Apple v. Motorola Mobility in ITC Section 337 Proceedings

In Part 1 of this two-part article we looked at an overview of International Trade Commission Section 337 Investigations as a weapon in preventing the importation of goods that allegedly infringe a US patent. This strategy is currently being played out by tech giants Apple and Motorola Mobility.

Apple v. Motorola Mobility
The strategy of coupling an ITC proceeding with an analogous patent infringement suit is precisely the tack taken by Apple, Inc. in trying to maintain its hefty US market share for the iPhone by precluding the importation of competing goods. Apple's proceedings before the ITC are part of a much larger battle between the parties, including patent infringement suits that Motorola brought against Apple in Germany and the Southern District of Florida, as well as another infringement filing by Apple against Motorola in the Northern District of Illinois.

On Friday, January 13, the ITC issued an initial determination finding that Motorola's Droid phones do not infringe three asserted patents and therefore refusing to block importation of the Droid phones.

Will the decision stand?
The decision of the administrative law judge in each ITC case is subject to review by the full six-member panel. The ruling given by the ALJ - called an initial determination - is reviewed and either approved or modified by the panel to become a final determination. The full panel will only overturn the initial determination if there was a clearly erroneous application of law, clearly erroneous finding of fact or if it conflicts with an existing policy of the ITC. That's not a very good standard if you're laying bets on a reversal from the ID to the FD. Assuming the ID stands, the only recourse left is to appeal the FD to the Court of Appeals for the Federal Circuit. In this particular case, assuming the decision stands with the full panel, I can't imagine Apple will appeal it. I suspect they'll proceed with the district court case and focus their energies there. An appeal to the CAFC would be far more likely by a losing respondent who had their imports shut down by the ITC. That is, if Motorola had lost, they'd be more likely to appeal to the CAFC.

How big a blow is this to Apple?
The ramifications of this loss for Apple with respect to the Northern District of Illinois case are yet to be seen. Suffice it to say, however, it certainly doesn't help. It won't give Motorola any incentive to settle the district court case and will only strengthen their belief that they are operating not only within the law, but in a way that won't lead to a finding of infringement or damages against them in the district court case. Is that a sure thing? No. But it's definitely some momentum in their direction. On the other hand, I don't see this as a critical blow to Apple's case by any stretch. Bottom line is, the goods are going to keep coming into the country. Now Apple will have to argue that Motorola has to pay them for that privilege.

From a market perspective, Apple's ITC play was an aggressive attempt to keep Motorola's team from even stepping onto the playing field to compete. The ITC said Motorola can play. Now Apple will have to compete to win, both in terms of market share and in terms of a final determination on the infringement issue.

In the grand scheme of this epic battle between two tech titans, this was a small battle, with the victory going to Motorola. The battle will wage on with both sides still standing strong.