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Obama administration vetos Apple iPhone 4, 3G iPad 2 product ban [pdf]

152 points by ssclafani 13y ago

jdrobins2000 13y ago
Apple has argued that Samsung isn't licensing their standards essential patents on FRAND terms. If that is the case, it seems reasonable to me to prevent them from threatening product bans to extract exorbitant licensing fees. In my limited understanding, that right to discriminatory license fees is waived when patents are contributed to a standard, in exchange for acceptance for use in the standard. Otherwise it would be a de facto monopoly for the patent holders, with all of the negative consequences for competition. Have there been any other cases where a product ban has been enforced because of an FRAND patent dispute? Unless there have, claims of protectionism are unwarranted. But even if there have, that doesn't prove protectionism is in play, but rather possibly that a past wrong is being corrected.
- corresation 13y ago
  The ITC found the Apple could neither prove that the infringed was covered by FRAND, nor did Apple agree to what the ITC thought was a reasonable agreement. Of course the ITC considers FRAND which is exactly why Motorola's injunction against the Xbox was denied.
  - jdrobins2000 13y ago
    Citation please. From reading the Commission Opinion document, it appears to me that what was in dispute was whether Apple proved that Samsung had not made at least one FRAND offer, and even if not, whether Apple proved the ITC didn't have authority to apply an import ban because of an SEP. Commissioner Pinkert offered a dissenting opinion (from a footnote in the report): "...Samsung does not dispute that it has made FRAND licensing commitments in regard to the '348 patent, and, as explained in his dissenting views, he has considered the evidence before the Commission in the current phase of the investigation and has found the weight of the evidence to indicate that Samsung has not made FRAND licensing terms covering the '348 patent available to Apple." So apparently it is not clear whether Samsung made a FRAND offer to Apple. Most details of negotiations are redacted, so I cannot make a judgement. It seems irrational to me that the ITC's comments regarding the negotiations seem to require Apple to irrefutably prove Samsung's offers weren't FRAND, but don't require Samsung to prove they were FRAND. Unfortunately in this case I believe all of Samsung's other licenses involve cross-licenses of multiple SEPs from each party, so there is no easily referenced objectively reasonable license fee for the single patent. In case of a stalemate in negotiations, I am not sure what the proper remedy should be, but an import ban on the would-be licensee seems to put far too much power into the hands of SEP licensors.
- josteink 13y ago
  Samsung demanded a fee equal to 2.5% of the cost of the phone. From everyone, including Apple. Apple decided this was "unreasonable" for them, demanded special treatment and refused to pay. The ITC concluded Apple was not following the rules and not playing fairly and thus initiated the ban. And now the administration overturns the court's decision on a whim. Keep in mind this is the same legal playground which fined Samsung 1 billion dollars for having pinch to zoom on a phone. It's very hard to see this is anything but unfair market manipulation.
  - jdrobins2000 13y ago
    2.4%. And please cite your source that says it applied to every other licensee. My reading of the commission document indicates that all other license agreements Samsung made for this patent involved multiple SEPs from each party in cross-licensing agreements. Samsung was also trying to use its SEPs as leverage to get Apple to cross-license its non-SEPs to them at a discount to Apple's proposal. Were both parties being reasonable in their demands? Honestly, I couldn't tell from the redacted document. Samsung blatantly copied the iPhone in many many ways. Using the pinch to zoom patent is likely similar to prosecuting the mafia for tax evasion - it wasn't their most egregious offense, but it was the only one the feds could make stick.
noonespecial 13y ago
I'm not sure I'm totally on board with this particular intervention as it seems to smack of the potential of favoritism; I'd have to think about that for a while after learning more about the specific case. What is extremely encouraging is that this is a sign that the highest levels of government understand that patents don't exist for their own sake and are merely a means to an end. When the desired end result isn't reached, intervention is required. That's hopeful.
el_chapitan 13y ago
Point of order. This isn't a veto. A veto is for legislation, this is fully contained within the executive branch.
- yanofsky 13y ago
  Another Point of Order. Obama didn't do this, the USTR did, on the authority of the President. Edit: It would be fair to say: "The Obama Administration did this"
  - droithomme 13y ago
    The President is the only one authorized by Section 337 to take this action. Although the President assigned his authority to the trade representative on his behalf, this action is only permitted under the law to the extent it is done by the President.
    - hga 13y ago
      Here's the law, 19 U.S.C. § 1337 (http://www.law.cornell.edu/uscode/text/19/1337 http://www.law.cornell.edu/uscode/text/19/1337): "(j) Referral to President (1) If the Commission determines that there is a violation of this section, or that, for purposes of subsection (e) of this section, there is reason to believe that there is such a violation, it shall— [...] (B) transmit to the President a copy of such determination and the action taken.... If, before the close of the 60-day period beginning on the day after the day on which he receives a copy of such determination, the President, for policy reasons, disapproves such determination and notifies the Commission of his disapproval, then, effective on the date of such notice, such determination and the action taken under subsection (d), (e), (f), (g), or (i) of this section with respect thereto shall have no force or effect."
- bradleyjg 13y ago
  Veto just means "I forbid". It is perfectly fine to use it outside the context of the President denying his consent to legislation. For example I could, and have, vetoed a resturant in a discussion of where to go for dinner. In this case a decision of the International Trade Commission is presumptively valid unless the President, or his designee, forbids the ruling from going into effect -- or in other words, unless he vetoes it.
asveikau 13y ago
I know political discussion on HN is frowned upon by some, but I get amused thinking of hypothetical reaction from the president's opponents. This seems to be an action against regulation of business, but it's the Obama administration, therefore... Communism! Apple is in the tank for Obamacare!
- hga 13y ago
