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ITC-847 Public Knowledge Public Interest Statement

ITC-847 Public Knowledge Public Interest Statement

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Published by: Florian Mueller on Nov 15, 2013
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11/26/2013

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IN THE UNITED STATES INTERNATIONAL TRADE COMMISSION WASHINGTON, D.C.
 
In the Matter of CERTAIN ELECTRONIC DEVICES, INCLUDING MOBILE PHONES AND TABLET COMPUTERS, AND COMPONENTS THEREOF Investigation No. 337-TA-847 STATEMENT OF PUBLIC KNOWLEDGE IN RESPONSE TO THE COMMISSION’S NOTICE OF REQUEST FOR STATEMENTS ON THE PUBLIC INTEREST DATED OCTOBER 18, 2013 CONTENTS
I.
 
IN ASSESSING THE PUBLIC INTEREST, THE COMMISSION SHOULD LOOK TO BROAD CONSIDERATIONS OF PROMOTING INNOVATION .........................................1
 
A.
 
Whether the Patented Feature Is a Small Part of the Product to Be Excluded ....................2
 
B.
 
Whether an Exclusion Order Will Hamper Future Innovation ............................................2
 
C.
 
These Considerations Weigh Against an Exclusion Order in the Present Case ..................3
 
II.
 
THE COMMISSION SHOULD ESTABLISH A MULTI-FACTOR TEST FOR EVALUATING PUBLIC INTEREST CONCERNS IN § 337 INVESTIGATIONS ...............4
 
A.
 
A Clear Public Interest Test Would Increase Consistency Among the Commission’s Decisions and Facilitate Early Evaluation of Public Interest Considerations ......................4
 
B.
 
Policy Goals of the Administration Indicate the Importance of a Clearly Defined Public Interest Test ..............................................................................................................5
 
III.
 
CONCLUSION ..........................................................................................................................5
 
 
 1
STATEMENT OF PUBLIC KNOWLEDGE
Public Knowledge respectfully submits the following statement pursuant to 19 C.F.R. § 210.50(a)(4) and the U.S. International Trade Commission’s Notice of Request for Statements on the Public Interest, dated October 18, 2013, regarding Investigation No. 337-TA-847. Public Knowledge is a § 501(c)(3) public interest organization. Its primary mission is to  promote technological innovation, protect the rights of all users of technology, and ensure that emerging issues of technology law, including patent law, serve the public interest. In brief, Public Knowledge presents two separate recommendations. First, Public Knowledge suggests that the Commission consider two particular factors in its public interest evaluations, such as that to be conducted in the present investigation. These factors relate to the  public interest in promoting innovation, and advance the fundamental principle that patents should incentivize innovation. The suggested factors are (1) the relative proportionality between the features of the accused product and the patented component of that product, and (2) the ex-tent to which an exclusion order will potentially hamper further innovation. Second, Public Knowledge recommends that the Commission adopt a clear multi-factor test for evaluating the public interest considerations. This would promote consistency among the Commission’s decisions, assist parties and the public in early evaluations of the merits of inves-tigations, and comport with stated policy aims of the Administration.
I.
 
IN ASSESSING THE PUBLIC INTEREST, THE COMMISSION SHOULD LOOK TO BROAD CONSIDERATIONS OF PROMOTING INNOVATION
In assessing the public interest, many of the considerations will be well known or obvious from the statutory text or prior decisions. Such factors include the quantity of products on the market, the effect on health and welfare, and whether the patents at issue are standards-essential. In the interest of technology consumers, the Commission should consider the following two additional factors. Although they have not been historically the focus of the Commission in evaluating the public interest, these factors have a substantial impact on “competitive conditions in the United States economy” and “United States consumers,” and more importantly substantial
 
 2 impact on the fundamental principle that patent law should promote innovation.
A.
 
Whether the Patented Feature Is a Small Part of the Product to Be Excluded
It is age-old law that the value of a patent is proportional to the amount that patent con-tributes to a product.
Seymour v. McCormick 
, 57 U.S. 480 (1854) (“But one who invents some improvement in the machinery of a mill could not claim that the profits of the whole mill should  be the measure of damages for the use of his improvement.”). This proportionality informs dis-trict courts when they calibrate awards of reasonable royalties. The Commission does not have the flexibility to award a calibrated reasonable royalty. Consequently, it must apply exclusion orders judiciously, based on the relative value of the pa-tented elements. In cases where that value is relatively small, the Commission should avoid the heavy hammer of exclusion and instead defer to the district courts to use the scalpel of damages.
1
 By failing to consider proportionality and issuing exclusion orders on products based on even the smallest infringing part, the Commission risks denying consumers numerous valuable and useful technologies for the sake of protecting a minimal patent on a single aspect of a com- plex device. Aside from obviously reducing competition, disincentivizing innovation, and dis-serving consumers, it is entirely possible, as was the case in
 Baseband Processor 
, that some of those non-patented features implicate public health and welfare.
See
 
Certain Baseband Proces- sor Chips
, Inv. No. 337-TA-543, Comm’n Op. at 148-49 (June 19, 2007).
2
 Thus, to properly consider the public interest factors fully, the Commission must balance the specific component implicated by the patents at issue against other technologies provided by the products at issue.
B.
 
Whether an Exclusion Order Will Hamper Future Innovation
Generally, in evaluating the market effect of an exclusion order on a product, the Com-mission looks to other products contemporaneously on the market, to evaluate the extent to
1
 This conclusion is strengthened when the complainant is a non-practicing entity who ultimately  benefits only from settlements driven by exclusion, and not the exclusion order itself. Patent owners generally are free to pursue parallel district court litigation, and many of them do.
2
 Although, in
 Baseband Processor 
, the public safety applications used the patented networking technology, the public safety applications themselves did not infringe the patents at issue.
See
 
id.

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