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Why Stop with iPhones? All ITC Decisions Deserve a Veto

August 14, 2013 in Economics

By K. William Watson

K. William Watson

The U.S. International Trade Commission, a federal agency empowered to ban imports for patent infringement, recently ruled against both Apple and Samsung late model smartphones. In a bold move, President Obama overturned the iPhone ban while leaving the Samsung decision intact. This raises the question: has the President has picked sides in the global smartphone patent war? Time may answer that question, but the most important consequence of the President’s action is that it draws attention to how useless and disruptive it is to have a trade agency deciding patent cases.

As a patent jurisdiction, the ITC is a redundant anachronism. The law that enables the agency to act as a specialized patent court for imports was designed to augment the protectionist designs of the infamous Smoot-Hawley Tariff Act of 1930. The ITC’s mandate under the law is not to prevent patent infringement, but to protect domestic industry from “unfair methods of competition.”

While the agency has morphed over the decades into an efficient and powerful venue to litigate patents, it nevertheless remains a protectionist trade remedy that has no place in our modern globalized economy. The ITC’s exclusion orders harm consumers, violate our international obligations, and seriously disrupt the patent system.

In truth, the ITC’s patent jurisdiction is so worthless and harmful that every decision could rightly be vetoed in the public interest.”

Most observers have correctly come to realize that the ITC’s import bans are an excessive remedy for patent infringement. The iPhone ban is a good example. No federal court would have banned Apple’s products, because Samsung’s patent covered standard-essential 3G technology. Samsung can demand reasonable royalties for licensing, but never had the right to exclude Apple from using the technology. As the Administration’s disapproval letter makes clear, the ITC’s order gave Samsung “undue leverage.”

But banning Samsung’s phones is also harmful to consumers. A federal district court has already refused to ban Samsung products despite infringement of Apple’s patents, although Apple is appealing that refusal. Doesn’t that mean that the ITC’s import ban gives Apple “undue leverage?” If the President can veto the ITC’s iPhone ban because it would be harmful to “competitive conditions in the U.S. economy” and “U.S. consumers,” then surely the Samsung ban deserves a veto as well.

In truth, the ITC’s patent jurisdiction is so worthless and harmful that every decision could rightly be vetoed in the public interest. Just …read more

Source: OP-EDS

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