Docket Update: E-Cigarettes Come to the ITC, And So Do Standard-Essential Patents
Electronic Nicotine Delivery Systems and Components Thereof
On October 3, Juul Labs, Inc. filed a complaint at the ITC against eighteen respondents representing eight competing brands. It accuses them of infringing various claims of four different patents related to removable pods for e-cigarette devices. On the same day, Juul filed patent infringement lawsuits against all of the respondents in different federal district courts.
Like the accused products, Juul’s e-cigarette devices are manufactured in China. To show the existence of a domestic industry, however, Juul is relying on the fact that it “manufactures, through the use of contract manufacturers, its liquid nicotine and fills its pods” in the United States.
In its statement on the public interest Juul touts its recent rise to dominance in the U.S. e-cigarette market, its efforts to help people quit smoking, and its commitment not to sell or market its products to minors. Conversely, it describes proposed respondents as “bit players” selling “inferior copies” that are “ending up in the hands of underage users.”
Public Interest and FRAND Commitments
Respondents Apple and ZTE in the recently instituted LTE- and 3G-Compliant Cellular Communications Devices (Inv. 1138) submitted statements on the public interest pointing out that INVT’s patents in that investigation are standard-essential and should therefore not be allowed to form the basis for an exclusion order. INVT acknowledged in its complaint that the patents cover technology essential to operating 3G and LTE standards and that it is required to license those patents to all users on fair, reasonable, and nondiscrimination (FRAND) terms.
The ITC’s role in enforcing FRAND-encumbered standard-essential patents has been controversial. The Obama administration addressed the issue in 2013 when it vetoed an ITC exclusion order against late model iPhones in Electronic Devices, Including Wireless Communiction Devices, Portable Music and Data Processing Devices, and Tablet Computers (Inv. 794). In its official letter of disapproval, the U.S. Trade Representative warned “about the potential harms that can result from owners of standard-essential patents . . . gaining undue leverage and engaging in “patent hold-up”, i.e., asserting the patent to exclude an implementer of the standard from a market to obtain a higher price for use of the patent than would have been possible before the standard was set, when alternative technologies could have been chosen.”
Citing a complementary policy statement from the Justice Department, USTR noted, however, that “an exclusion order may still be an appropriate remedy in some circumstances, such as where the putative licensee is unable or refuses to take a FRAND license.”
The parties in LTE- and 3G-Compliant Cellular Communications Devices disagree on whether INVT fulfilled its obligation to offer a FRAND license—a question which (unless the case is terminated for other reasons) may be central to the ITC’s final decision in the investigation.
Other Newly Instituted Investigations
So far in October, the ITC has agreed to institute five investigations based on recently filed complaints. In addition to LTE- and 3G-Compliant Cellular Communications Devices (Inv. 1138), these include:
Strength-Training Systems and Components Thereof (Inv. 1136)