UNITED STATES INTERNATIONAL TRADE COMMISSION

WASHINGTON, D.C.

In the Matter of

CERTAIN MOBILE TELEPHONES,

TABLET COMPUTERS WITH CELLULAR
CONNECTIVITY, AND SMART WATCHES Docket No. 3595
WITH CELLULAR CONNECTIVITY,
COMPONENTS THEREOF, AND
PRODUCTS CONTAINING SAME

ACT | THE APP ASSOCIATION’S CORRECTED STATEMENT ON THE PUBLIC INTEREST

 ACT | The App Association (App Association) hereby submits comments to the U.S.

International Trade Commission (USITC) in response to the USITC’s call for comments on public

interest issues in the complaint entitled Certain Mobile Telephones, Tablet Computers with Cellular

Connectivity, and Smart Watches with Cellular Connectivity, Components Thereof, and Products

Containing Same, DN 3595, issued on January 24, 2022.1 The App Association represents more than

5,000 small business app and technology development companies located across the United States that

create the leading software and hardware solutions used across countless consumer and enterprise use

cases. The ecosystem the App Association represents is valued at approximately $1.7 trillion and provides

5.9 million American jobs.2 Our small-business innovator members develop and leverage patented

technology to innovate and compete across sectors and use cases, driving the growth of the internet of

things (IoT). The App Association urges careful consideration of our views and how the USITC’s next

steps will affect the U.S. small business innovators during this critical time of development and

deployment for new fifth generation (5G)3 networks and internet of things (IoT)4 technologies based on

open standards, including those that utilize 3G and LTE connectivity standards. There are endless

1
87 Fed. Reg. 3585 (2022).
2
App Economy Report or Online Platforms and Market Power, Part 2: Innovation and
Entrepreneurship: Hearing Before the H. Subcomm. on Antitrust, Commercial, and Administrative Law,
116th Cong. 2 (2019) (statement of Morgan Reed, President, ACT | The App Association) available at
https://actonline.org/wp-content/uploads/Online-Platforms-and-Market-Power-Part-2-Innovation-and-
Entrepreneurship-1.pdf.
3
While there is no universal definition for a “fifth generation” (5G) mobile network, the term
encompasses the future wave of interoperable mobile networks being driven through various technical
standards bodies today. 5G networks are expected to utilize a wide range of spectrum bands, both licensed
and unlicensed, through new and innovative spectrum efficiencies and spectrum sharing arrangements
that will incorporate and augment existing 3G and LTE networks. Standard bodies such as 3GPP and
IEEE, among many others, continue to develop the requirements. See Dino Flore & Balazs Bertenyi,
Tentative 3GPP Timeline for 5G, 3GPP THE MOBILE BROADBAND STANDARD (Mar. 17, 2015), at
http://www.3gpp.org/news-events/3gpp-news/1674-timeline_5g; see also IEEE Standards Association,
Internet of Things, at http://standards.ieee.org/innovate/iot/.
4
Similar to 5G, IoT will involve everyday products that use the internet to communicate data collected
through sensors. IoT is expected to enable improved efficiencies in processes, products, and services
across every sector. In key segments of the U.S. economy, from agriculture to retail to healthcare and
others, the rise of IoT is demonstrating efficiencies unheard of even a few years ago. See, e.g.,
Department of Commerce Internet Policy Task Force and Digital Leadership Team, Fostering the
Advancement of the Internet of Things (Jan. 2017), available at
https://www.ntia.doc.gov/files/ntia/publications/iot_green_paper_01122017.pdf.

1
possibilities when it comes to how IoT devices will change Americans’ lives. For example, in healthcare,

a miniaturized and embedded connected medical device must have the ability to automatically

communicate bidirectionally in real time. This capability enables a healthcare practitioner to monitor a

patient’s biometric data and the patient to be able to communicate with a caregiver in the event of a

medical emergency. Other uses, such as sensors deployed to alert security of an unauthorized presence,

may only require the ability to send data to security professionals with minimal (or even no) capability to

receive communications. Further uses are imminent, including the mobile technology and software apps

used in enabling America’s first responders in a new planned national public safety broadband network.

