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Change is unlikely to impact contentious smartphone wars

The U.S. International Trade Commission (ITC) proposed this week a rules change that may rein in patent trolling efforts by foreign firms.  Under the new rules companies filing patent complaints will have to prove they have a "significant" presence in the U.S. before any preliminary injunctions (bans) are ordered.  Previously, this establishment of a "domestic standard" of enforcement was performed after the case concluded.

The smartphone patent wars have highlighted the growing use of ITC injunctions to damage competitors via import bans.  That practice stems from the 2006 Supreme Court ruling in eBay v. MercExchange [PDF], which made it harder to ban products due to infringement findings in federal court.  Companies quickly realized that instead of federal courts, they could simply use the ITC to do their bidding (or banning, in this case).  As the majority of commercial goods in the U.S. today are manufactured overseas or use parts that are manufactured overseas, such bans are highly effective in most cases.

The change should have little impact on ITC complaints from the smartphone industry -- for better or worse -- as most OEMs like HTC Corp. (TPE:2498) or Samsung Electronics Comp., Ltd. (KSC:005930) have significant domestic presences.  Rather, it should impact smaller firms from overseas who hold U.S. patents, but do not sell products or market in the U.S.

ITC office
The ITC has become a popular avenue for product bans. [Image Source: Wikimedia Commons]

Critics might view the plan as setting up barriers to free trade and offering favoritism to U.S. corporations over small overseas patent holders.

But many top U.S. tech corporations praised the change.  The ITC Working Group -- which includes representatives of Avaya Inc., Broadcom Corp. (BRCM), Cisco Systems Inc. (CSCO), Google Inc. (GOOG), Hewlett-Packard Comp. (HPQ), Intel Corp. (INTC), and Oracle Corp. (ORCL) -- called the shift significant.

ITC Working Group Executive Director Matt Tanielian commented, "Addressing this will require more than administrative fixes, but the pilot program is a step forward that could help limit costly and unnecessary patent cases."

A more serious change could be in the works if Congress (or the ITC itself) considers a rules change proposed by the White House, which would make it as hard to institute an ITC ban as a federal court ban.

Source: Reuters



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Barriers.
By drycrust3 on 6/25/2013 5:42:56 PM , Rating: 2
quote:
Critics might view the plan as setting up barriers to free trade and offering favoritism to U.S. corporations over small overseas patent holders.

quote:
Rather, it should impact smaller firms from overseas who hold U.S. patents, but do not sell products or market in the U.S.

There are several points to be made.
The first is I agree with the notion that this as setting up trade barriers. The problem here is a company, especially one that is successful outside of America, should hold American patents and trademarks to protect their IP simply because they are successful, to not do so would be foolish. There are two problems now facing them: The first is because they are successful American companies could easily want to copy their IP, get it manufactured outside of America, and then ship it into America and then to the rest of the world and sell it as their own, and the original company, even though they did all the right things to try and protect their work, has almost no right to stop this blatant theft.
The second problem the original successful company has is when they decide to enter the American market, this fact means they didn't have a presence in the American market. This company will be known to those with a presence in the American market, and those in the American market, especially those that copied their technology, will fear the arrival of that successful company and use the excuse "they hold American patents but don't have a presence here" to keep them out.
Another interesting point about this is what happens if the product isn't shipped in by ship or plane, but sent over the internet? Say a successful European software company or Asian movie maker happens to hold US patents, but doesn't actually have a US market presence. Because they are successful they decide to sell their products in America, but because of the difficulties in shipping in the stuff, they decide to transport it in via the internet. Will the ITC require American ISPs to block access to this company's IP address?




RE: Barriers.
By sbtech on 6/26/2013 6:16:17 AM , Rating: 2
You made some very good points drycrust.

At first glance, it seems the easy approach would be to move the patent system to WTO, as they should be regulating trade. But they are only as good as the commitment of the participating countries. And if the participating countries gets into a trade war by adding boundaries, WTO can't do much.

Not to mention, the process of patenting will be grinding to halt due to red tape and bureaucracy.

When they were teaching this whole land, labour, capital and entrepreneur in school, our professor used to say, that due to globalization and free movement of three of these components, markets should be constantly correcting the prices as we reach equilibrium through employment across the globe. Its 21st century, and we are still going in circles.

Anyway, this board is not the place for a debate macro economics.

Cheers


RE: Barriers.
By maugrimtr on 6/26/2013 9:55:47 AM , Rating: 2
Perfect, now you must be American or substantially American to hold a US patent. In other words, US patents have no legal basis when held outside of the US.

I await the matching European patents have no legal basis when held by American companies Directive by the EU. Have to stop all the patent trolls so fair is fair!

This entire move is a simple trade barrier to make damn sure foreign companies are incapable of seeking US patent protection. I trust the Republicans are up in arms over this disgraceful regulation of the world free market.


RE: Barriers.
By JPForums on 6/27/2013 9:13:33 AM , Rating: 2
I think you are confused. Nothing in the new rules sets up new barriers to trade. In fact, this makes it harder to set up barriers to trade (in the U.S.). Put simply a foreign company that does not sell products in the U.S. can not successfully seek an injunction in the U.S. on a company that does sell products in the U.S.

quote:
The first is because they are successful American companies could easily want to copy their IP, get it manufactured outside of America, and then ship it into America and then to the rest of the world and sell it as their own, and the original company, even though they did all the right things to try and protect their work, has almost no right to stop this blatant theft.
If they don't sell in the U.S., then they aren't losing money from sales the copycat makes in the U.S. market. As far as exporting to the rest of the world is concerned, U.S. patents aren't valid in other countries anyways, so this has zero bearing on injunctions or patent infringement suits in other countries. If the original company wants to pursue legal action in Germany, they should take it up with the German legal system. How in the world would an injunction (or lack thereof) in the U.S. effect what is allowed to be sold in Germany?

quote:
The second problem the original successful company has is when they decide to enter the American market, this fact means they didn't have a presence in the American market. This company will be known to those with a presence in the American market, and those in the American market, especially those that copied their technology, will fear the arrival of that successful company and use the excuse "they hold American patents but don't have a presence here" to keep them out.
How exactly would this keep them out? The new rule only removes the original company's ability to file an injunction in the U.S. until they do have a U.S. market presence. This does not give the copycat the right to file an injunction on anyone as the copycat does not have ownership of the patent. There is absolutely nothing in the new rules that preclude the original company from entering the U.S. market. There is also nothing to stop them from filing an injunction once they have a U.S. market presence. Finally, this does not stop the original company from filing a patent infringement case against the copycat. Oh, and as a side note, companies don't tend to like more competition in the market whether they are guilty of copying or not.

quote:
Another interesting point about this is what happens if the product isn't shipped in by ship or plane, but sent over the internet?
If money exchanges hands, then there has to be a company handling the exchange and currency conversion, hence a market presence.

quote:
Say a successful European software company or Asian movie maker happens to hold US patents ...
I may be reading you wrong here, but I would caution you not to confuse patents with copyrights.


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