  If you had any familiarly with "the president's opponents", you would know we label this as "crony capitalism" (much more akin to original formula Italian fascist corporatism), and have so since at least the 2009 cram-down of Chrysler's secured bond holders. While of course partisan, this OPED by the Republican governor of Indiana lays out the issues and some of the longer term consequences and outcomes: http://online.wsj.com/article/SB10001424052748703561604575282412364326230.html http://online.wsj.com/article/SB1000142405274870356160457528... Note Apple's board includes one "Albert Gore Jr., Former Vice President of the United States": http://www.apple.com/pr/bios/ http://www.apple.com/pr/bios/ It's good to have friends in high places. (Also note the cramdown was a remarkably bad long term idea; most specifically, because it ensures in the future heavily unionized companies in trouble will find it very difficult to pledge their assets for money to get themselves out of it. One of the major reasons Ford didn't have to declare bankruptcy is that its then new CEO, previously a Boeing lifer, in 2006 pledged all the company's assets to borrow $23.6 billion dollars: http://en.wikipedia.org/wiki/Alan_Mulally#Ford_Motor_Company http://en.wikipedia.org/wiki/Alan_Mulally#Ford_Motor_Company .)
  - asveikau 13y ago
    Thanks, good sir, for confirming everything I was saying. (It's funny that you begin by assuming I am unfamiliar with such positions. Thinking they are goofy, humorous and exaggerated is very different from never having been exposed to them. It was exactly this exposure that compelled me to write this, even knowing that it would be a target of downvotes and flames.)
    - dictum 13y ago
      "Action against regulation of large corporations with good relationships with the government" is only a subset of "action against regulation of business".
ianlevesque 13y ago
So they intend to veto any product bans related to FRAND patents from this point going forward. That makes a lot of sense to me. Using standards-essential patents as legal weapons is completely unethical. However, I can't help but wonder if the public good would've been greater served by letting a few multinational corporations like Apple feel some real patent pain. It's the only way the system will ever be overhauled.
- distant-uncle 13y ago
  > Using standards-essential patents as legal weapons is completely unethical. I would argue, it's more like: "using patents as weapons is completely unethical." And yes, it's a shame to see any patent aggressor get away with it. There is no fundamental difference between FRAND and any other patent. In all cases, independent invention is prohibited, denying inventors their natural right to gather the fruits of their labor. Secondly, the "can't work around argument" is equally applicable to any patent discussion: unlike copyright, patent regime does not recognize the merger doctrine, placing some foundational methods at risk of being completely locked up by greedy entities. Third, patent aggressors benefit tremendously from the work of third parties on whose shoulders they stand; patent aggression is an ugly contrast to this.
revelation 13y ago
What a joke. So good to see the president is finally tackling the patent abuses, by protecting local trolls from a taste of their very own medicine. (The justification here being that this ban is not "in the interest of the public". If this was considered in ay other cases, we'd all be paying cents for generics from India instead of thousands of millions for the brand version)
- mtgx 13y ago
  This is what increasingly bothers me lately about the decisions they make. They're sacrificing a lot of stuff "in the interest of public good". It seems like a lot of collectivism. "We can't put bankers in prison because this way it's better for the public/the economy" "We can't punish any corporation with more than a relatively minor fine, because that would hurt the public" "We can't let a judge's decision about banning Apple's product for losing a patent battle in war they started, be implemented, because that would hurt the public". The worst part is that they must be thinking these are really good decisions. It's probably why Obama convinced himself and did a 180 on the mass spying, too "because it's in the interest of the public".
  - jivatmanx 13y ago
    Actually, the justification for not going after banking or corporate malfeasance, according to Eric Holder, is that they're "Too Big to Jail". I have to say, as a committed small r republican wary of executive power, this kind of crap makes me crave Teddy Roosevelt.
    - falk 13y ago
      Eric Holder admitted that he can't do his job. He needs to be fired.
      - jivatmanx 13y ago
        To be fair, he's been busy leading brave soldiers against Washington's pot dispensaries, and running guns for Mexican gangs.
guelo 13y ago
It's signed by the US trade representative, not Obama. I don't know if this kind of thing is approved all the way at the top, but the letter uses "I" a lot suggesting it was his decision. I think the headline should at least be changed to "The Obama Administration". Also, it's not a "veto".
- hga 13y ago
  The law puts it in the hands of the President, see this subthead: https://news.ycombinator.com/item?id=6153056 https://news.ycombinator.com/item?id=6153056 ; he may of course delegate his authority, but the buck stops on the desk in the Oval Office.
jivatmanx 13y ago
Intervening in one case for an iconic American company is protectionism, not free trade. That would have entailed reforming the patent system for everyone. This is ominous, what if this is remembered as the equivalent of Smoot-Hawley? Patents are a hell of a lot more complex than tariffs... and at least the ITC is trying to do international coordination here, and Obama has just blatantly undermined them.
- melling 13y ago
  I've gotta ask if you understand anything about the case, or are you just trying to speak generally.
- comex 13y ago
  Taking legal action against FRAND abuse is hardly unique to the US. http://www.fosspatents.com/2012/12/european-commission-to-issue-statement.html http://www.fosspatents.com/2012/12/european-commission-to-is... See also Mueller on this veto; while I often disagree with him, I tend to agree on this issue: http://www.fosspatents.com/2013/08/obama-administration-vetoes-itc-import.html http://www.fosspatents.com/2013/08/obama-administration-veto...
  - jivatmanx 13y ago
    The problem I have with this argument, is, isn't the point of every technological advance to become widespread and Standards-Essential? If we're going to disallow them, why have patents at all? For "Look-And-Feel" patents?
    - comex 13y ago
      Because even strong software patents often have alternatives, and weak ones are easy to find an alternative to, decreasing their value, but once a standard protocol requires their use, the patent holder can jack up the price. As an extreme example, consider the exFAT patents: there are many file systems superior to exFAT that have no need for whatever bits of functionality Microsoft patented, but because Windows speaks exFAT as one of few alternatives, some companies have licensed them. Not exactly a standard, but the same idea.
cromwellian 13y ago
