UNITED STATES INTERNATIONAL TRADE COMMISSION

WASHINGTON, D.C.

In the Matter of

CERTAIN MOBILE TELEPHONES, Investigation No. 337-TA-____

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

PUBLIC INTEREST STATEMENT OF PROPOSED RESPONDENT

APPLE INC.
 On December 17, 2021, Apple filed a case in the Eastern District of Texas in which it seeks

“a binding judicial determination of FRAND terms for Apple to license Ericsson’s SEPs

globally” and committed that it is “also willing to have the Court adjudicate terms for Apple’s

patents declared essential to cellular standards (‘SEPs’) as part of the overall resolution of the

parties’ fair, reasonable, and non-discriminatory (‘FRAND’) licensing dispute, if Ericsson wishes

to do so.”1 In other words, Apple committed to be bound by whatever FRAND terms the court

determines for a cross license—and did so in Ericsson’s preferred forum.2 Indeed, the same day

it filed with the Commission, Ericsson affirmed to the Eastern District of Texas Court that the

Eastern District “is the parties’ chosen forum.”3

Apple’s case followed an offer by Apple in October 2021 to engage in binding arbitration.

And it also followed a significant licensing offer by Apple in November 2021, which was based

on the parties’ 2015 license and accounted for changes in each party’s respective shares of SEPs

since then.

Despite these facts, Ericsson claims, incredibly, that it “takes this step only after exhausting

all other options to conclude a license with Apple on … FRAND terms.” (Stmt. at 2.) That is

false—Ericsson first could have taken up Apple on its substantial FRAND licensing offer, second

on its offer to engage in binding arbitration, or third on its willingness to have the Texas court set

binding FRAND terms for a global cross license.

Ericsson’s pursuit of exclusion orders here and around the world conflicts with its FRAND

1
Complaint ¶¶ 5, 43, Apple Inc. v. Telefonaktiebolaget LM Ericsson, No. 2:21-cv-460 (E.D. Tex.
Dec. 17, 2021) (emphasis added).
2
On October 4, 2021, Telefonaktiebolaget LM Ericsson and Ericsson Inc. (collectively,
“Ericsson”) sued Apple in the Eastern District of Texas seeking a declaratory judgment that it has
“fully complied with its FRAND Commitment” in licensing negotiations with Apple. Original
Complaint ¶¶ 17, 66, Ericsson Inc. v. Apple Inc., No. 2:21-cv-376 (E.D. Tex. Oct. 4, 2021).
3
Ericsson’s Motion to Dismiss or, in the Alternative, to Sever and Consolidate at 1, Apple Inc. v.
Telefonaktiebolaget LM Ericsson, No. 2:21-cv-00460-JRG (E.D. Tex. Jan. 17, 2021).
commitments and is calculated to use the threat of disruption to Apple’s business to coerce supra-

FRAND royalties.4 As Ericsson concedes, it “contractually committed to license its portfolio of

patents that are essential to practice certain telecommunication standards” on FRAND terms.

(Stmt. at 2.) Apple has presented Ericsson with multiple paths to FRAND royalties for its entire

SEP portfolio.

Because any exclusion order would be detrimental to each of the statutory public interest

factors, the Commission should decline to institute an investigation. If the Commission decides

not to make that determination at this time, Apple respectfully requests that the issue of the public

interest be delegated to the ALJ for fact-finding and adjudication.

I. An Exclusion Order Would Harm Competitive Conditions in the U.S. Economy and
Consumers By Sanctioning Ericsson’s SEP Holdup Strategy.

Standard setting plays a vital role of promoting innovation and competition in the U.S.

economy by creating common platforms that allow access to the market and opportunities for

companies to innovate on top of standards. President Biden recently recognized that importance

by warning of the need “to protect standard-setting processes from abuse” and the danger of “the

potential for anticompetitive extension of market power beyond the scope of granted patents.”5

To that end, he directed the Attorney General and the Secretary of Commerce “to consider whether

to revise their position on the intersection of the intellectual property and antitrust laws, including

by considering whether to revise the Policy Statement on Remedies for Standards-Essential Patents

Subject to Voluntary F/RAND Commitments issued jointly by the Department of Justice, the

4
In response to Ericsson’s escalation and because Apple cannot unilaterally disarm, Apple has
sought an investigation of Ericsson and pursued patent claims in other jurisdictions. But as Apple
has offered Ericsson, Apple is willing to dismiss those cases in favor of the Texas case if Ericsson
does so as well.
5
Exec. Order No. 14036 § 5(d), 86 Fed. Reg. 36987 (July 9, 2021).

