In June the International Trade Commission ruled that Apple infringed on a Samsung standard essential patent and ordered a ban on importation and sale of some older model iPhones and iPads. That ban is to commence at the end of the week, unless the Obama administration intervenes.
Apple’s appeal is that standard essential patents should not be allowed to stifle competition. The ITC and Samsung say that removal of punitive threat of a ban would render royalty rate negotiations fruitless and drastically impact the value of a standards essential patent.
Apple claims Samsung did not negotiate for a fair, reasonable and non-discriminatory royalty rate, something necessary in the bargain that creates standard essential patents in the first place. Samsung, and, importantly, the ITC disagree, saying that Apple failed to satisfy their burden of proof that Samsung negotiated in bad faith and was unwilling to license their patent at a reasonable rate.
It’s an interesting debate, with extended consequences. Not surprisingly, the FTC comes down on the side against anti-competitive behavior. So does Microsoft. Over a year ago they pledged to not seek an injunction or exclusion order against any firm on the basis of their essential patents. That pledge, however, acknowledges the right to do so, and that right adds to patent value. AT&T agrees, but they are a direct stakeholder, currently selling the iPhone 4.
To frame the debate for the public, the royalty rates charged others for the same patent would need to be revealed in order to assess whether or not a rate is non-discriminatory.