Seems to me that in the future, companies are going to withhold some of their patents from FRAND even if they would be potentially more useful as FRAND to continue to use them as a weapon. The potential royalties of many of these FRAND patents seem small compared to the damages from infringement. In fact, it seems the value of a patent is inversely proportional to it's usefulness. A patent which covers a critical wireless protocol component is worth a few pennies and can't be used to get injunctions, but a patent for some rounded corner button can be used to sue for billions. If you look at the patent trolling going on, a lot of the cases are for really, obvious, trivialities. While I don't think one should be able to get bans like this, sooner or later, Apple or Microsoft has to lose a patent case in a painful way so they stop trying to shake down competitors. Mutually assured destruction doesn't work if it's not mutual. This ITC case was the closest they've come to experiencing a real threat of pain.
- ianlevesque 13y ago
  An interesting opinion. It'll be interesting to see if the incentives align better with the guaranteed royalties from FRAND licensing vs. as you say "potential" royalties from trolling. If they don't this is an obvious place for policy changes (not that that is likely to happen if this kind of interventionism prevents real pain for large corporations).
  - denis1 13y ago
    The problem with "the guaranteed royalties" is that they aren't really guaranteed. Samsung has been in negotiations with Apple for ages. I'm not sure who is to blame, but there sure as hell isn't a licensing agreement between them. If Samsung can't force Apple's product of the market, what is stopping Apple from never agreeing to a license?
- distant-uncle 13y ago
  I've been mulling over the most common argument predictably wheeled out by the patent aggressors and their supporters: "Theft! We don't want them to steal our stuff!!" Never mind that even if one allows that the whole concept of patents is a legitimate, and an ethical legal framework, patent infringement is never theft. Theft would involve actual trespass of someone's physical property, that involves removing and/or otherwise exploiting said property without the owner's permission -- in effect depriving them of it. So for an obvious example, if Corp A. breaks into Corp B's engineering offices, and literally steals their code and/or design documents. That would be theft. Of course, computer break in is not technically a physical trespass, but the distinction still stands: an actual trespass must occur. We already have time-tested criminal laws for this, and justly so. Patents are completely redundant for this case. But if you think about, there is actual, honest to goodness theft that goes on in patent cases... and the thief, it's the aggressor! Albeit for a "limited time" (that's of course subject to interpretation, in 20 years many things happen, to someone who dies, that limitation is permanent), someone is given the government-sanctioned go-ahead to literally deprive another of their own discoveries and hard work. Independently discovered, independently arrived at and hammered out. No matter.
falk 13y ago
I'm so happy the President can take the time to address the patent system when it's in regards to giving protectionism to multi-national corporations while small businesses are drowning in frivolous patent lawsuits.
- danmaz74 13y ago
  Especially when it's multi-national corporations that use patents in the worst possible way, and use any possible scheme to withhold money from taxation.
3327 13y ago
This is the most misleading headline I have seen.
- bdcravens 13y ago
  You obviously haven't been on HN very long :-)
  - 3327 13y ago
    Almost a year mostly interested in actual hack threads and python threads. and pro keeping HN, HN, despise reddit style posts as there is a place for that and its called Reddit !
    - bdcravens 13y ago
      If you're lucky you'll get 50% "hacker" threads. Most are political or fanboy threads.
znowi 13y ago
And people say what incentives do companies have to cooperate with the government. This is one of them. All PRISM participants do. It's a mutually beneficial relationship.
chris-martin 13y ago
So... we've determined that you violated the law, but we're choosing not to enforce the law. This what the kids call a bad code smell, right?
kunai 13y ago
I'm a bit lost for words on this case. On one hand, I can't help but feel it would have been good for Apple to get a taste of their own medicine. At the same time, I think this excessive patent protection is harming the industry... In a perfect world, Apple would have never pursued Samsung in their frivolous extortion case, and this ban would never have reached the Obama admin. But this is a world motivated by cutthroat competition. I'm tired of it.
- Terretta 13y ago
  I've traced the history several times over the past few years here, but suffice to say, Apple wasn't suing anyone until the mobile phone industry realized Apple's little toy was gobbling all the profits. See this comment from 1,250 days ago, recapping early timeline: http://news.ycombinator.com/item?id=1166321 http://news.ycombinator.com/item?id=1166321 And a comment from a year ago: Over two [now three] years ago, I argued that patent suits were how the licensing game was played among the existing players. It was considered an everyday cost of doing business by the incumbents, but Apple wasn't well prepared for this. (They've learned fast.) This wasn't on consumers' radar because none of the fights were as interesting as the juggernauts of Apple v. Android which get framed in almost religious terms and taken personally by users who have chosen a camp. The argument then was that Apple had not been actively litgating patents, but when Nokia (faced with dwindling profits, most of which appeared to be landing in Apple's pockets) started the fight, and Kodak piled on, Apple had to demonstrate that the patents it was using to counter these suits were patents that it was actively defending. This pushed Apple to file against HTC, and eventually against others who, again, had all been actively (but boringly) suing one another before Apple got to the table.
  - mitchty 13y ago
    Curious if you could link to the latter comment a year ago as well?
    - Terretta 13y ago
      http://news.ycombinator.com/item?id=4191403 http://news.ycombinator.com/item?id=4191403
LoganCale 13y ago
I guess joining PRISM has its advantages.
vijucat 13y ago
There are at least 2 forms of hypocrisy here: a) Big > Small : smaller companies are subject to market forces and are expected to sink or swim as deemed by their own competitive merit, but Apple gets a hand when times are tough! This is essentially a State-assisted protection of private wealth owned by the few; Tim Cook and all the mutual funds and hedge funds that invested in AAPL can now sleep well at night knowing that the American government has a Protectionism Put Option on AAPL. b) Free trade, patents, et al are "the American way" as long as they benefit America, but the moment a foreign competitor uses the same tools and wins, oh no no no, we can't have that. I believe that protectionism and jingoism ("Buy American") is how the American car industry, amongst others, survived for many decades despite being uncompetitive? At least, this is the gist of what I got from reading articles here and there. Ironically, such protectionism is not (always) in Americans' interest; I believe the car industry has successfully stymied the development of metro trains and other public transport options that would have made cars supremely unnecessary? Just take the MTR in Hong Kong or the MRT in Singapore to realize what you are missing.
