To hear U.S. importers of patent-infringing components and products tell it, the U.S. International Trade Commission serves the ulterior interests of “patent trolls.” Nothing could be further from the truth.
Predatory patent infringers such as Apple and the domestic auto industry rage against the USITC because of the effectiveness of its remedy—exclusion orders under Section 337 of the trade law. These effectively prevent them from bringing in imports with patent-infringing parts that infringers would use to collect ill-gotten gains that deprive American innovators of the just fruits of their innovative labor.
This trade remedy is one of the remaining strengths of the U.S. intellectual property system. Big Tech firms, foreign interests and implementers of cutting-edge American innovators’ IP have weakened the U.S. patent system over the past few decades.
They’ve thrown patent eligibility law into chaos, created an Administrative State tool at the Patent Office with which they easily wipe out issued patents, and made it very hard to obtain a judicial injunction against infringers (a remedy still readily available for copyright and trademark), even after defending a patent’s validity and proving infringement in court.
Now these anti-IP special interests have redoubled their efforts to defang the USITC and tilt the patent, including the standard-essential patent, royalty regime in their favor. Such self-interested mischief threatens U.S. competitiveness and global technological leadership, especially in critical and emerging technologies vital the America’s national interests. As Locke’s Notebook has previously explained:
Foundational technology involves discovering and developing scientific and mathematical solutions to fundamental, complex problems related to [critical technologies such as] wireless Internet and telecom connectivity. This type of R&D is arduous, riskier, expensive and longer-term.
Research and development apply those solutions to form the system on which end-user devices operate. These key inventions lay the foundation of a new technological ecosystem, such as 5G itself in wireless connectivity.
These innovators pour a large part of their royalty earnings into R&D and pioneer invention to state-of-the-art levels. Like iconic inventors such as Edison, they focus on invention rather than manufacturing. Whom the infringers’ lobby disparages as “trolls” or nonpracticing entities are inventors who license their IP to get back to the lab.
In other words, technology implementers rely on foundational technology and standard-essential patents for their second-level, follow-on innovations to work and interoperate. The honest ones pay fair royalties for the privilege. The savvy ones pay royalties and respect the division of labor that brings forth ever-better innovation and enables products that run on others' inventions.
Thus, the USITC appropriately protects American innovators even from domestic implementers. For example, medical device innovator Masimo Corp. recently won USITC exclusion and cease-and-desist orders to halt importation of Apple Watches that infringe Masimo patents related to reading blood-oxygen levels.
Regrettably, denizens of the infringers’ lobby are behind property rights-undermining initiatives like the European Union’s Framework for Transparent Licensing of Standard Essential Patents proposal of a compulsory licensing scheme on SEPs.
Domestically, these interests propose destructive legislation such as H.R. 3535, the Advancing America’s Interests Act, which would weaken the USITC’s ability to issue exclusion orders that halt importation of U.S. patent-infringing goods; the Standard Essential Royalty Act, a compulsory licensing regime; and the Defending American Patents Act, which would deny U.S. innovators access to foreign courts to enforce their patents.
U.S. auto makers are innovative in their lane, but must rely on American innovators in other technological spheres if their vehicles are to have features that attract buyers.
Computer and wireless device firms are innovative in their lanes, but must rely on American innovators who engineer the technologies that make voice communications, GPS, apps and other product features operable and interoperable.
Instead of trafficking in dangerous, destructive nonsense, such as lumping U.S. foundational innovators into fictitious mischaracterizations and pushing anti-IP policies, Big Tech firms, the auto industry and other technology implementers should pony up and pay fair royalties for the patent-protected inventions they desperately need in their consumer products.