UNITED STATES INTERNATIONAL TRADE COMMISSION
`WASHINGTON, D.C.
`
`In the Matter of
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`CERTAIN MOBILE DEVICES AND
`RELATED SOFTWARE
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`Inv. No. 337-TA-750
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`APPLE’S STATEMENT ON THE PUBLIC INTEREST
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`
`
`
`
`Anne M. Cappella
`Jill J. Ho
`Brian C. Chang
`Weil, Gotshal & Manges LLP
`201 Redwood Shores Parkway
`Redwood Shores, CA 94065
`Tel: (650) 802-3000
`
`Matthew D. Powers
`Steven S. Cherensky
`Paul T. Ehrlich
`Robert L. Gerrity
`Tensegrity Law Group LLP
`555 Redwood Shores Parkway, Suite 360
`Redwood Shores, CA 94065
`Tel: (650) 802-6000
`
`
`
`Served on Behalf of Complainant:
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`Apple Inc.
`1 Infinite Loop
`Cupertino, CA 95014
`Tel: (408) 974-2042
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`Counsel for Complainant:
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`Mark G. Davis
`Brian E. Ferguson
`Robert T. Vlasis
`Edward S. Jou
`Christopher T. Marando
`Weil, Gotshal & Manges LLP
`1300 Eye Street, N.W., Suite 900
`Washington, D.C. 20005
`Tel: (202) 682-7000
`Fax: (202) 857-0940
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`I.
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`INTRODUCTION
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`This Investigation presents no public interest concerns significant enough that an
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`exclusion order or cease-and-desist order should not issue against the accused Motorola Accused
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`Articles. To the contrary, the public interest supports exclusion of these products. Apple has
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`been known for decades as a company that creates not just commercially successful products, but
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`products that fundamentally change the way people live and work. Apple has invested billions
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`of dollars annually in research and development for these products, including such industry-
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`defining products as the iPhone and the iPad.1 Apple has also been awarded numerous patents
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`and has received significant industry praise for its unprecedented and pioneering mobile and
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`tablet technology. Apple was first to the market in all of the Accused Article categories, with
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`Motorola trailing years behind. Indeed, Motorola has a smaller market share than Apple, spends
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`significantly less on R&D, and has achieved substantially less commercial success.2
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`Thus, if a violation is found, an exclusion order and cease-and-desist order would serve
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`the public interest by encouraging innovation and protecting Apple’s investments, the jobs of
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`thousands of employees devoted to these products, and the investments and activities of
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`numerous third parties such as Apple’s carriers, component and accessories suppliers, and
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`applications developers.3 Moreover, numerous alternative products are available in the market,
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`1 Apple invested a total of $5.5 billion in research and development, primarily in the United States, in fiscal years
`2009 through 2011. See Apple 2011 10-K, p. 7, available at
`http://files.shareholder.com/downloads/AAPL/1413414133x0x512287/5a5d7b14-9542-4640-841d-
`e047ec28bb96/AAPL_10K_FY11_10.26.11.pdf.
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`2 Motorola’s Mobile Devices Segment has lost hundreds of millions of dollars in the last two years alone. See
`Motorola 2011 10-K, at pp. 11, 49, available at http://investors.motorola.com/secfiling.cfm?filingID=1193125-12-
`67566&CIK=1495569.
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`3 See Certain Personal Data and Mobile Communications Devices and Related Software, Inv. No. 337-TA-710
`(“710 Investigation”), Public Interest Statement of the Association for Competitive Technology (Oct. 26, 2011)
`(urging that the public interest is not served by allowing importation of smart phones that infringe U.S. patent rights,
`and assuring the Commission that like articles were readily available).
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`1
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`including Apple’s own products, other Android-based products, and products based on non-
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`Android software platforms, such as Windows-based products. The availability of these other
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`products will reduce the risk of any meaningful disruption in the delivery of products to
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`consumers.
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`II.
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`HOW THE ACCUSED ARTICLES ARE USED IN THE UNITED STATES
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`The Motorola Accused Devices include mobile “smart phones” and tablet computers
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`running the Android operating system. The Android operating system was developed by Google
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`for smart phones and similar mobile devices. Several alternative operating systems to Android
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`exist, including iOS on the iPhone and iPad, Blackberry OS, and Microsoft Windows.
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`Exemplary Accused Articles include but are not limited to the “Droid” line of smart phones and
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`the XOOM tablet. These products are used for many of the same purposes as other smart phone
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`and personal communications devices, such as placing and receiving phone calls, sending and
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`receiving text messages and e-mails, accessing media content, and searching and browsing the
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`Internet.
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`III.
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`PUBLIC HEALTH, SAFETY, OR WELFARE CONCERNS
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`Apple is unaware of any public health, safety, or welfare concerns significant enough to
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`justify the Commission declining to issue a remedy in the event a violation is found. See, e.g.,
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`Certain Fluidized Supporting Apparatus, Inv. No. 337-TA-182/188, Comm’n Op. at 23–25 (Oct.