- mknappen 13y ago
  see also: Noam Chomsky
  - NoPiece 13y ago
    or Milton Friedman.. http://www.youtube.com/watch?v=0GEiRroLaHc http://www.youtube.com/watch?v=0GEiRroLaHc
  - vijucat 13y ago
    My thoughts were basically an inspired summary of a couple of Noam Chomsky articles!
tmister 13y ago
And Gruber yesterday posted a link indicating that Apple's punishment of recent e-book trial was result of Amazon's good relation with Obama administration http://daringfireball.net/linked/2013/08/02/amazon http://daringfireball.net/linked/2013/08/02/amazon. I wonder what will he say now.
- Samuel_Michon 13y ago
  I think few people, including Gruber, expected the Obama administration would step in. It was a possibility, but it wasn’t at all likely. As for the ebook farce: Apple was told by Capitol Hill insiders that it should increase its lobbying efforts (like Amazon and Google), otherwise bad things might happen. http://www.politico.com/news/stories/0512/76073.html http://www.politico.com/news/stories/0512/76073.html
ihsw 13y ago
My comment from earlier this week[1] seems extremely relevant: And thus, too big to fail rears its head again. If we ignore laws surrounding patent restriction enforcement due to Apple's products forming the bottom line of many mobile operators offerings, then it stands to reason that the lesson learned here is it's better to become so entrenched that nobody -- not even the government -- can pull you out, rather than forming a competitive patent portfolio. [1] https://news.ycombinator.com/item?id=6121974 https://news.ycombinator.com/item?id=6121974
tmister 13y ago
Also the violated patents are owned by Samsung. So this is the result of going "thermonuclear" against android. Irony hurts.
ruswick 13y ago
Although there is clear legal justification for this veto, I still fear that it was issued for perverse reasons. Apple is a lobbying juggernaut and is a favorite among the Government. Undoubtedly, Apple exerted extreme pressure on this decision, and I have severe doubts that this same conclusion would have been reached had Apple sought an embargo on Samsung products. Absurd cases and wholesale perversion of intellectual property law are nothing new in this country. Why has the administration only intervened for Apple? It's just worrying when proper execution of the law becomes transactional.
- voodoo123 13y ago
  Utterly false. Apple is not a lobbying juggernaut at all and spends less on lobbying than any of the other major tech companies: http://www.politico.com/news/stories/0512/76073.html http://www.politico.com/news/stories/0512/76073.html Apple is also taking a serious beating from Obama's DOJ. So clearly not 'a favorite' of the governments.
  - ruswick 13y ago
    Entirely incorrect. Evidently, you neglected to read the details of the article. First, Samsung isn't mentioned at all, so there's no context for this specific debate. The fact that Microsoft or IBM gave more money to government officials means absolutely nothing when someone is trying to to decide between Apple and Samsung. Moreover, this article pertains only to a three month period. You can't possibly pretend that this data is conclusive. I actually looked up the empirics. First, Samsung didn't really lobby at all until last year, whereas Apple has consistently spent millions. Even when Samsung did start expanding their lobbying efforts, Apple has outspent them by more than double every year. The article to which you linked is in no way pertinent to the discussion, and totally betrays the actual statistics. http://www.opensecrets.org/lobby/clientsum.php?id=D000042406&year=2012 http://www.opensecrets.org/lobby/clientsum.php?id=D000042406... http://www.opensecrets.org/lobby/clientsum.php?id=D000021754&year=2012 http://www.opensecrets.org/lobby/clientsum.php?id=D000021754...
    - voodoo123 13y ago
voodoo123 13y ago
Judging by the comments here, people on HN hate Apple more than they hate patents. Incidentally - for those suggesting that Apple should get a taste of its own medicine, what on earth are you talking about? Since when did Apple have competitors products banned?
- Mikeb85 13y ago
  Is this a joke?
  - voodoo123 13y ago
    Is that a point?
- mrich 13y ago
  They tried very hard in the Samsung case to get a large portion of their offerings banned but the judge wouldn't have it. They also got HTC products banned from the US for relatively minor infringements.
josteink 13y ago
One simple way to let Apple know you don't think their abuse of the legal system is cool is to simply not buy their products. No iPhone, no iPad, no MacBook, no iStore products. simply stop feeding them money to fuel their lawyer-machine. It's easy. Apple is by far one if the least competitive players out there one you take a look at value for money and let go of the need for a hipster-approved badge.
bdcravens 13y ago
Thank goodness! I was afraid Best Buy wouldn't be allowed to sell me an iPad 2 come Christmas.
czhiddy 13y ago
Where was all this outrage when South Korea banned the iPhone until 2009 to protect the local cell phone makers? http://www.crn.com/news/networking/220100939/south-korea-lifts-apple-iphone-ban.htm http://www.crn.com/news/networking/220100939/south-korea-lif...
- moapi 13y ago
  Believe it or not, a whole lot of South Koreans were complaining about it, you just don't hear about it over here in America. Source: I'm Korean
  - hga 13y ago
    I wasn't "outraged" because it didn't affect me or mine, but I do find incidents like that distressing. Especially because, at least in Korea's case, it can compete. One example, granted, with Google's help, is my father, who tried both an iPhone and a Galaxy, and decided the latter was better.
nraynaud 13y ago
From the country that forbid car parts from entering Cuba...
danmaz74 13y ago
I'm disgusted, this is such a rigged game.
jolohaga 13y ago
Hooray for Apple!
mike_ivanov 13y ago
Apparently, Apple is too ~riesenhafte~ to fail. Typical, as of late.
mpyne 13y ago
I've wanted the Obama administration to take serious action for patent reform for awhile. This is not at all the direction I was thinking he'd take, and it's disappointing to see.
autodidakto 13y ago
Veto? Pff. The best part of being prez is pardoning your friends! (And in Clinton's case, brother). Here's starting at Johnson, great reading: http://en.wikipedia.org/wiki/List_of_people_pardoned_or_granted_clemency_by_the_President_of_the_United_States#Lyndon_B._Johnson http://en.wikipedia.org/wiki/List_of_people_pardoned_or_gran...

