The Obama administration’s decision to overturn an international trade ruling against Apple Inc. —the first such veto in more than 25 years—promises to upend long-running battles over intellectual property in the smartphone market and change the strategies some of the world’s biggest technology companies use to defend their inventions.
Increasingly, those companies have been using patents to try to hobble rivals in a mobile-device market expected to top $400 billion this year. In 2012, the number of patent cases filed in the U.S. jumped nearly 30% from a year earlier to 5,189, according to consulting firm PricewaterhouseCoopers.
Apple and Samsung Electronics Co., in particular, have been engaged since April 2011 in patent fights throughout the world. In the case that provoked Saturday’s veto, the U.S. International Trade Commission in early June ruled that sales of some older iPhones and iPads should be banned because Apple infringed a Samsung patent.
Such orders, and the role of the ITC, have split the technology industry, raising questions about how best to promote innovation. Companies including Intel Corp. and Microsoft Corp. fear that injunctions stemming from patents on tiny features of their products could restrict their ability to bring improved devices to consumers. They and some other tech companies argued against ITC sales bans in such cases.
Other companies that make money from licensing patents, including Qualcomm Inc., take the opposite position. They argue that courts and trade bodies need to be able to impose sales or import bans or the value of patented inventions will be diminished.
“Once you get a patent, how do you know what it’s worth because your expectations are changing on a daily basis because of what the courts say, what the ITC says and now what the White House says?” said Christal Sheppard, a former ITC attorney who is now an assistant professor at the University of Nebraska College of Law.
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(Published Aug 5, 2013, in The Wall Street Journal.)