Samsung Electronics Co. Ltd scored a victory against rival Apple Inc. at the U.S. International Trade Commission on Tuesday, when the agency ruled that certain older iPad and iPhone models should be blocked from entering the country. Siding with Samsung’s lawyers at Quinn Emanuel Urquhart & Sullivan, the agency rejected Apple’s defense that Samsung was unfairly leveraging patents that are essential to industry standards.
Samsung initiated the ITC case against Apple in June 2011, alleging infringement of five patents. Samsung later dropped one of the patents from the case.
Apple’s lawyers at Wilmer Cutler Pickering Hale and Dorr grabbed an early lead in October 2012, when a single ITC judge issued a preliminary ruling that Apple doesn’t infringe the four remaining patents. Samsung sought review of that decision by a full panel of ITC judges.
In March, the panel indicated that it might find infringement of a single patent in the case. Because that patent has been declared essential to industry standards—which must be licensed on fair, reasonable and non-discriminatory (FRAND) terms—the panel asked the parties to comment on whether an import ban would be an appropriate remedy.
Apple’s lawyers at Wilmer argued that Samsung gave away its right to injunctive relief by playing hardball with a standards-essential patent. According to Apple, Samsung had to be dragged to the negotiating table, and when it arrived it proposed an unreasonably high royalty rate.
Quinn Emanuel countered that Apple was the party negotiating in bad faith. According to Samsung, it kept lowering its asking price but Apple refused again and again to take a license.
In what patent commentator Florian Mueller called a "major surprise," the agency seems to have sided with Samsung. The panel said in Tuesday’s order that "Apple has failed to prove an affirmative defense based on Samsung’s FRAND declarations."
Tuesday’s decision can still be appealed to the U.S. Court of Appeals for the Federal Circuit. And President Obama, who must sign off on all exclusion orders, could effectively veto it. Such a veto would be almost unheard of, but not impossible. In a funny coincidence, on Tuesday Obama signaled his support for legislation that would force the ITC to accept a less plaintiff-friendly standard for granting injunctions.
If the ITC’s ruling goes into effect, it will only block a few limited Apple products, like the AT&T model of the iPhone 4 and the iPad 2 3G. Samsung had initially sought to block a wider range of Apple devices.
Samsung’s team at Quinn Emanuel includes partners Paul Brinkman and Charles Verhoeven. Apple’s defense lineup at Wilmer includes William Lee and Mark Selwyn.