152 points by ssclafani 13y ago

jdrobins2000 13y ago

Apple has argued that Samsung isn't licensing their standards essential patents on FRAND terms. If that is the case, it seems reasonable to me to prevent them from threatening product bans to extract exorbitant licensing fees. In my limited understanding, that right to discriminatory license fees is waived when patents are contributed to a standard, in exchange for acceptance for use in the standard. Otherwise it would be a de facto monopoly for the patent holders, with all of the negative consequences for competition. Have there been any other cases where a product ban has been enforced because of an FRAND patent dispute? Unless there have, claims of protectionism are unwarranted. But even if there have, that doesn't prove protectionism is in play, but rather possibly that a past wrong is being corrected.

corresation 13y ago
The ITC found the Apple could neither prove that the infringed was covered by FRAND, nor did Apple agree to what the ITC thought was a reasonable agreement. Of course the ITC considers FRAND which is exactly why Motorola's injunction against the Xbox was denied.
- jdrobins2000 13y ago
  Citation please. From reading the Commission Opinion document, it appears to me that what was in dispute was whether Apple proved that Samsung had not made at least one FRAND offer, and even if not, whether Apple proved the ITC didn't have authority to apply an import ban because of an SEP. Commissioner Pinkert offered a dissenting opinion (from a footnote in the report): "...Samsung does not dispute that it has made FRAND licensing commitments in regard to the '348 patent, and, as explained in his dissenting views, he has considered the evidence before the Commission in the current phase of the investigation and has found the weight of the evidence to indicate that Samsung has not made FRAND licensing terms covering the '348 patent available to Apple." So apparently it is not clear whether Samsung made a FRAND offer to Apple. Most details of negotiations are redacted, so I cannot make a judgement. It seems irrational to me that the ITC's comments regarding the negotiations seem to require Apple to irrefutably prove Samsung's offers weren't FRAND, but don't require Samsung to prove they were FRAND. Unfortunately in this case I believe all of Samsung's other licenses involve cross-licenses of multiple SEPs from each party, so there is no easily referenced objectively reasonable license fee for the single patent. In case of a stalemate in negotiations, I am not sure what the proper remedy should be, but an import ban on the would-be licensee seems to put far too much power into the hands of SEP licensors.
josteink 13y ago
Samsung demanded a fee equal to 2.5% of the cost of the phone. From everyone, including Apple. Apple decided this was "unreasonable" for them, demanded special treatment and refused to pay. The ITC concluded Apple was not following the rules and not playing fairly and thus initiated the ban. And now the administration overturns the court's decision on a whim. Keep in mind this is the same legal playground which fined Samsung 1 billion dollars for having pinch to zoom on a phone. It's very hard to see this is anything but unfair market manipulation.
- jdrobins2000 13y ago
  2.4%. And please cite your source that says it applied to every other licensee. My reading of the commission document indicates that all other license agreements Samsung made for this patent involved multiple SEPs from each party in cross-licensing agreements. Samsung was also trying to use its SEPs as leverage to get Apple to cross-license its non-SEPs to them at a discount to Apple's proposal. Were both parties being reasonable in their demands? Honestly, I couldn't tell from the redacted document. Samsung blatantly copied the iPhone in many many ways. Using the pinch to zoom patent is likely similar to prosecuting the mafia for tax evasion - it wasn't their most egregious offense, but it was the only one the feds could make stick.

noonespecial 13y ago

I'm not sure I'm totally on board with this particular intervention as it seems to smack of the potential of favoritism; I'd have to think about that for a while after learning more about the specific case. What is extremely encouraging is that this is a sign that the highest levels of government understand that patents don't exist for their own sake and are merely a means to an end. When the desired end result isn't reached, intervention is required. That's hopeful.

el_chapitan 13y ago

Point of order. This isn't a veto. A veto is for legislation, this is fully contained within the executive branch.

yanofsky 13y ago
Another Point of Order. Obama didn't do this, the USTR did, on the authority of the President. Edit: It would be fair to say: "The Obama Administration did this"
- droithomme 13y ago
  The President is the only one authorized by Section 337 to take this action. Although the President assigned his authority to the trade representative on his behalf, this action is only permitted under the law to the extent it is done by the President.
  - hga 13y ago
    Here's the law, 19 U.S.C. § 1337 (http://www.law.cornell.edu/uscode/text/19/1337 http://www.law.cornell.edu/uscode/text/19/1337): "(j) Referral to President (1) If the Commission determines that there is a violation of this section, or that, for purposes of subsection (e) of this section, there is reason to believe that there is such a violation, it shall— [...] (B) transmit to the President a copy of such determination and the action taken.... If, before the close of the 60-day period beginning on the day after the day on which he receives a copy of such determination, the President, for policy reasons, disapproves such determination and notifies the Commission of his disapproval, then, effective on the date of such notice, such determination and the action taken under subsection (d), (e), (f), (g), or (i) of this section with respect thereto shall have no force or effect."
bradleyjg 13y ago
Veto just means "I forbid". It is perfectly fine to use it outside the context of the President denying his consent to legislation. For example I could, and have, vetoed a resturant in a discussion of where to go for dinner. In this case a decision of the International Trade Commission is presumptively valid unless the President, or his designee, forbids the ruling from going into effect -- or in other words, unless he vetoes it.

asveikau 13y ago

I know political discussion on HN is frowned upon by some, but I get amused thinking of hypothetical reaction from the president's opponents. This seems to be an action against regulation of business, but it's the Obama administration, therefore... Communism! Apple is in the tank for Obamacare!

