Customs Gets Embroiled in the Smartphone Patent Wars

Smart Phone Patent Wars, Microsoft v. MotorolaThere’s another front in the Smartphone Patent Wars that you may not have heard of, or may not know much about: a battle with U.S. Customs & Border Protection (CBP) over whether Motorola can import certain smartphones. The issue stems from an exclusion order issued by the International Trade Commission after Motorola lost a patent infringement investigation instigated by Microsoft. Microsoft is suing CBP to force it to exclude some Motorola smartphones that CBP believes are not infringing and therefore not covered by the exclusion order.

Florian Mueller, Microsoft’s paid consultant, weighed in on this last Friday. He seems to feel that Microsoft has suffered some kind of injustice.

Unlike Florian, I have litigated at the ITC; although I’m no expert, I do have some familiarity with the process. I can’t agree with his take.

First, some background. At the ITC, Microsoft accused Motorola of infringing 7 patents based on the calendar syncing in some of its Android phones. Microsoft lost on all but one of the patents. But Motorola’s smartphones were held to infringe one patent, U.S. Patent No. 6,370,566, which the Commission found was not invalid.

The ITC issued a limited exclusion order, which directed CBP to exclude all Motorola phones that infringed 3 particular claims of the ’566 patent. This is the standard way the ITC writes its exclusion orders in patent cases; rather than naming particular products (which could be renamed or repackaged), it identifies the products as those which infringe specific patent claims.

CBP got the order and started interacting with Motorola to identify which phones were covered. Motorola in the meantime bought a license (intended to resolve the infringement) from a third party, which would have allowed Motorola to keep importing. In response, Microsoft terminated the third party’s license.

Motorola then changed its phones to get rid of the full ActiveSync feature (ActiveSync is the protocol Microsoft provides to let users sync other products with their Outlook calendars). The CBP decided that this change was enough to make the phones no longer infringing, and announced that it would let Motorola import phones without ActiveSync in them into the U.S.

Microsoft is unhappy with that ruling, and has filed suit in the D.C. District Court to force CBP to reverse the ruling and exclude Motorola’s phones anyway. In its Complaint, Microsoft claims that the phones can still sync using Google calendar, and allege they therefore still infringe.

There is an institutional problem: the CBP doesn’t have the expertise or the resources to make technologically complicated decisions about patent infringement. It has to rely on knowledgeable parties (that is, the company that makes the excluded products) for information and the ITC to tell it what to do.

Apparently, early on, Microsoft did accuse both ActiveSync and Google calendar on Motorola’s smartphones of infringement. But at the hearing, Microsoft only presented evidence about ActiveSync. After the hearing, Motorola admitted that it infringed, and just argued about the validity of the ’566 patent (an argument Motorola lost). Microsoft is arguing that that Google calendar infringes, and the exclusion order isn’t specific; therefore, all Motorola phones with Google calendar should be excluded.

What should CBP do? The official record (including the hearing, and some briefs that both parties filed before and after the hearing), has nothing to say one way or the other about Google calendar. The Commission’s review says nothing about Google calendar. But the Commission did say that Motorola could certify that its products do not infringe, because “in this case where the alleged infringement is based upon the accused devices’ inclusion of ActiveSync protocol, and CBP cannot easily determine whether or not Motorola’s mobile devices implement the ActiveSync protocol by inspection.” (See pages 20–21 of the Commission decision.)

That’s pretty clear language. According to the Commission, it’s just ActiveSync that was the basis of Microsoft’s infringement allegations.

Microsoft is basically asking CBP to go beyond the Commission’s opinion, and decide on its own that Google calendar on Motorola’s phones also infringes the ’566 patent.

Some of the discussion about this case has unfortunately been misleading, especially comments by Florian and others which characterize typical, routine discussions between CBP and the interested parties as improper. It’s always done that way; CBP talks to the parties separately.

If Microsoft is correct in its substantive claim, that Motorola is lying in its certification, Microsoft can go back to the ITC for help. (For example, it can ask for a general exclusion order, which would just bar all Motorola smartphones with certain features.)

It’s disputes like this that President Obama was addressing in the Executive Actions he announced last month. Here’s the President’s announcement:

Strengthen Enforcement Process of Exclusion Orders. Once the U.S. International Trade Commission (ITC) finds a violation of Section 337 and issues an exclusion order barring the importation of infringing goods, Customs and Border Protection (CBP) and the ITC are responsible for determining whether imported articles fall within the scope of the exclusion order. Implementing these orders present unique challenges given these shared responsibilities and the complexity of making this determination, particularly in cases in which a technologically sophisticated product such as a smartphone has been successfully redesigned to not fall within the scope of the exclusion order. To address this concern, the U.S. Intellectual Property Enforcement Coordinator will launch an interagency review of existing procedures that CBP and the ITC use to evaluate the scope of exclusion orders and work to ensure the process and standards utilized during exclusion order enforcement activities are transparent, effective, and efficient.

It’s certainly clear that there need to be better procedures to help the CBP deal with situations like this, which is why the President’s action was needed. This suit highlights how the CBP is in an impossible position; CBP shouldn’t have to make a decision about whether or not a product infringes a patent.

It’s a shame that CBP has to deal with this. Doesn’t it have more important business, like protecting the border from terrorists?

Seems like it’s just more collateral damage from the Smartphone Patent Wars.

  • FOSSrules

    Does Florian ever get *anything* right? Why does anyone quote him anymore? I really appreciate the clear indication that he is a paid Microsoft mouthpiece. I wish that other news sources would be so forthcoming about his obvious bias.

    • Przemysław Lib

      He isn’t paid only by MS. And he sometimes write normally. You can tell witch one is by the title of such posts. All posts that consider LOST cases by his clients, are OK generally (weighted with detailed descriptions on what can happen next… etc.).

      No its not bad joke. (And compare it to the posts that describe LOST cases of adversaries of competitors of his clients..)

      • NotFlorian

        He is paid by, among others, Oracle and Microsoft, but despite singing the praises of his employers and slamming all of their competitors, he claims that his opinions are entirely his own.

        Presumably it’s just a massive coincidence that “his own” opinions just happen to tally completely with the opinions of his employers.

        IMHO he is basically a paid shill. pay him as a consultant and all of a sudden his opinion will change to yours.

  • coldcustard

    Florian from what I have read is a paid blogger for anything that is against FOSS. He rants on behalf of Apple, Oracle, Microsoft and Nokia. All these companies are waging war against Google and any manufacturer that uses Android.

    • rkhalloran

      With Rob Enderle having been pretty well outed as a paid shill, the big IT companies seem to have rested their favor on Mr Mueller as their ‘objective third party’ to weigh in on the eeevils of F/OSS-based products.

  • MZ

    It’s reasonable to ask why CBP and import bans are involved at all here. These aren’t a bunch of fly by night overseas companies trying to import dodgy pharmaceuticals, counterfeit watches, or pirated movies. Rather, this is a commercial dispute between two cash-flush Fortune 100 companies both headquartered in the United States. The ITC/CBP system was intended to address the complexities of international trade, where manufacturers, exporters, and distributors may be long gone or unknown by the time a dispute is settled. There is no reason that this matter can’t be handled in ordinary federal courts with the same civil enforcement remedies as any other court order.