Another day, another patent troll filing an ITC complaint. In this case, Neodron—an Irish NPE—is trying to block the sale of products made by three prominent American tech companies: Amazon, Apple, and Microsoft. This isn’t Neodron’s first ITC case, and it remains a travesty that the ITC continues to allow foreign non-practicing entities to use a statute designed to protect American companies from unfair foreign competition.
But this post isn’t about the absurdity of an Irish company that doesn’t make anything abusing a trade court—one designed to protect American companies—to try to extract a huge payday from those companies. It’s about the ITC’s continued refusal to recognize that the world has changed. It’s about the ITC continuing to believe that smartphones have no significant impacts on public health, safety, and welfare.
In the Matter of Certain Personal Data and Mobile Communications Devices
Basically, the issue goes back to an ITC case in 2011—337-TA-710. In that case, Apple sued to block HTC products from entering the market. And the ITC found that excluding HTC’s smartphones wouldn’t create a public health or welfare issue. But they didn’t say that excluding smartphones didn’t impact public health or welfare—the ITC said that excluding HTC’s smartphones didn’t impact public health or welfare because there were adequate substitute Android and non-Android smartphones available.
Times Have Changed
That was 2011. Things have changed a bit over the intervening years. In 2011, LTE barely existed. Smartphones were only owned by around 35% of the American population. Barely anyone—2% of adults—relied on a smartphone as their sole internet connection. And Blackberry, Palm, and Windows smartphones were still a significant portion of the market.
Fast-forward to 2020. More than 80% of adults own a smartphone. Around 1 in 5 adults uses a smartphone as their sole form of Internet access, with poor and rural populations being more likely to rely solely on smartphones for access. That means that 20% of American adults rely on smartphones as their means for accessing basic services, medical information, finding jobs, transportation, everything that goes into modern life. Not to mention the increasing integration of mobile devices and medical data, with initiatives dedicated to enabling American adults to better understand and track their personal health.
It’s hard to argue that smartphones don’t impact public health and welfare in 2020.
But maybe this Neodron case is like the HTC case—maybe it’s a case where there are plenty of alternatives available?
Neodron Seeks To Exclude Vast Majority Of Smartphones
More than 75 million smartphones are sold each year in the United States. And if Neodron wins, 88% of them—66 million—would be blocked from being sold. Neodron claims that Neodron’s licensees could make up the shortfall, but that’s somewhere between laughable and impossible. Neodron only lists one licensee—Microchip—and they don’t make smartphones. It’s possible Neodron has a licensee who does make smartphones, but let’s be honest—can they make an additional 66 million each year?
Not to mention, can those licensees make an iOS device? An Android device? If not, the substantial investments made by consumers in software and accessories for those operating systems, as well as the significantly better availability of software for those platforms, means that Neodron’s licensees are likely to provide at best imperfect substitutes. As just one example, a member of my family has a portable EKG. The app that controls the device is only available for iOS and Android. If Neodron’s licensees can’t supply iOS or Android devices, that impacts their health care if they need a new phone.
The world has changed since the days when the ITC determined that the availability of smartphones doesn’t have significant impacts on public health and welfare. It’s time for the ITC to recognize that excluding these products is likely to have significant impacts on U.S. consumers.
It’s especially important for the ITC to address the public interest when the exclusion is on behalf of a foreign company that has never made a thing and is trying to exclude the vast majority of smartphones from the U.S. market.