The Joy of Tech

The ITC said Wednesday that it is delaying its ruling on Samsung’s complaint until May 31 while it considers the consumer impact of an import ban against the Apple devices alleged to have infringed. With that in mind, the agency requested briefs on what effect the banning of certain models of iPad and iPhone would have on the smartphone and tablet markets, and whether there are acceptable substitutes for those devices if they were to be banned.

The postponement of the ITC ruling is good news for Apple, but the rationale for it suggests potentially bad news ahead. If the commission is soliciting comment on the implications of a product ban, it is clearly considering doling one out. If it wasn’t, it wouldn’t bother itself with public interest considerations.

An unfortunate turn of events for Apple, particularly since a preliminary ITC ruling on the same complaint found that the company had not violated the FRAND patents Samsung asserted against it, and that there was no justification for a sales ban. But that was a preliminary ruling by a single judge. Now that the matter is in review before the full commission, there’s a real chance things could go south for Apple if it reverses that preliminary ruling and finds the company guilty of infringement.

That said, it’s unclear just what Apple products are at risk here. It could be that the company’s current portfolio of iPhones and iPads are protected thanks to new Qualcomm chips that are legally licensed by Samsung.

The Joy of tech

The ITC said Wednesday that it will evaluate a decision issued last October by administrative law judge Thomas Pender which found that Samsung has violated one of Apple’s iPhone design patents as well as three software feature patents. The agency also asked Pender to take a second look at parts of two patents where he had found infringement.

The ITC’s review of Pender’s findings likely means that a final decision in the matter will be issued sometime after its original March 27 deadline. Good news for Samsung, which could see a ban on U.S. imports of some of its products if Pender’s ruling stands.

The move follows a December filing to the ITC by Google — which makes the Android OS that runs on the Samsung devices at issue here — encouraging the agency not to block the importation of Samsung’s products.

“Apple asserts patents that cover only small aspects of the feature-packed Android platform and that do not drive consumer demand,” Google wrote. “These interests do not justify an exclusion order.”

That is: What is Google required to do with the existing standards-essential patent cases it is currently fighting on behalf of its Motorola subsidiary against Microsoft and Apple?

The FTC got Google to sign a consent decree saying it wouldn’t seek injunctions over its SEPs — patents that contribute to foundational parts of smartphones and other devices across the industry — as long as other companies were willing to license them.

But what happens to existing cases — for instance, one involving Motorola patents on the video compression standard H.264, which Microsoft wants to license for Xbox but not on Google’s proposed royalty terms?

FTC spokesman Peter Kaplan said last week, “The answer is that under the order they do not have to drop their appeals of SEP cases, but at the same time they cannot obtain or enforce any SEP exclusion orders or injunctions.”

But Microsoft pointed out, in a filing released today by the U.S. International Trade Commission (see below), that the FTC said last week in multiple parts of the published agreements and public statements that Google had to withdraw all its related SEP claims.

From the official statement from Jan. 3: “Google’s settlement with the Commission requires Google to withdraw its claims for injunctive relief on FRAND-encumbered SEPs around the world.”

Then, at the press conference, when asked directly about whether Google would withdraw its cases, FTC Chairman Jon Leibowitz said, “My understanding is they’re going to stop trying to seek [an] exclusion order at the ITC.”

Microsoft notes that the ITC case is ongoing; in fact, the next deadline for briefs is tomorrow. So this issue needs to get figured out ASAP.

Asked for additional comment, the FTC’s Kaplan said, “I’m still trying to get clarification on the language from the statement that you asked about.”

A spokeswoman for Google said she did not have anything to announce on the ITC cases at this time.

Microsoft filing regarding Google-FTC

The U.S. International Trade Commission said Thursday that it has agreed to investigate Samsung for possible trade violations, following a complaint by Ericsson. The network-equipment manufacturer alleges that Samsung has infringed a number of its mobile technology patents by continuing to sell a number of smartphones, tablets and TVs without a proper patent-licensing agreement. And it wants the ITC to ban their importation.

Further complicating matters: A similar complaint brought by Samsung against Ericsson late last year. In it, Samsung argued that some of Ericsson’s telecommunications network equipment violate a handful of Samsung patents.