hga 13y ago
If you had any familiarly with "the president's opponents", you would know we label this as "crony capitalism" (much more akin to original formula Italian fascist corporatism), and have so since at least the 2009 cram-down of Chrysler's secured bond holders. While of course partisan, this OPED by the Republican governor of Indiana lays out the issues and some of the longer term consequences and outcomes: http://online.wsj.com/article/SB10001424052748703561604575282412364326230.html http://online.wsj.com/article/SB1000142405274870356160457528... Note Apple's board includes one "Albert Gore Jr., Former Vice President of the United States": http://www.apple.com/pr/bios/ http://www.apple.com/pr/bios/ It's good to have friends in high places. (Also note the cramdown was a remarkably bad long term idea; most specifically, because it ensures in the future heavily unionized companies in trouble will find it very difficult to pledge their assets for money to get themselves out of it. One of the major reasons Ford didn't have to declare bankruptcy is that its then new CEO, previously a Boeing lifer, in 2006 pledged all the company's assets to borrow $23.6 billion dollars: http://en.wikipedia.org/wiki/Alan_Mulally#Ford_Motor_Company http://en.wikipedia.org/wiki/Alan_Mulally#Ford_Motor_Company .)
- asveikau 13y ago
  Thanks, good sir, for confirming everything I was saying. (It's funny that you begin by assuming I am unfamiliar with such positions. Thinking they are goofy, humorous and exaggerated is very different from never having been exposed to them. It was exactly this exposure that compelled me to write this, even knowing that it would be a target of downvotes and flames.)
  - dictum 13y ago
    "Action against regulation of large corporations with good relationships with the government" is only a subset of "action against regulation of business".

ianlevesque 13y ago

So they intend to veto any product bans related to FRAND patents from this point going forward. That makes a lot of sense to me. Using standards-essential patents as legal weapons is completely unethical. However, I can't help but wonder if the public good would've been greater served by letting a few multinational corporations like Apple feel some real patent pain. It's the only way the system will ever be overhauled.

distant-uncle 13y ago
> Using standards-essential patents as legal weapons is completely unethical. I would argue, it's more like: "using patents as weapons is completely unethical." And yes, it's a shame to see any patent aggressor get away with it. There is no fundamental difference between FRAND and any other patent. In all cases, independent invention is prohibited, denying inventors their natural right to gather the fruits of their labor. Secondly, the "can't work around argument" is equally applicable to any patent discussion: unlike copyright, patent regime does not recognize the merger doctrine, placing some foundational methods at risk of being completely locked up by greedy entities. Third, patent aggressors benefit tremendously from the work of third parties on whose shoulders they stand; patent aggression is an ugly contrast to this.

revelation 13y ago

What a joke. So good to see the president is finally tackling the patent abuses, by protecting local trolls from a taste of their very own medicine. (The justification here being that this ban is not "in the interest of the public". If this was considered in ay other cases, we'd all be paying cents for generics from India instead of thousands of millions for the brand version)

mtgx 13y ago
This is what increasingly bothers me lately about the decisions they make. They're sacrificing a lot of stuff "in the interest of public good". It seems like a lot of collectivism. "We can't put bankers in prison because this way it's better for the public/the economy" "We can't punish any corporation with more than a relatively minor fine, because that would hurt the public" "We can't let a judge's decision about banning Apple's product for losing a patent battle in war they started, be implemented, because that would hurt the public". The worst part is that they must be thinking these are really good decisions. It's probably why Obama convinced himself and did a 180 on the mass spying, too "because it's in the interest of the public".
- jivatmanx 13y ago
  Actually, the justification for not going after banking or corporate malfeasance, according to Eric Holder, is that they're "Too Big to Jail". I have to say, as a committed small r republican wary of executive power, this kind of crap makes me crave Teddy Roosevelt.
  - falk 13y ago
    Eric Holder admitted that he can't do his job. He needs to be fired.
    - jivatmanx 13y ago
      To be fair, he's been busy leading brave soldiers against Washington's pot dispensaries, and running guns for Mexican gangs.

guelo 13y ago

It's signed by the US trade representative, not Obama. I don't know if this kind of thing is approved all the way at the top, but the letter uses "I" a lot suggesting it was his decision. I think the headline should at least be changed to "The Obama Administration". Also, it's not a "veto".

hga 13y ago
The law puts it in the hands of the President, see this subthead: https://news.ycombinator.com/item?id=6153056 https://news.ycombinator.com/item?id=6153056 ; he may of course delegate his authority, but the buck stops on the desk in the Oval Office.

jivatmanx 13y ago

Intervening in one case for an iconic American company is protectionism, not free trade. That would have entailed reforming the patent system for everyone. This is ominous, what if this is remembered as the equivalent of Smoot-Hawley? Patents are a hell of a lot more complex than tariffs... and at least the ITC is trying to do international coordination here, and Obama has just blatantly undermined them.

melling 13y ago
I've gotta ask if you understand anything about the case, or are you just trying to speak generally.
comex 13y ago
Taking legal action against FRAND abuse is hardly unique to the US. http://www.fosspatents.com/2012/12/european-commission-to-issue-statement.html http://www.fosspatents.com/2012/12/european-commission-to-is... See also Mueller on this veto; while I often disagree with him, I tend to agree on this issue: http://www.fosspatents.com/2013/08/obama-administration-vetoes-itc-import.html http://www.fosspatents.com/2013/08/obama-administration-veto...
- jivatmanx 13y ago
  The problem I have with this argument, is, isn't the point of every technological advance to become widespread and Standards-Essential? If we're going to disallow them, why have patents at all? For "Look-And-Feel" patents?
  - comex 13y ago
    Because even strong software patents often have alternatives, and weak ones are easy to find an alternative to, decreasing their value, but once a standard protocol requires their use, the patent holder can jack up the price. As an extreme example, consider the exFAT patents: there are many file systems superior to exFAT that have no need for whatever bits of functionality Microsoft patented, but because Windows speaks exFAT as one of few alternatives, some companies have licensed them. Not exactly a standard, but the same idea.

