The ITC just issued a Notice of Final Determination in Inv. No. 337-TA-794, the investigation concerning Samsung’s complaint against Apple. (For a refresher on the case and issues, check out our previous posts). In a decision that will reverberate across the standard-essential patent world, the Commission has determined that Apple’s products at issue — certain models of the iPhone and iPad — infringed one Samsung UMTS-essential patent, and issued both a limited exclusion order (preventing importation into the U.S.) and a cease & desist order (preventing sales/distribution of products already within the U.S.). Here’s the text of the ITC’s summary:
Notice is hereby given that the U.S. International Trade Commission has found a violation of section 337 in this investigation and has issued a limited exclusion order prohibiting respondent Apple Inc. of Cupertino, California (“Apple”), from importing wireless communication devices, portable music and data processing devices, and tablet computers that infringe claims 75-76 and 82-84 of U.S. Patent No. 7,706,348 (“the ’348 patent”). The Commission has also issued a cease and desist order against Apple prohibiting the sale and distribution within the United States of articles that infringe claims 75-76 and 82-84 of the ’348 patent. The Commission has found no violation based on U.S. Patent Nos. 7,486,644 (“the ’644 patent”), 7,450,114 (“the ’114 patent”), and 6,771,980 (“the ’980 patent”). The Commission’s determination is final, and the investigation is terminated.
The ITC determined that Apple failed to prove its affirmative FRAND-related defenses, and also concluded that public interest did not prevent the issuance of a limited exclusion order and cease and desist order against Apple (i.e., Samsung’s FRAND declarations by themselves did not preclude an exclusion order). However, Commission Dean. A. Pinkert dissented on public interest grounds from the decision to issue an exclusion order.
The ITC’s Final Determination will now be reviewed by President Obama and the U.S. Trade Representative, who have 60 days to decide whether to veto the ITC’s decision (although such vetoes are rare, having happened only 5 times ever — none since the 1980’s). And of course, Apple can appeal this decision to the Federal Circuit.
Importantly, there are two things to note about the effect of the ITC’s decision — first, due to a modification of the claim construction by the Commission, this decision currently only affects the the Apple iPhone 3G, iPhone 3GS, iPhone 4, original iPad 3G and iPad 2 3G that run on the AT&T network (Verizon-related models are unaffected); second, the Commission found that the bond should be set at zero percent, so Apple can continue to import these devices during the 60-day Presidential Review period without paying any money to Samsung.
But whatever the limitations are on the remedy in this specific case, this ruling is certainly a landmark one in the world of standard-essential patents — the ITC has never before issued an exclusion order based on infringement of a FRAND-encumbered standard-essential patent. Be sure to check back with the Essential Patent Blog for more — we will be updating this post with more analysis, and will be doing more follow-up posts on the matter once the public version of the ITC’s Final Determination (and the dissent) become available).
[UPDATE] The ITC has now published a Letter from Lisa Barton (acting Secretary of the ITC) to the Intellectual Property Rights branch of U.S. Customs and Border Protection notifying the CBP of the ITC’s decision and the issuance of the exclusion order. [/UPDATE]