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United States Patent and Trademark Office, and the National Institute of Standards and

Technology on December 19, 2019.”6

Those agencies have done just that, issuing on December 6, 2021 an updated draft policy

that recognizes the risks of conduct like Ericsson’s.7 Although in draft form, the policy clearly

signals a renewed concern by the U.S. government with anticompetitive SEP holder conduct. For

example, it warns that conduct by SEP holders “to gain undue leverage in licensing negotiations

can cause multiple harms, including non-F/RAND patent royalties, increased costs, and delayed

introduction of standardized products and services.”8 The draft is a return to the enforcement

agencies’ longstanding view of the dangers of SEP holdup.9

Those concerns are all present here based on the harms that Ericsson’s tactics will cause to

U.S. competitive conditions and consumers. Indeed, when the U.S. Trade Representative

disallowed a SEP exclusion order in 2013, he pointed specifically to concerns about the “effect on

competitive conditions in the U.S. economy and the effect on U.S. consumers.”10 As a Department

of Justice official recently recognized, “[p]articipants in this ecosystem all suffer when individual

patent holders . . . act opportunistically or in bad faith. And consumers bear the brunt of it when

such behavior delays the introduction of standardized products or reduces investment in the

standards themselves.”11 Likewise, a U.S. Federal Trade Commissioner recently observed that

6
Id.
7
U.S. Dep’t of Justice, U.S. Patent & Trademark Office & Nat’l Inst. of Standards & Tech., Draft
Policy Statement on Licensing Negotiations and Remedies for SEPs Subject to F/RAND
Commitments, Dec. 6, 2021, https://tinyurl.com/2p8dxvez.
8
Id. at 2.
9
E.g., U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual
Property Rights at 35-36, Apr. 2007, https://tinyurl.com/23pnc2fy (warning of SEP holdup
danger).
10
Aug. 3, 2013 letter from Amb. Michal B. G. Froman to Hon. Irving A. Williamson, U.S. ITC at
3, https://ustr.gov/sites/default/files/08032013%20Letter_1.PDF.
11
Jeffrey Wilder, Antitrust Division Economics Director of Enforcement, U.S. Dep’t of Justice,
Leveling the Playing Field in the Standards Ecosystem at 10 (Sept. 29, 2021),
https://tinyurl.com/5bvcr6ds.

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holdup “involve[s] the abuse of market power to stymie consumer choice.”12 She also warned that

“[a]nticompetitive distortions to the bargaining process over FRAND royalties are especially

harmful to innovative small businesses and start-ups, the ‘little engines that could’ of our

economy.” While Apple does not fall within that category, if even Apple can be held up in this

way, it sends a chilling message to smaller companies lacking Apple’s experience and resources.13

Ericsson justifies its complaint by accusing Apple of “reverse hold-up” (Stmt. at 2), but

that claim is untenable on the facts set forth above. To be sure, Apple disagrees that Ericsson has

made a FRAND offer, just as Ericsson disagrees Apple has. But Apple has not insisted on sticking

with its offer and blocking the path toward resolution. Instead, Apple has repeatedly expressed its

willingness to license Ericsson’s SEPs on whatever terms are FRAND and has offered two other

binding paths for that to happen. In these circumstances, there is no holdout, there is only holdup.

II. An Exclusion Order Would Result in Other Dramatic Harms to the Statutory Public
Interest Factors.

Ericsson has identified various iPhones and cellular-enabled iPads and Watches as

potentially subject to its requested remedial orders. (Stmt. at 3.)

An exclusion order would impact the many millions of users of these products and cause

significant harm to competitive conditions in the U.S. economy, to the labor force, to consumers,

and to a broad array of businesses, schools, state and local governments, and non-profits. 14

Further, telehealth has grown exponentially with the COVID-19 pandemic and will continue to

grow, with tremendous implications for how patients and medical professionals use mobile

12
Rebecca Kelly Slaughter, Commissioner, FTC, SEPs, Antitrust, and the FTC at 5 (Oct. 29, 2021)
https://tinyurl.com/2p95fpau.
13
Id. at 3 (“the threat of exclusion might deter innovation investment in these firms in the first
place”).
14
See, e.g., https://www.wired.com/story/ipads-crucial-health-tools-combating-covid-19/;
https://www.apple.com/business/success-stories/; https://www.apple.com/education/docs/ipad-
in-education-results.pdf.

