White House overturns ITC ruling to back Apple in Samsung patent case

White House overturns trade decision saying banning older iPhones and iPads would have been too disruptive to consumers and the economy

PUBLISHED : Monday, 05 August, 2013, 12:00am
UPDATED : Tuesday, 11 October, 2016, 1:04pm

In a rare step, the White House has overturned a decision that would have forced Apple to stop selling some iPhones and iPads in the US.

US Trade Representative Michael Froman, an Obama appointee, has issued a letter explaining the decision to make such a rare intervention in a trade dispute. The last time the White House vetoed a decision by the US International Trade Commission was 1987.

"I have decided to disapprove the USITC's determination to issue an exclusion order and cease and desist order in the investigation," Froman wrote.

The decision comes two months after the ITC ruled that some older Apple gadgets violated a Samsung patent that covers a method for transmitting data.

In a statement, Apple said: "We applaud the administration for standing up for innovation in this landmark case. Samsung was wrong to abuse the patent system in this way."

Samsung was wrong to abuse the patent system in this way
An apple statement

In its own statement, Samsung said it was disappointed and that "the ITC's decision correctly recognised that Samsung has been negotiating in good faith and that Apple remains unwilling to take a licence."

The import ban would have applied to the iPhone 4 and iPad 2 3G models that run on networks operated by AT&T and T-Mobile, as well as two regional carriers in Texas and Alaska.

Newer and more popular devices such as the iPad mini and the iPhone 5 were not covered in the potential ban, which had been scheduled to go into effect August 4.

While it's hard to gauge the sales of devices like the iPhone 4, because Apple does not break out sales by device version, the older model remains popular among newer smartphone buyers who are more price conscious.

Many carriers offer the iPhone 4 for free, or almost free, in exchange for a contract.

"What we have seen is that the number of first-time smartphone buyers that the iPhone 4 is attracting is very, very impressive," Apple Chief Executive Tim Cook said on a recent earnings call. "And we want to attract as many of these buyers as we can."

Samsung and Apple had been negotiating a licensing deal for the patent, but talks eventually broke down and Samsung took the matter to the ITC. According to reports, Samsung wanted about US$18 per phone, a figure Apple deemed too high.

Froman said he was not making a decision about the merits of Samsung's case, or its right to seek compensation. Rather, he emphasised that because the patent in question was now a widely held technology standard, banning the products in question would be too disruptive to consumers and the economy.

ITC cases can be appealed to the US Court of Appeals for the Federal Circuit, and from there to the Supreme Court.

Apple has a parallel complaint filed against Samsung at the ITC, accusing the South Korean company of copying the iPhone and iPad. An ITC judge in that case found that Samsung had violated four out of six patents listed in the complaint. A final decision is due this month.

Samsung phones run on Google's Android software.

Additional reporting by Reuters