Samsung Win Over Apple Deflated by Obama Administration Ruling

Samsung's June victory over Apple was muted this weekend, when a U.S. Trade representative undid a sales ban on older Apple iPhones and iPads.

Samsung won a major courtroom victory over Apple on June 4, when the U.S. International Trade Commission (ITC) ruled in favor of Samsung, putting an end to a drawn-out patent-infringement suit. But on Aug. 3, the Obama administration took the sting out of Apple's loss, to the frustration of Samsung and the South Korean government.

The ITC's ruling included a ban on the sale and distribution of certain Apple products—older, 3G-only iPhones and iPads. The determination was subject to a 60-day presidential review period, which Bloomberg reported June 5 "rarely happens."

Count this that rare time.

U.S. Trade Representative Ambassador Michael B.G. Froman, in a letter to ITC Chairman Irving A. Williamson over the weekend, undid the impact of the ITC ruling.

"After extensive consultations ... I have decided to disapprove the USITC's determination to issue an exclusion order and cease and desist order in this investigation," wrote Froman. "This decision is based on my review of the various policy considerations discussed above as they relate to the effect on competitive conditions in the U.S. economy and the effect on U.S. consumers."

Samsung is the largest business in South Korea, and that government has called the U.S. government's move "protectionism."

"We express concerns about the negative impact that such a decision would have on the protection of patent rights," South Korea's Ministry of Trade, Industry & Energy said in statement, according to an Aug. 5 report from Reuters.

In June, Gartner Research Vice President Carolina Milanesi called the decision a blow for Apple, but one it could "take on the chin."

Patent litigation expert Florian Mueller called the ruling a "major surprise," blogging that it was inconsistent with recent U.S. federal court rulings and opinions expressed by antitrust regulators and U.S. lawmakers, and that it ignored Apple's FRAND—fair, reasonable and non-discriminatory—terms argument.

"The ITC could not have done more to show to Congress that its granting of injunctive relief is far too permissive and a threat to the U.S. tech sector," Mueller wrote at the time.

Apple felt vindicated by the Aug. 3 determination.

"We applaud the administration for standing up for innovation in this landmark case," Apple spokeswoman Kristin Huguet told Bloomberg. "Samsung was wrong to abuse the patent system in this way."

Froman further said in his determination that a Jan. 8 policy statement from the U.S. Patent and Trademark Office makes clear that voluntary consensus standards are fundamental to the functionality of products that consumers rely on.

"The Policy Statement expresses substantial concerns, which I strongly share, about the potential harms that can result from owners of standards-essential patents (SEPs) who have made a voluntary commitment to offer to license SEPs on terms that are [FRAND], gaining undue leverage and engaging in 'patent hold-up," wrote Froman.

"The administration is committed to promoting innovation and economic progress ... [and] relief available to the owners of intellectual property rights ... is an important facet of achieving that objective," he continued.

Froman added that his determination isn't a criticism of the ITC's decisions, and the patent owner is still entitled to remedy and "may continue to pursue its rights through the courts."