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devices, including the accused products, to access and provide essential health services. 15

Throughout the pandemic, Apple has helped develop various applications to assist governments

and public health agencies reduce the spread of the virus.16 The requested relief would reduce

public access to these health-related applications.

The exclusion of Apple’s iPhone, iPad, and Watch products also would cause enormous

disruption to the economy. This disruption would be heightened in the current climate where the

Omicron variant has led to an uptick in remote work and remote learning measures that have

increased businesses’ and schools’ reliance on Apple products.17 Moreover, Apple’s iOS platform

and App Store ecosystem have directly and indirectly created 2 million jobs, in every state in the

country. 18 Any exclusion order would threaten the valuable U.S. jobs that the iOS platform

generates.

III. Ericsson’s Licensees and/or Third Parties Cannot Replace the Subject Articles If
They Were Excluded.

Ericsson does not make any of the targeted categories of products, either in the United

States or elsewhere. Ericsson claims that its licensees “could quickly ramp-up production to

replace the Accused Products if they are excluded” (Stmt. at 4), but provides absolutely no

information supporting those claims. In any event, none of Ericsson’s licensees can manufacture

any “like” product because none offer products with Apple’s iOS operating system.

15
See, e.g., https://www.cdc.gov/coronavirus/2019-ncov/hcp/telehealth.html;
https://www.healthcareitnews.com/news/va-working-apple-broaden-telehealth-access-veterans.
16
See, e.g., https://www.apple.com/newsroom/2020/04/apple-and-google-partner-on-covid-19-
contact-tracing-technology/; https://www.apple.com/newsroom/2020/03/apple-releases-new-
covid-19-app-and-website-based-on-CDC-guidance/.
17
See, e.g., https://www.nytimes.com/2022/01/03/business/omicron-return-to-office.html;
https://www.apple.com/newsroom/2021/06/in-a-year-apart-apple-technology-helped-educators-
and-learners-stay-connected/.
18
https://www.apple.com/job-creation/.

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DATED: February 1, 2022 Respectfully submitted,

/s/ Mark D. Selwyn

Mark D. Selwyn
mark.selwyn@wilmerhale.com
WILMER CUTLER PICKERING
HALE AND DORR LLP
2600 El Camino Real #400
Palo Alto, CA 94306
Telephone: 650-858-6000
Facsimile: 650-858-6100

Joseph J. Mueller
Timothy D. Syrett
joseph.mueller@wilmerhale.com
timothy.syrett@wilmerhale.com
WILMER CUTLER PICKERING
HALE AND DORR LLP
60 State Street
Boston, MA 02109
Telephone: 617-526-6000
Facsimile: 617-526-5000

Michael D. Esch
WILMER CUTLER PICKERING
HALE AND DORR LLP
1875 Pennsylvania Avenue, NW
Washington, DC 20006
Telephone: (202) 663-6000
Fax: (202) 663-6363

Ruffin B. Cordell
FISH & RICHARDSON P.C.
1000 Maine Ave., SW
Washington, DC 20024
Telephone: (202) 783-5070
Fax: (202) 783-2331

Benjamin C. Elacqua
FISH & RICHARDSON P.C.
One Houston Center – 28th Floor
1221 McKinney
Houston, TX 77010
Telephone: (713) 654-5300

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 Fax: (713) 652-0109

Betty H. Chen
FISH & RICHARDSON P.C.
500 Arguello Street
Ste. 400
Redwood City, CA 94063
Telephone: (650) 839-5070
Fax: (650) 839-5071

Attorneys for Respondent Apple Inc.

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 CERTIFICATE OF SERVICE

I, Lanta M. Chase, hereby certify that true and correct copies of the foregoing, PUBLIC
INTEREST STATEMENT OF PROPOSED RESPONDENT APPLE INC., have been filed
and served on this 1st day of February 2022, on the following in the manner indicated:

The Honorable Lisa R. Barton  Via Electronic Filing

Secretary Via Hand Delivery (2 Copies)
U.S. International Trade Commission Via Overnight Delivery
500 E Street, S.W. Via Facsimile
Washington, DC 20436

Josh Budwin  Via Hand Delivery

McKool Smith, P.C.  Via Overnight Delivery
303 Colorado, Suite 200  Via Facsimile
Austin, Texas 78701  Via Electronic Mail
jbudwin@mckoolsmith.com

/s/ Lanta M. Chase

Lanta M. Chase