cromwellian 13y ago

Seems to me that in the future, companies are going to withhold some of their patents from FRAND even if they would be potentially more useful as FRAND to continue to use them as a weapon. The potential royalties of many of these FRAND patents seem small compared to the damages from infringement. In fact, it seems the value of a patent is inversely proportional to it's usefulness. A patent which covers a critical wireless protocol component is worth a few pennies and can't be used to get injunctions, but a patent for some rounded corner button can be used to sue for billions. If you look at the patent trolling going on, a lot of the cases are for really, obvious, trivialities. While I don't think one should be able to get bans like this, sooner or later, Apple or Microsoft has to lose a patent case in a painful way so they stop trying to shake down competitors. Mutually assured destruction doesn't work if it's not mutual. This ITC case was the closest they've come to experiencing a real threat of pain.

ianlevesque 13y ago
An interesting opinion. It'll be interesting to see if the incentives align better with the guaranteed royalties from FRAND licensing vs. as you say "potential" royalties from trolling. If they don't this is an obvious place for policy changes (not that that is likely to happen if this kind of interventionism prevents real pain for large corporations).
- denis1 13y ago
  The problem with "the guaranteed royalties" is that they aren't really guaranteed. Samsung has been in negotiations with Apple for ages. I'm not sure who is to blame, but there sure as hell isn't a licensing agreement between them. If Samsung can't force Apple's product of the market, what is stopping Apple from never agreeing to a license?
distant-uncle 13y ago
I've been mulling over the most common argument predictably wheeled out by the patent aggressors and their supporters: "Theft! We don't want them to steal our stuff!!" Never mind that even if one allows that the whole concept of patents is a legitimate, and an ethical legal framework, patent infringement is never theft. Theft would involve actual trespass of someone's physical property, that involves removing and/or otherwise exploiting said property without the owner's permission -- in effect depriving them of it. So for an obvious example, if Corp A. breaks into Corp B's engineering offices, and literally steals their code and/or design documents. That would be theft. Of course, computer break in is not technically a physical trespass, but the distinction still stands: an actual trespass must occur. We already have time-tested criminal laws for this, and justly so. Patents are completely redundant for this case. But if you think about, there is actual, honest to goodness theft that goes on in patent cases... and the thief, it's the aggressor! Albeit for a "limited time" (that's of course subject to interpretation, in 20 years many things happen, to someone who dies, that limitation is permanent), someone is given the government-sanctioned go-ahead to literally deprive another of their own discoveries and hard work. Independently discovered, independently arrived at and hammered out. No matter.

falk 13y ago

I'm so happy the President can take the time to address the patent system when it's in regards to giving protectionism to multi-national corporations while small businesses are drowning in frivolous patent lawsuits.

danmaz74 13y ago
Especially when it's multi-national corporations that use patents in the worst possible way, and use any possible scheme to withhold money from taxation.

3327 13y ago

This is the most misleading headline I have seen.

bdcravens 13y ago
You obviously haven't been on HN very long :-)
- 3327 13y ago
  Almost a year mostly interested in actual hack threads and python threads. and pro keeping HN, HN, despise reddit style posts as there is a place for that and its called Reddit !
  - bdcravens 13y ago
    If you're lucky you'll get 50% "hacker" threads. Most are political or fanboy threads.

znowi 13y ago

And people say what incentives do companies have to cooperate with the government. This is one of them. All PRISM participants do. It's a mutually beneficial relationship.

chris-martin 13y ago

So... we've determined that you violated the law, but we're choosing not to enforce the law. This what the kids call a bad code smell, right?

kunai 13y ago

I'm a bit lost for words on this case. On one hand, I can't help but feel it would have been good for Apple to get a taste of their own medicine. At the same time, I think this excessive patent protection is harming the industry... In a perfect world, Apple would have never pursued Samsung in their frivolous extortion case, and this ban would never have reached the Obama admin. But this is a world motivated by cutthroat competition. I'm tired of it.

Terretta 13y ago
I've traced the history several times over the past few years here, but suffice to say, Apple wasn't suing anyone until the mobile phone industry realized Apple's little toy was gobbling all the profits. See this comment from 1,250 days ago, recapping early timeline: http://news.ycombinator.com/item?id=1166321 http://news.ycombinator.com/item?id=1166321 And a comment from a year ago: Over two [now three] years ago, I argued that patent suits were how the licensing game was played among the existing players. It was considered an everyday cost of doing business by the incumbents, but Apple wasn't well prepared for this. (They've learned fast.) This wasn't on consumers' radar because none of the fights were as interesting as the juggernauts of Apple v. Android which get framed in almost religious terms and taken personally by users who have chosen a camp. The argument then was that Apple had not been actively litgating patents, but when Nokia (faced with dwindling profits, most of which appeared to be landing in Apple's pockets) started the fight, and Kodak piled on, Apple had to demonstrate that the patents it was using to counter these suits were patents that it was actively defending. This pushed Apple to file against HTC, and eventually against others who, again, had all been actively (but boringly) suing one another before Apple got to the table.
- mitchty 13y ago
  Curious if you could link to the latter comment a year ago as well?
  - Terretta 13y ago
    http://news.ycombinator.com/item?id=4191403 http://news.ycombinator.com/item?id=4191403

LoganCale 13y ago

I guess joining PRISM has its advantages.

vijucat 13y ago

There are at least 2 forms of hypocrisy here: a) Big > Small : smaller companies are subject to market forces and are expected to sink or swim as deemed by their own competitive merit, but Apple gets a hand when times are tough! This is essentially a State-assisted protection of private wealth owned by the few; Tim Cook and all the mutual funds and hedge funds that invested in AAPL can now sleep well at night knowing that the American government has a Protectionism Put Option on AAPL. b) Free trade, patents, et al are "the American way" as long as they benefit America, but the moment a foreign competitor uses the same tools and wins, oh no no no, we can't have that. I believe that protectionism and jingoism ("Buy American") is how the American car industry, amongst others, survived for many decades despite being uncompetitive? At least, this is the gist of what I got from reading articles here and there. Ironically, such protectionism is not (always) in Americans' interest; I believe the car industry has successfully stymied the development of metro trains and other public transport options that would have made cars supremely unnecessary? Just take the MTR in Hong Kong or the MRT in Singapore to realize what you are missing.

mknappen 13y ago
see also: Noam Chomsky
- NoPiece 13y ago
  or Milton Friedman.. http://www.youtube.com/watch?v=0GEiRroLaHc http://www.youtube.com/watch?v=0GEiRroLaHc
- vijucat 13y ago
  My thoughts were basically an inspired summary of a couple of Noam Chomsky articles!

tmister 13y ago

And Gruber yesterday posted a link indicating that Apple's punishment of recent e-book trial was result of Amazon's good relation with Obama administration http://daringfireball.net/linked/2013/08/02/amazon http://daringfireball.net/linked/2013/08/02/amazon. I wonder what will he say now.