With a predicted 25.2 billion connected devices deployed by 2025, almost every sector of the U.S.

economy will be affected ranging from finance and health to gaming and the global digital ecosystem.5

In this case, the complainant asserts with limited evidence that there would be minimal impact on

American consumers or competitive conditions in the United States by a limited exclusion order against

the alleged infringing articles.6 As the technologies at issue are utilized across IoT use cases and countless

others, the issuance of limited exclusion orders (LEOs) and/or a cease-and-desist order (CDO) requested

by Ericsson in this case would harm the public interest and the health and welfare of American

consumers. Therefore, the App Association opposes Ericsson’s requested remedies.

App Association members use technical standards, and specifically the interoperability they

provide, to support a wide variety of innovation and—absent abuses—to create and promote competition.

Standardization is particularly critical in today’s highly digitized markets. The benefits of these standards

only accrue when technical standards-setting processes operate as intended. However, when the system is

gamed, standardization processes carry significant competitive risks due to close technical collaboration

between horizontal and vertical market participants being involved in standard setting.7 From a competition

5
See App Annie, State of the App Economy 2020 (Jan. 2020), available at
https://www.appannie.com/en/go/state-of-mobile-2019.
6
Complaint at 3-5.
7
See e.g., Microsoft Corp. v. Motorola, Inc., 795 F.3d 1024, 1030-31 (9th Cir. 2015) (standardization
“creates an opportunity for companies to engage in anti-competitive behavior”); see also ETSI, ETSI
Guidelines for Antitrust Compliance, §§ A-B (ETSI is “a forum in which competitors interact with each

2
law standpoint, technologies selected for inclusion in a standard might be viewed as “winners” that are

collaboratively “whitelisted” by industry participants.8 Conversely, technologies that are not selected might

be viewed as “losers” that are collaboratively “blacklisted.”9 Accordingly, the use of patented technologies

of certain companies rather than those of other companies gives rise to thorny competition issues. This

gives way to some companies with favored technologies possessing unchecked and significant market

power to demand excessive royalties, exclude competitors, or otherwise take advantage of an industry’s

collaborative agreement to make products in a certain way (i.e., in accordance with the standard).10

To address these competition law issues, many standard-setting organizations (SSOs) adopted

patent policies that require members to license the patents necessary for the implementation of the standard

(known as “standard-essential patents” [SEPs]) on fair, reasonable, and non-discriminatory (FRAND)

terms. The FRAND promise—when kept—serves to minimize competition law issues associated with

standardization by providing that patent licenses will remain available to all market participants on

reasonable terms that promote a “level playing field” for competition.11 Although no company has an

other. Therefore, the market-related rules apply to the decisions which are adopted by the Institute as a
standardization body as well as with regard to the activities of Members within ETSI”; accordingly, “[t]he
imposition of discriminatory and unfair conditions by the dominant company, to any categories of users,
or any other company having contractual relationships with the dominant company, is abusive”),
available at
http://www.etsi.org/images/files/IPR/etsi%20guidelines%20for%20antitrust%20compliance.pdf.
8
See, e.g., ETSI, ETSI Guidelines for Antitrust Compliance, §§ A-B (ETSI is “a forum in which
competitors interact with each other. Therefore, the market-related rules apply to the decisions which are
adopted by the Institute as a standardization body as well as with regard to the activities of Members
within ETSI”; accordingly, “[t]he imposition of discriminatory and unfair conditions by the dominant
company, to any categories of users, or any other company having contractual relationships with the
dominant company, is abusive”), available at
http://www.etsi.org/images/files/IPR/etsi%20guidelines%20for%20antitrust%20compliance.pdf.
9
See Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 314 (3d Cir. 2007) (“standard[ization], by
definition, eliminates alternative technologies”).
10
See, e.g., Microsoft Corp. v. Motorola, Inc., 795 F.3d at 1030-31 (addressing “hold up” power of
patents incorporated into standards); FTC, Brief of Amicus Curie in Support of Neither Party 3-4, Apple
Inc. v. Motorola, Inc., Nos. 2012-1548 et al. (Fed. Cir. Dec. 14, 2012)(“[t]he problem of patent hold-up
can be particularly acute in the standard-setting context, where an entire industry may be locked into a
standard that cannot be avoided without infringing or obtaining a license for numerous (sometimes
thousands) of standard-essential patents.”).
11
ETSI, Intellectual Property Rights Policy, ¶3.1 (“[T]he ETSI IPR POLICY seeks to reduce the risk to
ETSI, MEMBERS, and “others applying ETSI STANDARDS . . . , that investment in the preparation,
adoption and application of STANDARDS could be wasted as a result of an ESSENTIAL IPR for a

3
obligation to commit its patents to a standard, where a company chooses to do so the FRAND promise acts

as a crucial constraint on the abuse of market power associated with SEPs. As the Ninth Circuit has

explained, the voluntary FRAND commitment “must be construed in the public interest because it is crafted

for the public interest,”12 as it is designed to protect against the competitive abuses and consumer harm.

