Public Interest Procrastination by ITC in Qualcomm v. Apple

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A pair of decisions at the ITC yesterday changed everything and nothing in the ongoing Qualcomm–Apple dispute at the trade agency. 

One decision was the Commission's Final Determination in Mobile Electronic Devices (Inv. 1065)—that's the case where the administrative law judge found in November that Apple violated Section 337 by infringing one of Qualcomm's patents but recommended against an exclusion order on public interest grounds.  The ALJ's recommendation set off a flurry of activity from advocacy and lobbying groups eager to condemn or defend not just the recommendation but the propriety of Section 337's public interest factors in general. 

But instead of opining one way or the other on the ALJ's public interest findings (that Qualcomm's requested remedy would harm competition, innovation, and national security), the Commission mooted the whole issue by declaring Qualcomm's patent to be invalid, thus reversing the initial determination's finding of violation.  With no violation, there can be no exclusion order regardless of the public interest implications.

But that's not the only ITC investigation going on between the parties, because Qualcomm actually filed two Section 337 complaints against the same Apple products (iPhones with Intel chips) based on different patents. 

So, on the same day that the Commission wrapped up Mobile Electronic Devices (Inv. 1065) in Apple's favor with a finding of no violation, a second administrative law judge issued an initial determination in Mobile Electronic Devices (Inv. 1093) finding that Apple violated Section 337 by infringing one of the patents Qualcomm asserted in the second case. 

Unlike the ALJ in 1065, however, the ALJ in 1093 recommended in favor of an exclusion order.  The ITC has not yet released a public version of the determination, so we don't know the ALJ's reasoning, but both judges heard essentially identical arguments about the same public interest concerns and came to different conclusions.

Under the law, the ITC may refuse to issue an exclusion order even when a violation occurs if "after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry." 

In practice, the ITC has only relied on this public interest test to deny an exclusion order three times in its entire history, and the last time was over 30 years ago.  So, different outcomes on the public interest question in the two investigations is not at all surprising, because ALJ's have virtually no guidance from the Commission on how to apply the test. 

The public interest factors were not part of Section 337 when the law was first enacted in the 1920s.  Originally, investigations were conducted by the Tariff Commission, which would make nonbinding recommendations to the president.  With the Trade Act of 1974, Congress created the ITC and gave it the power to issue exclusion orders on its own.  The purpose of this change was not to eliminate the review function previously served by the president, but to give that role to the ITC, which would do so according to the factors laid out in the statute.  And the test is not merely a formality or procedural quirk.  As Congress set out in the legislative history, these factors are "overriding considerations" and the public interest "must be paramount in the administration of this statute."

It's hard to see how the test could be "paramount" if it never makes a difference.  On the contrary, the current policy of the Commission seems to be to ignore a key part of its own statute.

At the end of the day, the result of Tuesday's decisions is that the ITC gets to put off taking a stand on the public interest at least until July 26 when it is scheduled to release its final determination in the 1093 investigation. Even then, it's quite possible the Commission will manage to avoid the issue entirely by overturning the ALJ's violation finding in 1093 just like it did in 1065.

Image credit: loyogallegos