Samuel_Michon 13y ago
I think few people, including Gruber, expected the Obama administration would step in. It was a possibility, but it wasn’t at all likely. As for the ebook farce: Apple was told by Capitol Hill insiders that it should increase its lobbying efforts (like Amazon and Google), otherwise bad things might happen. http://www.politico.com/news/stories/0512/76073.html http://www.politico.com/news/stories/0512/76073.html

ihsw 13y ago

My comment from earlier this week[1] seems extremely relevant: And thus, too big to fail rears its head again. If we ignore laws surrounding patent restriction enforcement due to Apple's products forming the bottom line of many mobile operators offerings, then it stands to reason that the lesson learned here is it's better to become so entrenched that nobody -- not even the government -- can pull you out, rather than forming a competitive patent portfolio. [1] https://news.ycombinator.com/item?id=6121974 https://news.ycombinator.com/item?id=6121974

tmister 13y ago

Also the violated patents are owned by Samsung. So this is the result of going "thermonuclear" against android. Irony hurts.

ruswick 13y ago

Although there is clear legal justification for this veto, I still fear that it was issued for perverse reasons. Apple is a lobbying juggernaut and is a favorite among the Government. Undoubtedly, Apple exerted extreme pressure on this decision, and I have severe doubts that this same conclusion would have been reached had Apple sought an embargo on Samsung products. Absurd cases and wholesale perversion of intellectual property law are nothing new in this country. Why has the administration only intervened for Apple? It's just worrying when proper execution of the law becomes transactional.

voodoo123 13y ago
Utterly false. Apple is not a lobbying juggernaut at all and spends less on lobbying than any of the other major tech companies: http://www.politico.com/news/stories/0512/76073.html http://www.politico.com/news/stories/0512/76073.html Apple is also taking a serious beating from Obama's DOJ. So clearly not 'a favorite' of the governments.
- ruswick 13y ago
  Entirely incorrect. Evidently, you neglected to read the details of the article. First, Samsung isn't mentioned at all, so there's no context for this specific debate. The fact that Microsoft or IBM gave more money to government officials means absolutely nothing when someone is trying to to decide between Apple and Samsung. Moreover, this article pertains only to a three month period. You can't possibly pretend that this data is conclusive. I actually looked up the empirics. First, Samsung didn't really lobby at all until last year, whereas Apple has consistently spent millions. Even when Samsung did start expanding their lobbying efforts, Apple has outspent them by more than double every year. The article to which you linked is in no way pertinent to the discussion, and totally betrays the actual statistics. http://www.opensecrets.org/lobby/clientsum.php?id=D000042406&year=2012 http://www.opensecrets.org/lobby/clientsum.php?id=D000042406... http://www.opensecrets.org/lobby/clientsum.php?id=D000021754&year=2012 http://www.opensecrets.org/lobby/clientsum.php?id=D000021754...
  - voodoo123 13y ago

voodoo123 13y ago

Judging by the comments here, people on HN hate Apple more than they hate patents. Incidentally - for those suggesting that Apple should get a taste of its own medicine, what on earth are you talking about? Since when did Apple have competitors products banned?

Mikeb85 13y ago
Is this a joke?
- voodoo123 13y ago
  Is that a point?
mrich 13y ago
They tried very hard in the Samsung case to get a large portion of their offerings banned but the judge wouldn't have it. They also got HTC products banned from the US for relatively minor infringements.

josteink 13y ago

One simple way to let Apple know you don't think their abuse of the legal system is cool is to simply not buy their products. No iPhone, no iPad, no MacBook, no iStore products. simply stop feeding them money to fuel their lawyer-machine. It's easy. Apple is by far one if the least competitive players out there one you take a look at value for money and let go of the need for a hipster-approved badge.

bdcravens 13y ago

Thank goodness! I was afraid Best Buy wouldn't be allowed to sell me an iPad 2 come Christmas.

czhiddy 13y ago

Where was all this outrage when South Korea banned the iPhone until 2009 to protect the local cell phone makers? http://www.crn.com/news/networking/220100939/south-korea-lifts-apple-iphone-ban.htm http://www.crn.com/news/networking/220100939/south-korea-lif...

moapi 13y ago
Believe it or not, a whole lot of South Koreans were complaining about it, you just don't hear about it over here in America. Source: I'm Korean
- hga 13y ago
  I wasn't "outraged" because it didn't affect me or mine, but I do find incidents like that distressing. Especially because, at least in Korea's case, it can compete. One example, granted, with Google's help, is my father, who tried both an iPhone and a Galaxy, and decided the latter was better.

nraynaud 13y ago

From the country that forbid car parts from entering Cuba...

danmaz74 13y ago

I'm disgusted, this is such a rigged game.

jolohaga 13y ago

Hooray for Apple!

mike_ivanov 13y ago

Apparently, Apple is too ~riesenhafte~ to fail. Typical, as of late.

mpyne 13y ago

I've wanted the Obama administration to take serious action for patent reform for awhile. This is not at all the direction I was thinking he'd take, and it's disappointing to see.

autodidakto 13y ago

Veto? Pff. The best part of being prez is pardoning your friends! (And in Clinton's case, brother). Here's starting at Johnson, great reading: http://en.wikipedia.org/wiki/List_of_people_pardoned_or_granted_clemency_by_the_President_of_the_United_States#Lyndon_B._Johnson http://en.wikipedia.org/wiki/List_of_people_pardoned_or_gran...