs) unless Apple offered its non-essential iPhone patents -- the company's crown jewels -- in return.

Once again, that's like being the guy who runs the public pool in town refusing to let one family swim there unless he gets to come to their private house and skinny dip in their hot tub. It's unfair, unseemly, may well constitute abuse of the system, and definitely constitutes violation of Wheaton's law.

In this case, Samsung jumpstarted their entry into the smartphone and tablet market by infringing on Apple and instead of paying the cost of that infringement, they decided to threaten Apple's ability to get their devices onto wireless networks, and otherwise interoperate with existing standards - standards that came into being based on the good-faith pledges not to abuse them in just this way. It's also why, instead of granting bans, other jurisdictions had begun investigations into Samsung and others over the practice.

In that light, it's not baffling that the U.S. Trade Representative had to veto the ban, it's baffling the ban was issued at all, ever, in the first place.

Check out the rest of Elmer-DeWitt's piece for more on Samsung's apparent FRAND abuse, as elaborated upon by the dissenting ITC commissioner.

Source: Fortune:

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, The TV Show, Vector, ZEN & TECH, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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There are 23 comments. Add yours.

Linebarrel86 says:

'is' should be 'it' in the first sentence.

Oletros says:

"that's about the only thing that makes any sense."

Yes, the only thing that makes sense is that the majority of ITC is wrong, it is impossible that they can be right. Like the DoJ, they were wrong.

At least, comments here are not like the ones on Fortune 2.0
Elmer-DeWitt or Florian Mueller never are wrong and they are always unbiased

Rene Ritchie says:

Who cares what Philip or Florian think, use your own judgement and logic. Does a ban based on FRAND patents make sense? Does the information disclosed by the dissenting opinion cast doubt on Samsung's use of FRAND patents in litigation?

Apple's wrong all the time. All big companies are, depending on how their interests align.

In this case, however, it's hard to see how the ITC granting a ban based on FRAND patents was anything other than a gross error in judgements. Unless you want to live in a world where there are no standards, because no one can be trusted to honor their commitments to them anymore?

(And if Apple sues based on FRAND patents, they'd be just as wrong.)

Some things aren't about "company I like vs. company you like". Some things are about "I need to live in this world and their job is to make that work."

Oletros says:

"Does a ban based on FRAND patents make sense?"

A ban based on FRAND makes sense when the licensee doesn't do a good faith negotiation. The FTC in the settlement with Google allows injunctions for FRAND patents

"Does the information disclosed by the dissenting opinion cast doubt on Samsung's use of FRAND patents in litigation?"

They don't have cast a doubt in you, you have decided that they are guilty despite that the majority of the ITC decided that they offered a FRAND offer.

"Unless you want to live in a world where there are no standards, because no one can be trusted to honor their commitments to them anymore?

What has to do granting a ban for FRAND patent with not trusting to honer the commitments.

"(And if Apple sues based on FRAND patents, they'd be just as wrong.)"

Suing for FRAND patents is not a problem

"Some things aren't about "company I like vs. company you like"."

Then you have to apply to yourself, this and the ebook ruling shows that it is "the company you love against the others"

SockRolid says:

So what's your point? Just venting?

Sohail Shaikh says:

Elmer-DeWitt and Florian Mueller are paid experts... so they write in favor of the one that's pays.
Anyways in this case i do think the ITC got it wrong except what apple offered for the FRAND patents was less then what others were paying Samsung.

Oletros says:

The problem with ITC is that they only can give injunctions if there is a infringement, they don't have any other remedy

kch50428 says:

..."what apple offered for the FRAND patents was less then what others were paying Samsung." -- The record proves otherwise. Samsung was demanding Apple license non FRAND patents and asking as much as 12 times a license fee for FRAND patents from Apple than it was getting from other companies.

kch50428 says:

Read ITC Commissioner Pinkert's dissent of the now overturned ITC ruling.

Oletros says:

I can't see where the commissioner Pinkert says that Samsung asked a fee 12 times more than they asked other companies.

kch50428 says:

Sorry... my error - Motorola/Google is the party asking up to 12x FRAND of Apple... remains that Samsung was demanding non-FRAND licenses of Apple patents as a part of a FRAND deal - and that is egregious.

Oletros says:

ITC said that Samsung offer was FRAND

kch50428 says:

Plus NON-FRAND licensing from Apple in exchange for FRAND licenses from Samsung... egregious. The ITC ruling is overturned... not worth argument.

Oletros says:

Apple also licensed Nokia non FRAND patents in exchange of lowering their rate for FRAND patents. Egregious?

"The ITC ruling is overturned... not worth argument."

No, it has not been overturned, it has been vetoed, totally different beast.

kch50428 says:

" No, it has not been overturned, it has been vetoed, totally different beast." -- in the end, the ITC ruling is not going to be enforced... it's overturned by veto.

Oletros says:

In the end, the veto doesn't change what the ITC found.

Oletros says:

Ah, by the way, I'm against the injunction and using the ITC as a battleground

SockRolid says:

Hey, it's your world. We're just in it.

Trappiste says:

Local media are reporting Obama vetoed because Apple is a US company and part of the Obama clique -- simple as that. And the reporters are right. Apple refused to license FRANDs, knowing they can get away with under a Democrat Whitehouse. And, as predicted at Copertino, Obama just told everyone that Yankees will not need to license not-invented-here stuff in the future either. They play by their own rules. Interesting.

I wonder what shall happen when the current Nokia-Apple deal, where Apple pays over a billion in royalties, comes under re-newal negotiations. Will Obama bail out Copertino again? Dare he? The EU is a different kind of partner to South Korea, which cannot really do anything about this. The EU could.

Chris White11 says:

Ironic they felt the need to point out how much less Apple "pays off politicians" in another post. I am sure there are plenty of back room deals going on.

bsbharath1987 says:

That's just how business is done, not that the right way to do. But when was business ever right?

Mark Wright1 says:

Although, I agree that samsung should have offered FRAND terms

How many years has Apple been making phones?
why do they think they can use what ever patents they like and not pay royalties?
this has been their behaviour from the start. Nokia approached them at the Iphone 1
and Apple used and abused the system. It was not until about the 3gs did they capitulate.
They are no saints in this area and truth be told one of the worst offenders.
And honestly do you really think anyone could afford a Apple frand license?
They are a leech on innovation and offer nothing in return...