It’s worth noting that most of the patents at issue in this spat are standards-essential ones, which their holders are obligated to license under fair, reasonable and non-discriminatory (FRAND) terms. Both Ericsson and Samsung allege one another have refused to do so. And those allegations come at a time of increased regulatory scrutiny of standards-essential patents. Indeed, in its recent consent decree with Google, the U.S. Federal Trade Commission told Google that it cannot seek to ban competing products using patents it licensed under a FRAND agreement.

What’s interesting about Monday’s International Trade Commission ruling are the questions the trade body is asking of the two tech giants, and, really, of the industry.

In agreeing to review the administrative judge’s ruling in the case, the ITC is asking the bigger questions here, including when, if at all, a product should be banned if the patents it is accused of infringing are related to an industry standard. Also, what exactly does that commitment to license patents on a FRAND (fair, reasonable and non-discriminatory) basis really mean?

“Does the mere existence of a FRAND undertaking with respect to a particular patent
preclude issuance of an exclusion order based on infringement of that patent?” the trade body asked in a statement (PDF) on Monday. “Where a patent owner has offered to license a patent to an accused infringer, what framework should be used for determining whether the offer complies with a FRAND undertaking? How would a rejection of the offer by an accused infringer influence the analysis, if at all?”

Those are some mighty important questions.

The ITC, of course, will weigh the issue of whether Apple’s products actually infringe on the Samsung patents. The initial determination by the administrative law judge found that they did not.

The move comes as other courts are also trying to settle questions related to industry standard patents. In a case pitting Google’s Motorola unit against Microsoft, a Seattle federal judge is hearing testimony that could help establish what exactly constitutes fair and reasonable settlement terms.

The question was also due to come up in an Apple-Motorola case, though that matter stopped just short of reaching trial.

A U.S. International Trade Commission judge on Wednesday ruled that Samsung infringed four of the six patents Apple asserted against it before the ITC. In his initial determination, ITC Judge Thomas Pender found that Samsung’s products violate Apple’s ’949, ’922, ’678, and ’501 patents. The first refers to touchscreen heuristics and lists Steve Jobs as an inventor; the second describes a “method and apparatus for providing translucent images on a computer display”; the third, elements of the iPhone’s design; and the last, “audio I/O headset plug and plug detection circuitry.”

This is an initial determination, so Pender’s findings still need to be approved by the ITC’s full six-member commission. And he did find in Samsung’s favor on two other patents.

But, make no mistake, this is bad news for the company. The ITC has the power to stop the importation into the U.S. of infringing products and Apple will almost certainly push for that if Pender’s decision is upheld in February.

Today’s ruling follows an earlier ITC initial determination that found Apple’s iOS devices did not violate four patents that Samsung asserted against it, and the $1 billion jury verdict Apple won against the Korean company in August.

Filed in mid-August, the complaint accused Apple of infringing seven Motorola patents and asked the ITC to ban the iPhone 3GS, the iPhone 4, the iPhone 4S, the iPad 2, the new iPad, the Mac Pro, iMac, Mac mini, MacBook Pro and MacBook Air, which Google argued were in violation of them. On Sept. 19, the ITC agreed to review Google’s claims. So its sudden withdrawal just a few weeks later is remarkable, to say the least.

What happened? That’s not clear, and Motorola hasn’t replied to a request for comment. But there are two rationales that spring immediately to mind. The first: Those “secret” settlement talks between Google CEO Larry Page and Apple CEO Tim Cook have begun to show promise, and Google is backing off as a result. Note: In its filing, Google does not speak of a settlement at all.

The second: Google is no longer quite as confident in its chances to prevail over Apple in this arena. As we’ve noted here before, this complaint is the company’s second against the iPhone maker with the ITC. And the first one didn’t go well at all. And the one that was withdrawn today was based on patents that are thought to be not nearly as strong. Perhaps Google is cutting its losses, fearing that an unfavorable ruling from the ITC would further undermine the idea that acquiring Motorola Mobility and its patents for $12.5 billion was a wise move.

Reached for comment, Google had only this to say: “As we have said many times before, we will continue to vigorously defend our partners.”

