Apple steps up lobbying to change patent rules

Over the past decade, some of Apple's biggest regulatory problems have come from a little-known federal agency called the U.S. International Trade Commission. The agency's patent judges found Apple guilty of misappropriating innovations in smartphones, semiconductors and smart watches. And recently they forced Apple to remove health feature from Apple Watches.

Now the tech giant is fighting back. While defending itself against patent complaints before the ITC, Apple began lobbying lawmakers to help it rewrite the agency's rules.

The company campaigned throughout Washington state for legislation that would prevent certain patent owners from filing complaints before the ITC. She sought to influence language in committee reports that could affect how the agency scales sanctions. And he increased his lobbying power by bringing in one of the agency's former commissioners.

The lobbying effort comes as Apple is embroiled in a years-long legal battle with two U.S. medical device makers over Apple Watch technology. Businesses, AliveCor And Masimofiled an ITC complaint against Apple in 2021 for misappropriating innovations they had developed to measure the electrical activity of the heart and oxygen levels in people's blood.

After losing both cases, Apple this year, the technology to measure oxygen in the blood was removed in his watches, which violated Masimo's patent. She is appealing the ITC's decision. A similar sanction is pending as legal proceedings continue regarding the ITC finding that Apple violated AliveCor innovations with the electrocardiogram function of the Apple Watch.

Apple is trying to blunt the agency's signing power. Unlike traditional patent courts, where juries or judges typically impose fines, ITC judges can discipline a company that violates a patent by banning imports of the infringing product.

Since Apple manufactures all of its flagship devices overseas, a block on the import of its devices would be perilous for the company. To avoid this penalty in the future, the company says it wants the agency to put a product's public interest ahead of a ban. The company is betting that the court would then give more credence to Apple's argument that Americans would be harmed by an import ban because they would lose access to the communications and health features of iPhones and Apple Watches.

An Apple spokeswoman said current law requires the ITC to consider how the public interest might be affected before ordering an import ban. But he said public data showed that the agency had made public interest assessments in only a fifth of the cases heard since 2010. As a result, his lobbyists have spoken with the White House and congressional leaders on the ITC, as well as other issues such as privacy and domestic manufacturing.

Adam Mossoff, a patent law expert and professor at George Mason University, said Apple was misinterpreting the law, which requires the ITC to block a product if it believes it infringes a patent. An import ban is only supposed to be overturned if there is a proven threat to health or safety, he said. Blocking sales of an Apple device would not be considered harmful.

“The problem with their lobbying is that they are trying to neutralize a well-functioning court by closing its doors to Americans whose rights have been violated,” he said.

When Congress created what became the ITC in 1916, it wanted to protect American innovation by allowing the U.S. government to ban the importation of products with stolen technology. But as manufacturing has moved overseas, the federal agency's court system has become a forum for disputes between American companies.

ITC judges, appointed by the commission, hold hearings under different standards for patent disputes than those who govern district court cases. Cases are quick and compressed and can result in a judge punishing a patent abuser by blocking his products.

Before a ban goes into effect, a company found guilty can appeal to the White House for a reprieve. But it is rare for an administration, which oversees the agency, to go against a judge's recommendations.

Apple has become the leading example of how ITC can be used. Since the company manufactures almost all of its products abroad, judges who found it guilty of infringing patents on smartphones, semiconductors and smart watches say it should be punished by blocking the importing iPhones, iPads and Apple Watches.

Apple has largely escaped import bans. In 2013, the The Obama administration vetoed the ITC's plan to block iPhone imports after the agency determined Apple had violated one of Samsung's smartphone patents. In 2019, Apple agreed to pay a royalty to Qualcomm for certain wireless technology patents, thereby avoiding an ITC ruling that could have blocked iPhone sales. And after losing the Masimo case, Apple agreed to remove the offending health feature to avoid an Apple Watch ban.

For years, Apple has avoided the type of lobbying usual for a big company. It had a small office in Washington, staffed by just a few people and a single lobbying firm, said two people familiar with the company's practices. But as regulatory challenges have mounted, his policy team has expanded to include dozens of people and 11 lobbying firms.

Faced with patent complaints from AliveCor and Masimo, Apple's team in Washington prioritized lobbying to change the ITC. In 2022, it began working with the ITC Modernization Alliance, a loosely knit coalition of companies that includes Samsung, Intel, Dell. , Google, Verizon and Comcast. The group worked with members of Congress during the drafting of the Advancing America's Interest Act in 2019 and supported its reintroduction in 2023.

Supporters of the bill — Reps. David Schweikert, a Republican from Arizona, and Donald S. Beyer Jr., a Democrat from Virginia — promoted it as a way to curb abuse of the ITC by hunters of patents. This would prohibit patent owners from suing unless they have made a product using the patented technology or have already licensed that technology to someone else.

AliveCor and Masimo are medical companies that have focused on selling products to healthcare providers and consumers rather than licensing innovations to consumer technology companies like Apple.

Last year, Apple lobbyists filed three reports revealing they had campaigned for the bill, according to Open Secrets, a campaign finance research nonprofit. It has also expanded its lobbying ranks by hires Deanna Tanner Okunan old ITC Chair who works for the Polsinelli law firm. (The hiring had previously been reported by Policy.)

The lobbying campaign coincided with an attempt to argue in Washington that an ITC ban on Apple Watch imports would deprive people of a device crucial to their health, two people familiar with the lobbying said.

In addition to directly lobbying the legislation, Apple worked with a member of Congress to insert language on page 97 of a committee report for the 2024 appropriations bill, said Rep. Ken Buck, a Republican from Colorado. The text would require the ITC to review how it determines a product's value to the public before suggesting a ban and to report to Congress on that process.

“To me, it circumvented the legitimate process,” said Mr. Buck, who is leave Congress this month. He told Rep. Thomas Massie, a Kentucky Republican who sits on the Rules Committee, that he had 10 votes and would block the bill unless the language was removed. Mr. Massie's office confirmed that the wording had been removed at Mr. Buck's request, but declined to comment further.

An Apple spokeswoman disagreed with Mr. Buck's claims that his lobbying circumvented the legitimate legislative process. She said her public federal lobbying reports detailed how she worked on issues important to her products and customers.

The spokesperson also noted the Senate's adoption of a committee report containing a sentence expressing support for the ITC's thorough analysis of the public health implications of a product ban before proceeding with it. issue one, which is what Apple wants in the future.

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