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`5, 1984) (denying temporary relief on grounds that hospital beds for burn patients could not be
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`supplied within a commercially reasonable time); Certain Inclined Field Acceleration Tubes,
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`Inv. No. 337-TA-67, Comm’n Op. at 21–31 (Dec. 29, 1980) (public interest in advancing atomic
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`research precluded exclusion of patented acceleration tubes).
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`2
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`IV.
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`IDENTITY OF LIKE OR DIRECTLY COMPETITIVE ARTICLES MADE BY COMPLAINANT
`AND THIRD PARTIES IN THE UNITED STATES
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`Motorola’s Accused Devices are made outside of the United States, and thus, issuance of
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`an exclusion order or cease-and-desist order would not result in a deficiency in the production of
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`like or directly competitive articles in the United States.4
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`V.
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`ABILITY OF COMPLAINANT AND THIRD PARTIES TO REPLACE THE EXCLUDED
`ARTICLES IN A COMMERCIALLY REASONABLE TIME
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`Apple and third parties should have the capacity to replace the excluded articles in a
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`commercially reasonable time. In fiscal year 2011 alone, Apple sold more than 72 million
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`iPhones and over 32 million iPads, generating in excess of $65 billion in sales, approximately
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`39% of which were in the United States.5 Apple sells these products in the United States through
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`its online stores, its approximately 245 retail stores, its direct sales force, and third-party
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`wholesalers, resellers, and value-added resellers.6 Apple is currently the largest smart phone and
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`tablet maker in the world.7 In the United States, Apple sold 45% of the smart phones during the
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`most recent quarter, more than all other Android-based suppliers combined.8
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`The smartphone and tablet market is highly competitive with regular launches of new
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`devices by Apple and third parties that could readily replace the excluded articles. For example,
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`HTC has publicly stated that “[a]s of June 30, 2011, HTC ranked third in the United States in
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`sales of all smartphones, with 20% of all U.S. smartphones. As of June 30, HTC has sold
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`4 See, e.g., 710 Investigation, Additional Views of Comm’r Pinkert on Public Interest et al, at 3 (Dec. 29, 2011).
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`5 See Apple 2011 10-K at pp. 8, 30.
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`6 See id. at p. 34.
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`7 See
`http://www.appleinsider.com/articles/12/01/24/apple_now_largest_computer_maker_sold_more_ipads_alone_than_
`hp_sold_pcs.html
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`8 Financial Times, FT Tech Hub, iPhone becomes top US smartphone – and other Apple superlatives (Jan. 25,
`2012), available at http://blogs.ft.com/fttechhub/2012/01/apple-superlatives/#axzz1mPAXAKsS
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`3
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`millions of smartphones running the Android operating system in 2011 alone. HTC is the
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`leading manufacturer of smartphones running the Android operating system, currently
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`accounting for 36% of Android phones in the U.S.”9 Similarly, Android’s software maker
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`Google publicly stated that “Android is the only freely-adaptable, open-source mobile platform
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`that is available for use and customization by any programmer or any handset maker. The
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`Android platform is highly customizable and expandable . . . . Android is described as a
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`generative platform because . . . it invites anyone to develop and sell software for consumers to
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`use with the platform. For example, the Android platform supports not only Google’s Android
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`Market service, but also alternative distribution channels such as application marketplaces
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`operated by large technology companies like Amazon, as well as amateurs with programming
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`skills and an Internet connection.”10
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`Numerous other smart phones are available in addition to those based on the Android
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`operating system. For example, Nokia shipped over 100 million handsets in fiscal year 2011 and
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`recently announced the launch of its first Windows-based phones, with a planned U.S. release in
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`early 2012.11 Additionally, Microsoft currently provides the Windows operating system for the
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`HTC Titan II, HTC Titan, Nokia Lumia 900, Samsung Focus, Samsung Focus Flash, Samsung
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`Focus S, HTC Arrive, HTC Radar 4G, Nokia Lumia 710, HTC Trophy, HTC 7 Pro, HTC HD7,
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`and Nokia Lumia 800.12 As another example, the widely-used BlackBerry line of smart phones
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`and tablets manufactured by RIM and running BlackBerry OS further provides alternatives to the
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`9 See 710 Investigation, HTC’s Public Interest Statement at 2 (Aug. 25, 2011).
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`10 See 710 Investigation, Google’s Public Interest Statement at 4-5 (Oct. 6, 2011) (emphasis added).
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`11 Adweek.com, Nokia Angles for North American Re-entry (Feb. 13, 2012), available at
`http://www.adweek.com/news/advertising-branding/nokia-angles-north-american-re-entry-138225.
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`12 See Microsoft, Windows Phone, Buy your phone, available at http://www.microsoft.com/windowsphone/en-
`us/buy/7/default.aspx.
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`4
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`Motorola Accused Articles.
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`In total, Motorola currently accounts for less than 14% of the U.S. cellular market, which
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`is insufficient to negatively impact the public interest in any significant manner.13 The OUII
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`Staff recently stated that public interest considerations do not outweigh excluding Android-based
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`devices made by HTC, who at the time held a 14% share of the Android-based smart phone
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`market.14 Indeed, given the highly competitive nature of the market and Motorola’s relatively
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`small market share, there is no indication that Apple and others in the industry would be unable
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`to replace the Accused Articles.