App Association members rely on a competitive information and communications technology

hardware environment, specifically with respect to SEP licensing. Without this environment our members

would be significantly hampered in providing countless Americans (both in the consumer and enterprise

contexts) with leading edge software and hardware products and services that require an increasing amount

of bandwidth and computing power to meet customer demands. As standardized technologies provide a

baseline for the IoT innovations our members develop, an exclusion order in the case at hand stands to

impact those opportunities. In this case, we strongly urge the USITC to act consistent with, and to build

upon, existing global-consensus guidance providing clarity on what a FRAND commitment in the SEP

context means, and the effects of FRAND abuse on competition and innovation, reflected in the United

States and in other key markets.13 SEP licensing abuse represents both contract and competition law issues

affecting the public interest and an analysis underlying any exclusion order decision with respect to a SEP

must address both of these areas.

Consistent with existing law and precedent,14 the FRAND commitment must receive full

consideration in a USITC public interest analysis and in exclusion orders pertaining to SEPs, which are

only issued in extremely rare circumstances. Specifically, an exclusion order should only receive

STANDARD . . . being unavailable. In achieving this objective, the ETSI IPR POLICY seeks a balance
between the needs of standardization for public use in the field of telecommunications and the rights of
the owners of IPRs.”); ETSI, Guidelines for Antitrust Compliance, § B(noting that the competition
interests addressed by the ETSI Policies are “aimed at allowing firms to compete on a level playing
field.”).
12
Microsoft v. Motorola, 795 F. 3d 1024, 1052 (9th Cir. 2015).
13
https://actonline.org/wp-content/uploads/ACT-SEP-Gen-Position-Paper-sent-081619.pdf.
14
Letter to the Honorable Irving A. Williamson, United States International Trade Commission Chairman
re Disapproval of the U.S. International Trade Commission’s Determination in the Matter of Certain
Electronic Devices, Including Wireless Communication Devices, Portable Music and Data Processing
Devices and Tablet Computers, Investigation No. 33-TA-794, (August 3, 2013) available at
https://ustr.gov/sites/default/files/08032013%20Letter_1.PDF.

4
consideration when an infringing party/potential licensee is (1) demonstrably acting unreasonable; (2) is

unwilling to take a FRAND license; and (3) is acting outside of the scope of the SEP holder’s voluntary

FRAND commitment. The availability of such SEP exclusion orders can raise significant public health and

safety, as well as competition, concerns, and consequently are used sparingly and only under extremely rare

circumstances.15 Further, we note that SEP holders denied an exclusion order do not become

disenfranchised as they have the ability to recover monetary damages through the courts and partake in

standards-setting activities in an SSO (indeed, a promise to voluntary licensing on FRAND terms per an

SSO’s patent policy represents an agreement that monetary damages are in most cases the proper form of

relief for infringement save for extreme exceptions).

The App Association urges the USITC to fully examine the potential effects its decision will have

on SEP licensing if it alters the availability of exclusion orders with respect to SEPs (and, therefore, the

ability of the United States to compete in the growth of new IoT verticals using standards). Furthermore,

the USITC should examine the impact any such shift would have on key stakeholders across countless

consumer and enterprise use cases that rely on reasonable access to open standards as part of its public

interest analysis that considers the FRAND commitment.

Accordingly, the USITC should ensure that the FRAND commitment is considered in public

interest analyses when remedies are sought under Section 337 for SEPs, in order to fully appreciate the

impact of such remedies on the public health and welfare in the United States, competitive conditions in

the U.S. economy, the production of like or directly competitive articles in the U.S., and U.S. consumers.

Respectfully Submitted,

Brian Scarpelli
Senior Global Policy Counsel
ACT | The App Association
1401 K St NW (Ste 501)
Washington, DC 20005
February 1, 2022

15
The App Association notes that a party preserving its legal rights should not indicate unwillingness or
unreasonableness.