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Saturday, August 3, 2013

White House Vetoes Ban on Sale of Some Apple iPhones, iPads

As reported by the Wall Street Journal: The Obama administration on Saturday vetoed a U.S. trade body's ban on the sale of some Apple iPhones and iPads, a rare move that upends a legal victory for smartphone rival Samsung Electronics Co.

U.S. Trade Representative Michael Froman made the decision to veto the ban on the Apple devices, citing concerns about patent holders gaining "undue leverage." He said Samsung could continue to pursue its patent rights through the courts.

The action marked the first time since 1987 that a presidential administration had vetoed a product ban ordered by the U.S. International Trade Commission.

The ITC had ordered the ban on some older-model Apple iPhones and iPads in June after finding the products infringed a Samsung patent.

The ban had raised concerns among U.S. antitrust enforcers as well as some technology companies and lawmakers. They questioned whether companies should be able to use their essential technology patents to block rival products from the marketplace.

Apple on Saturday praised the administration for "standing up for innovation." The company had argued to the trade representative that the ban was inappropriate because Samsung had committed to license its patented technologies that were included in industry wide standards for wireless devices.

Once close business partners, Samsung and Apple have become increasingly intense rivals, sparring over the market for smartphones around the globe, with much of the momentum accruing to Samsung in recent months.

The rivalry has spilled into the courts, where barrages of competing patent claims have been lobbed in both directions. Last year, Apple won a jury trial and $1 billion in damages against Samsung over iPhone patents.

Samsung said Apple was the one that started the global patent wars between the two companies. It said the iPhone maker had sought to avoid paying for licenses of Samsung's patents.

The ITC, which has jurisdiction over certain trade practices, is an appealing legal option for patent holders, particularly tech companies, because the trade body can issue orders banning the importation of products that infringe upon another company's patents. Legal observers say it is easier to win an import ban at the ITC than it is to win a federal court ruling that would block product sales.

The ITC ruled against a key Apple theory across its recent litigation, which seeks to limit plaintiffs from using a broad class of patents to win injunctions against sales of infringing products. Such patents are submitted to industry groups that are setting key technology standards, and are deemed as essential to create products in certain categories—such as creating handsets that can communicate using a particular generation of cellular networks.

Apple has argued that in return for becoming part of an industry standard, companies usually promise those groups to license use of their patented technology under fair and reasonable terms.

But the ITC said Apple's argument wasn't valid, potentially hurting Apple's continuing efforts to change the way standards-based patents are used in legal cases.

The ITC order would have barred the U.S. sale or import of some Apple products still on store shelves, including a version of the iPad 2 made to work on AT&T Inc.'s network, and the iPhone4, which runs on AT&T and T-Mobile USA's airwaves.