In the wake of the ITC’s landmark exclusion order barring imports of certain Apple 3G products, we noticed an interesting question raised by Prof. Brian J. Love of Santa Clara law school, among others:


Professor Love is referring to one of several legislative recommendations and executive actions related to the patent system and patent litigation that were announced yesterday by President Obama’s Administration.  (For a good round-up on some of the issues the Administration is seeking to address, check out this post by Matt Levy at Patent Progress or Dennis Crouch’s post on Patently-O.)  Among the Obama Administration’s recommendations are several relating to the U.S. International Trade Commission, including this one:

Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied at the ITC and district courts.

This specific recommendation largely seeks to reduce incentives for forum-shopping in patent cases.  For example, a patent owner who might not be able to satisfy the equitable four-factor eBay test for injunctive relief in district court instead may choose to go to the ITC — where an exclusion order generally “shall” issue upon a finding of a Section 337 violation, unless it would be contrary to the public health, welfare, or competitive conditions in the U.S. (i.e., the “public interest”).  The Federal Circuit has made it clear that the standard for issuing an exclusion order is different than the eBay standard (see Spansion v. ITC, 629 F.3d at 1358) — now, the Obama Administration is seeking to unify or align the standards applied in district courts and the ITC.

So, what does this mean for the exclusion order against Apple?  By statute (19 U.S.C. § 1337(j)), President Obama (and the U.S. Trade Representative) have 60 days to review the ITC’s decision to issue an exclusion order, and can decide to “disapprove” of, or veto, the exclusion order. (**See Update Below**)  As we noted in our original post on the ITC decision, such presidential vetoes are rare — only five have ever occurred, and none since the 1980’s.  In 2007, an ITC case involving Broadcom and Qualcomm (Inv. No. 337-TA-543) resulted in a controversial, wide-ranging exclusion order entered against Qualcomm cellular chips and certain downstream products — but the Bush Administration decided to let the exclusion order go forward (the parties eventually settled).

Here, the Obama Administration is now on record taking the position that the standard for exclusionary relief at the ITC should be aligned with the standard for injunctive relief in district courts.  And several judges (e.g., Judge Robart and Judge Posner) have found that under eBay, FRAND commitments preclude entitlement to injunctive relief — although this issue is currently being debated in an Apple-Motorola Federal Circuit appeal.  It seems unlikely that the Administration would disapprove of the exclusion order on the basis of eBay itself, especially given the Federal Circuit’s Spansion decision.  But it’s entirely possible that the Administration could take the position — one apparently shared by dissenting ITC Commissioner Pinkert — that it would be against the public interest for an exclusion order to be enforced against the infringer of a FRAND-encumbered standard-essential patent.  The public version of the Commission’s Final Determination and exclusion order (and Commissioner Pinket’s dissent) should shed more light on the ITC’s particular consideration of the public interest factors with respect to the particular facts of this case — e.g., whether Apple is a “willing licensee,” the reasonableness of Samsung’s prior licensing offers, etc.  While we’ll have to wait awhile (potentially several weeks) for the public versions to become available, the confidential versions have already been delivered to President Obama and the U.S. Trade Representative for their consideration.

As this article notes, various groups undertook significant lobbying efforts during the Presidential review period associated with Inv. No. 337-TA-543.  Given the high profile of standard-essential patent issues and the Administration’s stance on ITC issues, it wouldn’t be surprising to see similar efforts take place over the next couple months.

**[UPDATE] To be clear, the authority to veto the ITC’s determination was delegated to the U.S. Trade Representative in a 2005 Presidential Memorandum (70 Fed. Reg. 43,251) **[/UPDATE]