The ITC voted Tuesday to investigate a patent-infringement complaint brought against Apple by Google. Filed last month by Quinn Emanuel — the law firm that represented Samsung in its recent courtroom rout by Apple, the complaint alleges that the iPhone maker violated seven patents Google acquired through its $12.5 billion acquisition of Motorola Mobility. Among the accused devices: The iPhone 3GS; the iPhone 4 and 4S; the iPad 2 and new iPad; the Mac Pro, iMac, Mac mini, MacBook Pro, and MacBook Air. In other words, a big chunk of Apple’s product line. Google is asking the ITC to ban the importation of all these devices, though that’s not its end game here. The company is really looking to chicken-wing Apple into negotiating a cross-licensing deal.

“We would like to settle these patent matters, but Apple’s unwillingness to work out a license leaves us little choice but to defend ourselves and our engineers’ innovations,” Google said in an August statement issued by Motorola.

A few things to remember here: The ITC’s decision to investigate Google’s claims is not a reflection of their merit. It’s pretty common for the agency to elect to consider complaints like these. This is the second time Motorola’s patents have been asserted against Apple in the ITC, and the first time things didn’t so go well. The ITC pretty much cleared Apple of infringement with respect to three patents, and remanded investigation of a fourth.

So Google here is taking a run at Apple with patents that are essentially second choice to a first-choice group that hasn’t proven very strong. This is another chance for the company to prove that the $12.5 billion it spent to gain Motorola Mobility’s patent portfolio really will deliver the sort of IP protection Google claimed it would. As Google chief legal officer David Drummond said when the search behemoth first announced plans to acquire Motorola Mobility, “We believe we’ll be in a very good position to protect the Android ecosystem for all of our partners.”

Right now, I’m not sure “very good” is an accurate way to describe Google’s position with regard to protecting Android and the OEMs that use it with Motorola’s patents. Question is, will it be a year from now, when the ITC finally rules on this complaint?

The patents relate to Apple devices including the iPhone, iPad and iPod Touch, Motorola says. Motorola is seeking a ban on the import of those products made overseas.

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“Motorola has taken proactive measures to ensure that our industry-leading smartphones remain available to consumers in the U.S.,” Motorola said in a statement to AllThingsD. “We respect the value of intellectual property and expect other companies to do the same.”

Motorola, now a unit of Google, declined to provide further detail on those measures. But it’s not difficult to deduce what they might be.

In order to win clearance for its products from U.S. Customs and Border Protection, Motorola must be able to guarantee that there is no continuing infringement under the ITC’s interpretation of the Microsoft ActiveSync patent that’s cause for the ban. That patent describes an ActiveSync feature which allows calendar meeting requests to be generated by a smartphone and synced across other devices via ActiveSync-enabled servers. And there are two ways of getting around it: 1) replace it with a non-infringing alternative that provides the same functionarly; 2) Remove it outright.

Now, as best I can tell, there isn’t really a way to provide the functionality that ActiveSync enables without infringing Microsoft’s patent. That’s why Apple, Google, Nokia and others license it. And that’s why Motorola licensed it until its contract expired in 2007. In other words, Option No. 1 is a nonstarter.

Which leaves Option 2: Remove the feature entirely, leaving 18 Motorola devices without the ability to schedule a meeting from their calendars. Sadly for Motorola and its users, that’s the most likely scenario here. Not a workaround so much as a defeaturing.

That’s lousy recourse, but unless Motorola is willing to roll over and pay Microsoft the licensing fees it’s seeking, that’s where it’s at.

Microsoft, for its part, would like Motorola to know that its representatives are standing by to take its order, should it opt to go that route.

“Microsoft brought this case only after Motorola stopped licensing our intellectual property but continued to use our inventions in its products,” Microsoft Deputy General Counsel Dave Howard said in a statement given to AllThingsD. “It’s unfortunate we’ve been forced to pursue legal action, but the solution for Motorola remains licensing our intellectual property at market rates as most other Android manufacturers have already done.”

The U.S. International Trade Commission (ITC) has refused to grant Apple’s request for an emergency ban on pretty much any HTC smartphone and tablet running Google’s Android operating system. Apple requested that ban in early June, alleging that 29 HTC smartphones infringe its ’647 “data tapping” patent, and arguing that their continued importation into the U.S. will cause Apple substantial harm. But, evidently, the ITC feels that it doesn’t have the necessary information to make that call.

