Granting Nokia's Lenovo Import Ban Would Harm 'Public Welfare,' Says PC Maker
Banning imports of Lenovo laptops, tablets and desktop PCs through an International Trade Commission exclusion order “threatens to create a supply gap, adversely affecting the public welfare, competitive conditions in the U.S. economy, and U.S. consumers,” commented Lenovo (login required) in docket 337-3466. Nokia’s July 2 complaint seeks the exclusion as the final remedy in a Tariff Act Section 337 investigation into allegations that Lenovo products and components infringe five Nokia patents.
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Four of Nokia’s “asserted” inventions on video compression are H.264 “standard-essential patents” (SEPs), said Lenovo Friday. The fifth describes user interfaces for better information searches through communications devices. Nokia committed to license SEPs to anyone on reasonable and nondiscriminatory (RAND) terms, said the PC maker.
The FTC is on record warning that SEP-based exclusions under Section 337 “may adversely affect competitive conditions and harm consumers,” said Lenovo. It cited a March 2011 FTC report on the “evolving” intellectual property marketplace and the need to align patent "remedies" with competition. The report recommended the ITC “consider these adverse effects in evaluating the public interest impact of proposed remedial orders,” said Lenovo.
Nokia “wrongly asserts" that its complaint "falls within the exceptional circumstances that would permit an exclusion order based on RAND-encumbered patents,” said Lenovo. “It does not allege that Lenovo has refused to pay a royalty that a U.S. court has already determined to be RAND or that no U.S. court would have jurisdiction over a RAND dispute between Nokia and Lenovo -- because neither is true."
Lenovo “accounts for a substantial volume” of all PCs supplied to the U.S. market, it told the ITC. It has 4,200 U.S. employees and “generates more than $1 billion annually in economic activity in North Carolina alone,” it said. It also buys “more than $10 billion of goods and services from U.S. companies each year,” it said. Gartner ranked Lenovo third behind Dell and HP among top U.S. PC vendors, with 17.5% share in Q1.
Nokia, “by contrast,” claims no “cognizable U.S. presence or domestic industry activities,” and sells no computers “of any kind,” said Lenovo. “With respect to the current complaint, Nokia is simply a foreign patent owner focused on patent monetization.” Nokia didn’t comment Monday.
Granting Nokia the exclusion order it seeks “would block US consumers’ access to affordable Lenovo Chromebook computers used by teachers and students across the country" for schoolwork, collaboration, and remote learning, said Google Friday. Chromebooks are “especially well-suited for the school environment” because they allow students and teachers “to bring their personal settings and preferences to any Chromebook they sign into,” it said.
Lenovo is a “prominent player in the Chromebook market,” said Google. As most schools worldwide “have begun adopting online learning in the wake of the coronavirus pandemic, demand for mobile computing devices from many countries’ K-12 education sectors has been rising with Chromebooks currently seeing the highest shipments.”
Though other vendors also sell Chromebook vendors, the COVID-19 pandemic and subsequent move to remote learning in schools “has put significant pressure on the supply chain as schools nationwide place orders to try and support remote learning resulting in Chromebook backlogs.” Even for Chromebooks that have already been ordered, some school districts aren't expecting deliveries until September, it said.
The Computer & Communications Industry Association also came to Lenovo’s defense, commenting Friday against Nokia’s assertion that excluding Lenovo PCs won’t harm the public health and safety. “That does not reflect modern society,” said CCIA. “Computers are no longer optional entertainment devices.” They're the “main or even exclusive portholes through which nearly every American interfaces with nearly every aspect of modern life,” especially during the pandemic, it said. CCIA lists more than two dozen tech company members, Lenovo not among them.
The raised public interest issues “unique” to the SEPs in Nokia’s complaint “justify” the ITC allowing “additional time” to build a “public interest record” in the docket, said CCIA. Also, serious “enforceability” issues “justify early resolution in order to protect the public’s interest in preventing abusive ITC litigation,” it said.
As coronavirus cases continue to spike in the U.S., excluding laptops and desktop PCs used for telework and remote learning “threatens public health and safety by limiting the ability of the public to engage in social distancing,” said CCIA. “For this reason alone, building a robust public interest record is necessary.” Even if the COVID-19 crisis is resolved by the time an import ban is declared, “exclusion would likely harm ongoing measures to limit future pandemics.” It fears a ban would limit the public’s access to telework devices, increasing their pricing, it said.
Nokia “ignores the significant competitive and consumer harms caused by exclusion orders based on SEPs,” said CCIA. Import bans not involving SEPs “give defendants a choice” of licensing the patent or designing around it, it said. “Design-arounds of SEPs are generally impossible without becoming incompatible with the standard.”