U.S. Trade Commission Rules Apple Violated Samsung Patents

Transcript

LINDA WERTHEIMER, HOST:

Apple could face problems with some of its older models of iPhones and iPads in the U.S. This, after the U.S. Trade Commission ruled yesterday that the devices violated a patent owned by Apple's archrival, Samsung.

The ruling is unlikely to have a big impact on Apple's earnings. But as NPR's Steve Henn reports, the decision raises more questions about how the U.S. patent system can be used.

STEVE HENN, BYLINE: Apple and Samsung have been battling each other over patents for years. Last summer, Apple won a billion dollar jury verdict after accusing its South Korean rival of copying its designs. Yesterday, it was Samsung turn when the International Trade Commission ruled that Apple infringed on a Samsung Patent.

CHRISTOPHER CARANI: And more importantly, decided to enter in a limited exclusion order.

HENN: Christopher Carani is an attorney and patent expert. Carani says the ITC order could actually prevent Apple from importing some kinds of iPhones and iPads into the U.S. But it's unlikely to hurt Apple's earnings. The import ban doesn't go into effect immediately - Apple could still appeal - and the effected devices are older.

CARANI: It seems like it's, you know, eons ago that we were talking about the iPhone 3 and 3G, things that are implicated in this case.

HENN: But Carani thinks this decision is big news, because the patent Apple is infringing is something known as a Standard Essential Patent. Basically this is technology everyone in the industry has to use for the 3G network to work.

CARANI: So if we think about the way that you connect to the Internet, or the way that Smartphones communicate.

HENN: It's really important that everyone in the industry agree one standard.

CARANI: If each one had a different shape then it would wreak great havoc.

HENN: So when a company like Samsung has a patent on a technology like this, they're supposed to agree to license it to everyone for a fair and reasonable price. This case went to the International Trade Commission because Samsung and Apple couldn't agree on what fair and reasonable meant.

Samsung wanted Apple to pay 2.4 percent of the cost of every iPhone and iPad sold. That's something close $10 a gadget to licenses its technology. But Samsung's patent was just one of thousands of these so-called Standards Essential Patents for the 3G network, all of which are necessary to make the it function. Apple argued...

CARANI: This particular contribution was .0000375 percent of the UTMS standard, was actually attributable to this particular patent.

HENN: Carani feels if this ruling stands other owners of so-called Standard Essential Patents - and there are thousands and thousand of them - could become emboldened to sue. That, he says, would erect a new and unnecessarily expensive toll bridge on the road to bringing new technologies to the U.S. market.

But looking at the broader patent picture, for months President Obama has been criticizing firms that buy up patents for no other reason than to sue. These are the so-called patent trolls. Here he is in February.

PRESIDENT BARACK OBAMA: They don't really produce anything themselves. They're just trying to, essentially, leverage and then hijack someone else's idea, and see if they can extort some money out of them.

HENN: Yesterday, the Whites House laid out series of steps to crack down on trolls, including reviewing the role of the International Trade Commission in settling patent disputes. But some patent attorneys, including Carani, say this Apple-Samsung case could create a powerful new tool that patent trolls could use to profit.

Steve Henn, NPR News, Silicon Valley.

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