“The commission finds that Apple has not demonstrated the propriety of temporary emergency action here,” the ITC wrote in its denial of Apple’s request. “The commission will not direct Customs to detain all subject HTC products because the commission does not have the information necessary to determine whether the respondents are currently violating the commission’s limited exclusion order.”

So Apple gets no immediate relief on this front. What it does get, however, is an official ITC investigation into its claim that HTC has been flouting an import ban on these devices by telling customs officials that they have been redesigned to avoid infringement of Apple’s IP.

If that claim pans out, and HTC is found to be in violation of the ITC’s order, it will have to remove from its handsets features based on Apple’s IP, or design around it — no easy task when you’re talking about a portfolio of 29 smartphones and a new custom build of Android that has to be vetted by Google.

Driving the ITC’s decision to review the case: Petitions from Apple and Motorola both. Motorola appears to be looking for a standard review concerning claim construction, infringement, validity and domestic industry.

Meanwhile, Apple has made the same request, but it’s also angling for a review of patent unenforceability. That’s worth noting, because the patent on which Motorola originally won this case is a standards-essential one that Apple alleges Motorola refuses to license under fair and reasonable terms.

Evidently Apple is pressing that issue hard with the ITC. According to the agency’s notice of review, it has rallied several outside parties to file public interest statements supporting its arguments. Among those who’ve submitted letters to the ITC: the Federal Trade Commission, the Business Software Alliance, the Association for Competitive Technology, the Retail Industry Leaders Association, Verizon, Nokia, Hewlett-Packard and Microsoft.

Google and Apple both declined comment on the review.

“Apple is a company with ‘big muscle’ and is famous worldwide,” Wang said late Wednesday. “In the United States particularly, it will be able to stop us by all means. This is our challenge. But we are not afraid of challenges because we have innovations. We will apply for patents in different fields, and we will also purchase different kinds of patents, such as those owned by S3 Graphics Co.”

Frankly, at this point, purchasing a few more patents might be a wise move. HTC has already lost a suit it filed against Apple, accusing it of violating patents held by S3 Graphics. And earlier this week, an ITC judge ruled that it cannot assert five patents it borrowed from Google to assert against Apple. Which leaves it in something of a bind, particularly since the ITC ruled last December that HTC had infringed an Apple patent for “data tapping.”

Not that the company’s leadership is all that worried about it. As Wang said, HTC isn’t “afraid of challenges,” and that’s a view shared by CEO Peter Chou. Said Chou, “Patent lawsuits haven’t caused any actual damage to HTC. Only the Street is worried for us, we’re not worried ourselves.”

The U.S. International Trade Commission (ITC) has tossed out five Google patents assigned to HTC to assert against Apple in the pair’s legal battle. Administrative Judge Thomas Pender ruled that HTC doesn’t have the right to file a lawsuit based on patents it has borrowed from Google in the hopes of winning a ban on the import of the iPhone and iPad. In doing so he has effectively hamstrung HTC’s case and, more importantly, gutted Google’s strategy of loaning out patents to its Android partners to aid them in their IP battles with Apple, without taking Cupertino to the mat itself.

HTC says it will appeal the ruling to the Commission, and there is a chance it could prevail. But if it fails, it will have only the three patents it originally asserted against Apple to wage this particular IP war. So this is a significant blow to the company, and to Google as well. The search giant has gone on record pledging to help Android device manufacturers facing patent litigation. “We tell our partners, including the ones here in Taiwan, we will support them,” Google Executive Chairman Eric Schmidt said last year. “For example, we have been supporting HTC in its dispute with Apple because we think that the Apple thing is not correct.”

But that support doesn’t appear to be surviving legal scrutiny. So what will Google do now?

Google and Apple did not respond to requests for comment.

The Commission sent a note on Wednesday to the U.S. International Trade Commission expressing concern that companies that hold such patents could demand more-than-reasonable royalties for their patents by holding over companies the threat of seeking an exclusion order banning imports of products using the standard in question.

Motorola has been accused of doing so as part of its ongoing patent battle with Microsoft. Redmond-based Microsoft was therefore unsurprisingly pleased with the FTC’s action.

“We welcome the FTC’s statement agreeing with Microsoft that standard essential patent abuse harms consumers and competition,” deputy general counsel David Howard said in a statement. “The FTC joins a growing chorus of regulators from around the world who recognize the danger posed by companies who try to use standard essential patents to block the sale of products.”

