The Obama administration has stepped in today to veto an import ban Samsung won from the International Trade Commission to prevent the iPhone 4 and some iPads from coming into the US. The move marks the first time since 1987 that a president has interfered with an ITC order. Such import bans, which effectively prohibit the sale of certain devices, have come under scrutiny from the Justice Department and the Federal Trade Commission as more companies are seeking the bans (instead of monetary damages) in an attempt to harm their competitors. Earlier this year President Obama also expressed his intention to combat "patent trolls," making today's veto not unexpected.
The veto is detailed in a letter written by trade representative Michael Froman from the president's office. At issue is how companies defend and license so-called "standards-essential patents" (SEPs). Companies must license such patents (at fair cost and terms) to rivals in order to facilitate technological advancements and healthy competition. The veto today stems from fears that firms like Samsung are "gaining undue leverage" over their competitors with such import bans, writes Froman. He adds that "licensing SEPs on FRAND [fair, reasonable, and non-discriminatory] terms is an important element of the administration's policy of promoting innovation and economic progress." While Froman wrote the letter and made the decision regarding the veto, the order itself comes directly from President Obama.
"[This] is an important element of the Administration's policy of promoting innovation and economic progress."
Samsung won the import ban from the ITC back in June of this year. The case concerned a cellular data patent Samsung held, and the Korean company claimed Apple infringed on the patent in the iPhone 4, 3GS, and 3G, as well as models of the original iPad and iPad 2 with 3G data radios. Newer Apple devices use a different cellular chipset and don't infringe. While today's veto means Apple will be free to continue importing and selling those devices in the US, Froman makes it clear that the veto in no way addresses the legal merit of Samsung's claims, explaining: "My decision to disapprove this determination does not mean that the patent owner in this case is not entitled to a remedy. On the contrary, the patent owner may continue to pursue its rights through the courts."
As for future patent disputes, Froman expresses the intent of the administration to prevent the ITC from awarding product bans in the future in cases involving standards-essential patents. In the letter, he advises the commission in such cases to "determine whether a remedy is in the public interest" before making a ruling.
Update: Samsung is unsurprisingly unhappy with the decision. In an emailed statement, a representative says, "We are disappointed that the US Trade Representative has decided to set aside the exclusion order issued by the US International Trade Commission (ITC). The ITC’s decision correctly recognized that Samsung has been negotiating in good faith and that Apple remains unwilling to take a license." An Apple representative, meanwhile, tells All Things D: "We applaud the Administration for standing up for innovation in this landmark case. Samsung was wrong to abuse the patent system in this way.”
Update 2: The South Korean government says it's concerned with the Obama administration's decision to veto the ban. In a statement, the Ministry of Trade, Industry & Energy called on the relevant parties to make "fair and reasonable decisions" this Friday, when it will be decided if a number of Samsung products should be banned from being imported to the US.