Foreign Patent Troll Wants U.S. Trade Agency to Ban All Smartphones and Tablets
Back in June 2019, the U.S. International Trade Commission instituted an investigation into Touch-Controlled Mobile Devices, Computers, and Components Thereof (Inv. 1162)—a great example of the worst sort of Section 337 patent case possible.
The complainant is an Ireland-based licensing company named Neodron that was formed recently with the apparent sole purpose of litigating the asserted patents, which relate to the design and operation of touchscreen controllers. In addition to numerous lawsuits in federal district court, Neodron filed its complaint at the ITC seeking an exclusion order barring the importation of smartphones, tablets, and laptops made by Amazon, Dell, HP, Lenovo, Microsoft, Motorola, and Samsung. The case is currently pending before an administrative law judge and scheduled for trial in late March.
By any reasonable definition, Neodron does not operate or enable a domestic industry in the United States. It is a patent assertion entity in the business of litigation meant to secure licensing revenue from genuinely productive and useful enterprises. As such, Neodron would not actually benefit from an exclusion order except as leverage to force a settlement.
In order to pass the ITC’s domestic industry test, Neodron is relying on the investments of a third-party licensee. That licensee is Microchip Technologies, a U.S.-based company that sold the asserted patents to Neodron three months before the litigation was filed. Microchip makes, among many other things, touchscreen controllers for use in automobile displays, and would also gain nothing from an exclusion order because it does not compete with the respondents.
It’s also worth noting that the respondents almost certainly don’t make the touchscreen controllers that are in their devices but instead buy them from third-party suppliers. Nevertheless, Neodron’s litigation campaign is targeting the consumer device makers because they sell a higher value product and have deeper pockets. The ability to seek ITC relief in this case significantly augments the litigation-derived value of the patents by threatening to block the imported product regardless of the relative value of the patented technology.
And the remedy Neodron has requested would have a huge impact on American consumers and the U.S. economy. In its public interest submission to the ITC, Samsung noted that respondents “provided over 78% of the Android OS tablets and over 86% of the Windows OS tablets to the U.S. marketplace,” as well “over 74% of the Chrome OS PCs and over 85% of the Windows OS PCs” and “over 53% of all Android phones” including 97% of Android phones “in the premium and ultra-premium sectors.” Excluding these products “would effectively reduce the number of operating systems from three to one” by eliminating the bulk of non-Apple devices currently available.
Apparently not content to leave one operating system still available, Neodron has now filed a second ITC complaint seeking to exclude iPhones and iPads as well.
The new complaint filed on 14 February—Capacitive Touch-Controlled Mobile Devices, Computers, and Components Thereof—asserts a different but very similar group of patents against a similar group of respondents. This time Apple, Asus, LG, and Sony have been added to the list of companies whose smartphones and tablets face exclusion from the U.S. market.
So in the two investigations combined, the ITC is currently reviewing whether to block over 90% of all smartphones and over 90% of all tablets from the U.S. market. According to official trade data, Americans imported $96.8 billion worth of phones, tablets, and laptops in 2019. That’s putting a lot of economic activity on the line just so one foreign patent assertion entity won’t have to wait an extra 18 months for its lawsuits to finish in district court.