Regulators in China and Europe have also expressed concern regarding the practice.

Speaking at the D: All Things Digital conference last week, Apple CEO Tim Cook also spoke out against the practice. Apple is also engaged in patent battles with Motorola.

“No one should be able to get an injunction off a standards patent, because the owner is obligated to license it in a fair and reasonable manner,” Cook said. “Apple has not sued anyone over standards-essential patents that we own, because we feel it’s fundamentally wrong to do that. The problem in this industry is that if you add up what everyone says their standards-essential patents are worth, no one would be in the phone business.”

Earlier this week, Apple filed a complaint against rival HTC with the ITC, its third in as many years. This one claims more than two dozen HTC devices are violating U.S. Patent No. 5,946,647 — a patent that HTC recently claimed to have worked around. In a May 29 statement, HTC said its One X and EVO 4G LTE were in compliance with an ITC ruling that found they infringed on Apple’s ’647 patent.

But in its new complaint to the ITC, Apple disputes that. It says the One X and EVO 4G LTE still infringe that patent. It further claims that there are 27 other HTC handsets that do so as well. And it wants the ITC to slap a limited exclusion order (LEO), or ban, on the importation of all of them. “Without such an express statement,” Apple said in its complaint, “HTC will continue to flout the terms of the LEO, which has caused and will continue to cause Apple to suffer substantial harm, and contravenes the public interest in enforcement of the commission’s LEO.”

The 29 HTC smartphones Apple’s taking issue with: The HTC Sensation, the HTC Sensation 4G, the HTC Wildfire, the HTC myTouch 4G, the HTC myTouch 4G Slide, the HTC Merge, the HTC Rezound, the HTC Rhyme, the HTC One X, the HTC One S, the HTC One V, the HTC Inspire 4G, the HTC Vivid, the HTC Status, the HTC Wildfire S, the HTC Hero, the HTC Hero S, the HTC EVO 4G LTE, the HTC Evo 4G, the HTC Evo V 4G, the HTC Evo Design 4G, the HTC Evo 3D, the HTC Amaze 4G, the HTC Droid Incredible 4G LTE, the HTC ThunderBolt, the HTC Flyer, the Droid Incredible 2, the HTC Jetstream and the HTC EVO View 4G.

An unfortunate turn of events for HTC, which today lowered its second-quarter revenue forecast by 13.3 percent, citing weaker sales in Europe and, you guessed it, delays in getting some of its products into the U.S. Having two new handsets stopped by U.S. customs is one thing, having 29 is quite another. And if Apple prevails in its latest complaint to the ITC, that could be what happens.

On Monday, a U.S. International Trade Commission judge ruled one of Kodak’s key patents invalid, undermining the photography pioneer’s efforts to assert it against Apple and Research In Motion. In his decision, ITC Judge Thomas Pender wrote that while some Apple and RIM products did indeed violate some claims of Kodak’s 6,292,218 patent, the patent itself, which covers the ability for a digital camera to preview images on an LCD screen, is invalid.

The ’218 patent is referred to by some as the “crown jewel” of Kodak’s portfolio, so Pender’s ruling is potentially a major blow to the company, which is looking to maximize the value of its IP ahead of a bankruptcy auction. Indeed, just last week Kodak accused Apple of attempting to undermine its efforts by asserting ownership claims over the ’218 patent.

“Apple’s decision to press its ownership claims now … should be seen for what it is, namely, a ploy calculated to prevent the debtors from using the [bankruptcy] sale process to obtain a fair price for Kodak’s digital capture portfolio (or to enable Apple to buy it on the cheap and extinguish its infringement exposure),” Kodak said in court documents filed last week.

It seems now that the ploy was a wasted effort. There are few better ways of extinguishing a company’s infringement exposure than having the patent asserted against it ruled invalid. And, as RIM noted in a statement issued Monday afternoon, Pender is the second ITC judge to rule the ’218 patent invalid.

That said, Apple and RIM aren’t entirely out of the woods yet. Kodak plans to appeal Pender’s ruling to the full commission. And it says it’s confident it will prevail in the end, since the U.S. Patent and Trademark Office confirmed ’218’s validity in 2010.

