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ITC Bars Imports of Infringing Smartphones but Effect Expected to be Limited

Wednesday, December 21, 2011
Sandler, Travis & Rosenberg Trade Report

The International Trade Commission has issued a limited exclusion order prohibiting the importation of smartphones from HTC that infringe a patent owned by Apple Inc. This order prohibits the unlicensed entry of infringing personal data and mobile communication devices and related software that are imported or manufactured abroad by or on behalf of HTC or any of its affiliated companies, parents, subsidiaries, licensees or other related business entities, or its successors or assigns. As a result of this action the ITC has terminated patent infringement investigation 337-TA-710 concerning these items.

The ITC adds, however, that based on its consideration of competitive conditions in the U.S. economy, this exclusion order will not take effect until April 19, 2012, to provide a transition period for U.S. telecommunications carriers. In addition, based on its consideration of the effect of the exclusion on U.S. consumers, the ITC is providing that until Dec. 19, 2013, HTC may import refurbished handsets to be provided to consumers as replacements under warranty or an insurance contract (whether offered by HTC, a carrier or a third party). The ITC notes that this exemption does not permit HTC to call new devices “refurbished” and import them as replacements.

Given the limited scope of the exclusion order and the delayed enforcement period, press sources state, the order is expected to have little practical effect. HTC officials said the ITC’s finding involves a “small part of the user experience,” and the company will likely be able to design it out of its devices by the time the order takes effect. Other manufacturers using the technology at issue can be expected to take a similar approach. Apple is also pursuing patent infringement cases against other manufacturers, in both the ITC and the court system, and is itself a target in a number of countersuits.

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