Public Interest Comments: Qualcomm v. Apple and the Law of Patent Remedies

The ITC is currently scheduled to complete its review of the Final Initial Determination in Mobile Electronic Devices (Inv. 1065) by March 26.  In issuing his determination, the administrative law judge found infringement but recommended against an exclusion order on public interest grounds, stating that the requested remedy (blocking importation of iPhones with Intel chips but not Qualcomm chips) would give Qualcomm a monopoly in the baseband processor market, disrupt the development of 5G technology, and harm U.S. national security.  If the Commission upholds the finding that Apple's iPhone 7 infringes one of Qualcomm's patents, it will also have to consider ALJ Pender's recommendation and decide what remedy, if any, to impose.  

The investigation has attracted a lot of attention for a Section 337 case. Comments to the ITC from third parties about the public interest implications of issuing or not issuing an exclusion order have been submitted by 18 members of Congress; 3 retired or current federal appeals court judges; 15 law professors; and numerous policy groups, trade associations, and private companies.

Many of those comments were submitted in November when the Commission was formally considering whether to review the initial determination.  I wrote about those comments at the time on this blog and elsewhere.

Now that the Commission is conducting its review, it has again solicited comments from the public.  Many of the submissions in this latest round, including R Street’s, reiterate or supplement arguments made by groups or individuals who participated in the previous round. But there were also a number of new commenters making new arguments.

These included seven submissions defending the reputation and testimony of Gregory Sidak, an expert witness for Qualcomm whom Judge Pender singled out as being unreliable.  There were also two submissions that raised an interesting new argument claiming it would be unconstitutional for the ITC to rely on any of Judge Pender's findings in the investigation because he was not properly reappointed as an ALJ after retiring in September but then returning to finish the ongoing 1065 investigation.

The argument over whether to issue an exclusion order in this investigation has often been a proxy for the larger debate over the role of injunctive relief as a remedy for patent infringement, whether at the ITC or in a court or law.  For example, patent law professors Kristen Jakobsen Osenga and Adam Mossoff lament that "patent rights . . .  have become mired in uncertainty, weakened, or outright eliminated" since the Supreme Court's decision in eBay v. MercExchange ended the practice of granting automatic injunctions for patent infringement.  They argue then that "denying an exclusion order in this case after finding that Apple infringed Qualcomm’s patents . . . contribute[s] to the 'death by a thousand cuts' that has placed the U.S. patent system into systemic distress in the past decade."

In contrast, a group of ten other law professors submitted a comment warning against automatic injunctions generally and applauding Judge Pender's reliance on the public interest test as mechanism to help the ITC tailor remedies to the circumstances of particular cases.  

U.S. law recognizes that the remedies needed to promote “the progress of science and useful arts” will vary from cases to case. Indeed, were it otherwise, patent remedies could impede the very progress that the patent system is designed to promote. If, for example, an “automatic injunction” rule applied, patentees could assert trivial patents covering small features against larger products containing those features.

. . . 

The ITC statutory framework provides normatively desirable flexibility for determining whether and how to issue an exclusion order. It does this through the public interest factors, which permit the ITC to conclude, for example, that an exclusion order would ill serve the public—even if infringement and validity were found. That is, the public interest factors protect against the “one size fits all” approach to remedies that would undercut innovation and harm economic efficiency. Sometimes the public interest analysis will compel “tailoring” the exclusion order. And sometimes—as Judge Pender concluded here—the public interest analysis will compel no exclusion order at all.

The ITC’s inflexible and generally excessive remedy is one of the main ways the agency disrupts the proper functioning of the U.S. patent system, and any application of the public interest test that brings ITC remedies more in line with district court would be a good thing.

One thing that’s missing from both the pro-injunction and pro-flexibility arguments in this debate is any recognition of Section 337's domestic industry and importation requirements. Both the public interest factors and domestic industry requirement are creatures of trade policy, designed to ensure that the ITC consciously pursues trade policy goals through its actions.  If the ITC can apply the public interest test today to bring its remedies more in line with modern patent jurisprudence, that is a happy accident.   

It's not clear to me whether critics of the public interest test also think it weakens the U.S. patent system when the ITC finds infringement of a valid and enforceable patent but denies an exclusion order because the patent owner doesn't operate or license a domestic industry or because the alleged infringer didn't import the accused product. The commission of an unfair act alone is not (and has never been) enough to justify an exclusion order under Section 337.  

Likewise, I'm unsure whether critics of automatic injunctions think importation of the accused product or the existence of a domestic industry are ever relevant considerations when tailoring a remedy. If they are not, is the public interest ever served by an ITC remedy when the parties can litigate in court?