Regardless, Pender’s ruling couldn’t come at a worse time. Sources say that Kodak has been looking to attract a stalking-horse bidder who would put down an initial offer for its patent portfolio as it gears up for its bankruptcy auction. Having the patent that’s at the center of its high-profile battle with Apple and RIM tossed aside by the ITC isn’t going to aid that effort.

This patent dispute, one of several between the companies, centers on Microsoft’s ActiveSync technology. Ultimately, the ruling could lead to the ban of imports of Motorola products that infringe on the patent in question.

“Microsoft sued Motorola in the ITC only after Motorola chose to refuse Microsoft’s efforts to renew a patent license for well over a year,” Microsoft deputy general counsel David Howard said in a statement. “We’re pleased the full Commission agreed that Motorola has infringed Microsoft’s intellectual property, and we hope that now Motorola will be willing to join the vast majority of Android device makers selling phones in the U.S. by taking a license to our patents.”

The ITC issued an initial finding of infringement in this case back in December.

Motorola, for its part, notes that it can continue shipping products during a 60-day presidential review process and said it will ponder its options. It also noted that Microsoft had originally sought a ruling that Motorola had infringed on nine patents.

“Although we are disappointed by the Commission’s ruling that certain Motorola Mobility products violated one patent, we look forward to reading the full opinion to understand its reasoning,” Motorola said in a statement. “We will explore all options including appeal.”

Motorola said it will be required to post a 33-cents-per-unit bond for products it ships during the 60-day review period.

This dispute is separate from other conflicts between the two companies, including one related to Microsoft’s Xbox. Motorola has won an initial ruling it its favor from the ITC in that case.

“The US availability of the HTC One X and HTC EVO 4G LTE has been delayed due to a standard U.S. Customs review of shipments that is required after an ITC exclusion order,” HTC said in a statement to AllThingsD. “We believe we are in compliance with the ruling and HTC is working closely with Customs to secure approval. The HTC One X and HTC EVO 4G LTE have been received enthusiastically by customers and we appreciate their patience as we work to get these products into their hands as soon as possible.”

HTC has been in a patent battle with Apple, which won an exclusion order late last year for certain HTC phones.

The HTC One X is bound for AT&T, while the HTC Evo 4G LTE is headed to Sprint and was due to go on sale on Friday.

Sprint declined to comment beyond HTC’s statement. An AT&T spokesman was not immediately available for comment.

HTC has been counting on its One line (along with the Evo for Sprint and a new Droid Incredible model for Verizon) to help it regain its footing.

Apple had asked the commission to block imports of Motorola phones such as the Droid and Droid X that run Google Inc.’s Android software, claiming they infringed on its patents.

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The organization found that HTC devices infringed on two claims related to an Apple patent. However, the ban will not take effect until April, the ITC said in a ruling, giving time for carriers to make transition plans and for HTC to demonstrate ways it has avoided infringement (by working around the patent, dropping infringing features or other means).

“Notice is hereby given that the U.S. International Trade Commission has found a violation of section 337 in this investigation and has issued a limited exclusion order prohibiting importation of infringing personal data and mobile communications devices and related software,” the agency said. “The Commission has determined that exclusion of articles subject to this order shall commence on April 19, 2012.”

HTC will be able to import some refurbished products to satisfy repair claims on already sold products, but will not be able to bring new products into the country after April 19, unless the ruling is reversed or it can show its products no longer infringe the patent in question.

The ruling had been delayed several times.

HTC said in a statement that it was pleased the commission reversed a ruling that said HTC infringed on another of Apple’s patents, and that it narrowed the ruling on the patent in which it did find infringement.

“While disappointed that a finding of violation was still found on two claims of the ’647 patent, we are well prepared for this decision, and our designers have created alternate solutions for the ’647 patent,” HTC said.

Apple didn’t comment directly on Monday’s ruling, instead merely reiterating a past statement that “we think competition is healthy, but competitors should create their own original technology, not steal ours.”

Here’s the ruling:

Usitc Ruling Apple Htc

The International Trade Commission in Washington on Wednesday is expected to rule on whether some phones made by HTC Corp. violate Apple’s patents. The ruling could lead to a ban on handsets sold by the Taiwanese company, which uses the Android operating system and is the No. 3 smartphone provider in the U.S. market, according to research firm Nielsen.

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