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`VI.
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`IMPACT OF POTENTIAL ORDERS ON THE U.S. ECONOMY AND CONSUMERS
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`Consumers currently enjoy a wide variety of options in the smart phone and tablet
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`markets. Motorola holds a minority share in these markets, and thus, consumers would likely not
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`face price increases or supply interruptions as a result of any exclusion order. Additionally, none
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`of the major mobile phone carriers provide service exclusively to Motorola devices and thus
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`should not be at risk of any major disruption in business.15 The broad range of available
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`substitutes for the Motorola Accused Devices—including other Android-based devices—
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`minimizes the likely impact of an exclusion order on the range of choices available to consumers
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`in the smart phone market.
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`13 Examiner.com, Android nears 50% of U.S. market share as smartphone use hits 40%, (Feb. 2, 2012) available at
`http://www.examiner.com/technology-in-national/android-nears-50-of-u-s-market-share-as-smartphone-use-tops-40-
`comscore.
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`14 See 710 Investigation, OUII’s Submission on Public Interest et al, at 14-15 (Oct. 6, 2011). The Staff later stated
`that a narrow exception should be made to allow importation of HTC’s infringing 4G devices for six months to
`lessen any disruption to that market. Id. at OUII’s Reply to Public Interest Submissions et al, at p. 12 (Oct. 17,
`2011).
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`15 See, e.g., Apple Inc., Where to buy iPhone, http://www.apple.com/iphone/buy/.
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`5
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`Dated: February 22, 2012
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`Respectfully submitted,
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`
`
`
`
`Mark G. Davis
`Brian E. Ferguson
`Robert T. Vlasis
`Edward S. Jou
`Christopher T. Marando
`Weil, Gotshal & Manges LLP
`1300 Eye Street, N.W., Suite 900
`Washington, D.C. 20005
`Tel: (202) 682-7000
`
`Anne M. Cappella
`Jill J. Ho
`Brian C. Chang
`Weil, Gotshal & Manges LLP
`201 Redwood Shores Parkway
`Redwood Shores, CA 94065
`Tel: (650) 802-3000
`
`Matthew D. Powers
`Steven S. Cherensky
`Paul T. Ehrlich
`Robert L. Gerrity
`Tensegrity Law Group LLP
`555 Redwood Shores Parkway, Suite 360
`Redwood Shores, CA 94065
`Tel: (650) 802-6000
`
`Counsel for Complainant
`Apple Inc.
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`6
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`CERTIFICATE OF SERVICE
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`I hereby certify that a copy of the foregoing was served on February 22, 2012 as indicated, on the
`following:
`Via EDIS and Hand Delivery
`The Honorable James R. Holbein
`Acting Secretary
`U.S. International Trade Commission
`500 E Street SW, Room 112-A
`Washington, D.C. 20436
`
`
`Via Hand Delivery
`The Honorable Theodore R. Essex
`Office of the Administrative Law Judge
`U.S. International Trade Commission
`500 E Street SW, Room 317
`Washington, D.C. 20436
`
`tamara.foley@usitc.gov
`Via Email and Hand Delivery
`Charles F. Schill
`STEPTOE & JOHNSON LLP
`1330 Connecticut Avenue, N.W.
`Washington, DC 20036
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`motorola750@steptoe.com
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`Counsel for Respondent Motorola, Inc.
`and Motorola Mobility, Inc.
`
`Via Email and Hand Delivery
`Lisa Kattan.
`Office of Unfair Import Investigations
`U.S. International Trade Commission
`500 E Street, S.W., Room 401
`Washington, D.C. 20436
`
`lisa.kattan@usitc.gov
`
`Office of Unfair Import Investigations Staff
`Attorney
`Via Email
`Charles K. Verhoeven
`Quinn Emanuel Urquhart & Sullivan LLP
`50 California Street, 22nd Floor
`San Francisco, CA 94111
`
`David A. Nelson
`Quinn Emanuel Urquhart & Sullivan LLP 500
`West Madison Street, Ste. 2450 Chicago, IL
`60661
`
`Edward J. DeFranco
`Quinn Emanuel Urquhart & Sullivan LLP
`51 Madison Avenue, 22nd Floor
`New York, NY 10010
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`Moto-Apple-750@quinnemanuel.com
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`Counsel for Respondent Motorola, Inc. and
`Motorola Mobility, Inc.
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`Via Email
`Robert T. Haslam
`Anupam Sharma
`Krista S. Jacobsen
`Covington & Burling LLP
`333 Twin Dolphin Drive, Suite 700
`Redwood Shores, CA 94065-1418
`
`Robert D. Fram
`Christine S. Haskett
`Samuel F. Ernst
`L.J. Chris Martiniak
`Winslow B. Taub
`Covington & Burling LLP
`One Front Street
`San Francisco, CA 9411105356
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`AppleCov@cov.com
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`Counsel for Complainant Apple Inc.
`_/s/ Michael P. Scanlan
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`_________
`Mike Scanlan
`Paralegal