The Administration’s veto of an ITC ban of importation of some Apple products has a valuation ripple effect

The International Trade Commission (ITC) had determined that Samsung had bargained in good faith with Apple over licensing their standard essential patent having to do with connecting to a wireless network and that Apple was infringing on the patent.  One of the remedies available is a ban on importation and sales of offending products, which the ITC invoked. Last weekend U.S. Trade Representative Michael Froman, representing the Obama Administration, vetoed the ban. In a letter explaining the veto, Froman said he considered the potential harm the sales ban would cause to consumers (limiting consumer choice) and the U.S. economy. The decision surprised some, but it is totally consistent with the FTC’s opinion discussed previously in IP Value Wire.

The ramifications of this on patent value are significant. What’s more, the political pressure now on the ITC, set to decide this week whether or not to ban U.S. imports of some Samsung products, is huge … even though the patent type is not comparable.  If Froman’s concern with consumer choice is the prevailing philosophy, it’s difficult to imagine a situation where a product ban would be the appropriate remedy. Which brings us back to value.

Part of a patent’s value is the availability of remedies against an infringer. Those remedies encourage good faith bargaining for licenses. The more certain are those remedies, the more comfortable one is of a valuation. If courts go one way, ITC goes another, and the executive branch, in effect, becomes the ultimate arbiter, it is impossible to know the worth of a technology patent.