Florian Mueller shared the final, public redacted version of the USITC ruling on Apple vs Samsung case, which has resulted in an exclusion order against older iPhones and iPads.
According to Mueller, the position taken by the USITC, “is actually much worse than even the worst German FRAND-related ruling I saw. I didn’t expect this to happen, least in the U.S.”
After reading the document, Mueller is definitely not exaggerating.
Mueller used the following analogy to describe what is happening in this case:
..Think of a city somewhere in the desert where only one company supplies water because it controls the only well in the area. And this monopolist now refuses to provide you any water unless you additionally agree to buy one smartphone per year. You may not want or need a smartphone; and even if you do, you would like to have a choice where to buy it. But what can you do without water? Short of relocating to another region, you’re going to have to accept this condition.Hobson’s choice.
Let’s take this one step further. After everyone acceded to the smartphone/tablet clause, the water supplier comes up with the next scheme. Now it requires every customer to work for this company two days per month. It offers some compensation, which most residents consider unacceptably low. Some others wouldn’t want to do that kind of work at all. As a result, many people complain and want a “cash-only option”: they want a contract for their water that comes with no such requirements. They just want to pay, and nothing else. The water supplier offers such a deal. The only problem is that in this case the price is a huge multiple of what a fair market price would be.
In the final, public redacted version of the ruling, the USITC provides a detailed explanation of how the panel arrived at their decision.
The USITC accused Apple of hypocrisy alleged that the Cupertino-based company is employing “reverse patent hold-up.
Apple also criticizes Samsung for tying some of its license offers to the settlement of litigation. We find Apple’s argument to be somewhat hypocritical. The following sentence from Apple’s Submission to the Commission on April 10, 2013, indicateis that Apple has no intention of paying Samsung any royalties until after the conclusion of litigation:
If the Commission were to determine that the ‘348 patent is valid, infringed, and enforceable–and it should not for all the reasons the ALJ found and Apple previously briefed–and if that judgment were affirmed on appeal, Apple would stand ready to pay FRAND royalties.
Resp. Apple Inc.’s Reply Submission at 20 (April 10, 2013) (public version April 12, 2013).
Apple’s position illustrates the potential problem of so-called reverse patent hold-up, a concern identifed in many of the public comments received by the Commission. In reverse patent hold-up, an implementer utilizes declared-essential technology without compensation to the patent owner under the guise that the patent owner’s offers to license were not fair or reasonable. The patent owner is therefore forced to defend its rights through expensive litigation. In the meantime, the patent owner is deprived of the exclusionary remedy that should normally flow when a party refuses to pay for the use of a patented invention.
Source: Foss Patent