The R Street Institute, together with Public Knowledge and the Innovation Defense Foundation, submitted comments to the ITC to draw the agency’s attention to public interest problems arising from the possible exclusion of general computing devices in Audio Players and Controllers, a recently filed Section 337 complaint.  As noted in a previous post, Sonos has asked the ITC to block a broad range of Google products, including smartphones, tablets, and laptops based on alleged infringement of patents related to the management of wireless speakers through a software interface—patents that are directly infringed by American consumers using U.S.-origin software after the devices are imported.

Despite being required by statute to consider the effect of every exclusion order on four public interest factors (including consumer welfare and competitive conditions in the U.S. economy), the ITC is generally dismissive of the public interest.  In previous cases where evidence of serious potential harm was presented, the agency has sidestepped its statutory duty to consider the public by claiming that any negative effects were outweighed by the importance of enforcing intellectual property rights.

We point out in our public interest comments, however, that the requested exclusion order does not actually further any interest in the enforcement of Sonos’s patents.

First, the list of accused products is very broad and includes devices that have no real connection to the patented technology.

The complaint identifies not just audio-specific devices but also “networked display devices,” “networked hub devices,” “networked node devices,” “mobile phones, tablets, and laptops,” regardless of whether the products actually infringe any patents but so long as, being general-purpose computing devices, they are “capable of” infringing acts. Indeed, Sonos does not allege that these devices are imported with software necessary to perform any infringing acts, merely stating that they may be “capable of downloading and executing an app or other software.” The accused smartphones, tablets, and laptops can indeed be “used in homes or businesses to play and/or control the playing of music,” but that is certainly not their only function. They can also be used as cash registers, cooking appliances, fishing guides, newspapers, television sets, and anything else that can be done with software on a computer.

Second, we note that special public interest problems arise in cases where the alleged infringement is the result of domestic inducement, particularly when it leads to the exclusion of non-infringing products.

Under the Federal Circuit’s holding in Suprema v. ITC, the Commission exercises authority under section 337 to block imports based on post-importation activity that induces domestic infringement. This has allowed further ITC litigation involving patents like those in Sonos’ complaint, where the respondent’s alleged infringement is predicated on the use of a domestically distributed software application. Taken to its logical end, Suprema theoretically authorizes exclusion of the most staple of articles with overwhelmingly noninfringing uses, so long as someone in the post-importation distribution chain suggests using the article in an infringing manner and regardless of whether that infringing use is actually performed. Such cases can pose special problems for the public interest where, as in this case, the remedy of an exclusion order could cover products only tangentially related to the complainant’s patent rights or the respondent’s involvement in infringement of those rights. . . .

At a minimum, then, the Commission must seek evidence in the present investigation to assess the relative degree to which the accused products are used in an infringing manner postimportation. Given that many of the accused devices are general-purpose computing devices and many consumers do not have or desire the complex speaker system contemplated by the patents at issue, it seems likely that the vast majority of accused devices are never used for infringement at all. If that is the case, the public interest should weigh heavily against any exclusionary remedy.

Third, we urge the Commission to consider as part of its public interest analysis Sonos’s ability to fully litigate its dispute and enforce its patent rights in federal district court.

In order to most effectively promote the public interest in enforcement of patent rights, the Commission should require stronger evidence of harm to the enumerated public interest factors before denying an exclusion order in cases where the complainant lacks a viable avenue for redress in federal district court. By the same token, the obvious availability and propriety of district court litigation in a particular case should reduce any weight the Commission assigns to the complainant’s interest in enforcement through an exclusion order.

. . .

Sonos and Google are both American companies that import products designed in the United States and assembled abroad. Sonos filed a lawsuit in district court simultaneously with this section 337 complaint in order to resolve a licensing dispute over whether certain functions in Google’s U.S.-designed music streaming software entitle Sonos to collect patent royalties. According to news reports, Sonos also hopes to secure royalties from Amazon but has chosen not to include that company in this current stage of its litigation campaign. This behavior is evidence that complainant’s goal in filing a section 337 complaint is to secure adjudication of its patent rights rather than enforcement.

You can read the full comment here.

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