Patent Troll Complaints at the ITC Threaten Consumers
By Mario H. Lopez, Hispanic Leadership Fund
More than a year into the COVID-19 pandemic and the array of challenges that it has wrought for Americans of all walks of life, one area that has met this unique challenge and demonstrated resiliency is our broadband networks. The Internet infrastructure has been largely successful in accommodating the massive spike in demand caused by remote work and distance learning.
Still, despite the strength of our networks and the obvious need for connectivity, the harsh reality is that millions of Americans still lack access to broadband and the devices needed to work and learn from home.
This connectivity challenge known as the “digital divide” has been widely discussed throughout the pandemic. Policymakers, thought leaders, and many key industry players have been proposing solutions to closing the gap and ensuring that all Americans are connected. Though a lot of work remains, the broadband industry has made significant progress in addressing COVID-19 challenges by offering relief measures such as discounted broadband pricing programs, mobile hotspots to the underserved, and connected devices to school districts.
The more expected challenges to increasing connectivity are compounded by external forces that may seem odd at first. Patent trolls, as I’ve highlighted previously, are a looming threat to broadband access.
The latest example involves Ericsson, a well-known Sweden-based telecommunications company, who recently filed a complaint with the U.S. International Trade Commission (ITC) against Samsung. The complaint alleges patent infringement by Samsung in many of its mobile devices and seeks to ban them outright from the entire U.S. market through an exclusion order.
Such a blanket ban of an entire company’s devices would be devastating for both consumer choice and efforts to bridge the digital divide.
Because of Samsung’s roughly 30% smartphone U.S. market share, an exclusion order would dramatically reduce the number of available connected devices, which many Americans rely on to manage their lives. The requested exclusion would have an even greater, and potentially more concerning impact on communities of color, as our communities disproportionately rely on wireless broadband connectivity and rely on Android devices like Samsung more frequently than other devices like Apple. Maintaining consumer choice is of course critical for price sensitive communities during these difficult economic times.
Ericsson has no ability to fill the market gap its case could cause because it does not manufacture or offer smartphones or tablets or other connected devices, meaning that fewer devices would be available for purchase. Basic economic principles teach us that when supply is low and demand is high, prices rise.
Ericsson’s troubling behavior is following the patent troll playbook, which is when a non-producing entity that uses patent infringement complaints aims to turn a quick buck via financial settlements aided by legal threats and suits. By targeting the vast majority of Samsung’s smart devices, Ericsson is clearly launching an aggressive litigious attack in an attempt to force Samsung to capitulate to a significant settlement. This is not a new strategy for Ericsson, either. The company has a long history of waging litigation wars against its competitors and licensees to manipulate negotiations.
The fact that the company has no viable solution to fill the device gap an exclusion order would create and cannot actually manufacture the devices it is seeking to exclude should raise alarms about what Ericsson’s real motives are in filing this complaint.
The result would hurt all consumers, and especially those from underserved communities. According to Pew Research Center, a quarter of Hispanics, for example, rely on a smartphone to access the internet. By excluding a large percentage of the smartphones in the market and inevitably raising prices of the devices that remain, the connectivity divide would almost certainly increase for underserved communities. This would limit access to education, job opportunities, telehealth, and other vital elements of life under the COVID-19 pandemic.
The goal of bridging the digital divide is to connect Americans to the internet and increase access to connected devices. The ITC should reject Ericsson’s reckless litigious strategy and stand up for the public interest. Issuing an exclusion order would incentivize a bad actor, while further depriving vulnerable communities across the country of connectivity. Truly, this would be a step in the wrong direction at a time when vulnerable communities can least afford it.
Mario H. Lopez is the president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity, and prosperity for all Americans.