UNITED STATES INTERNATIONAL TRADE COMMISSION Washington, D.C.

Transcription

1 UNITED STATES INTERNATIONAL TRADE COMMISSION Washington, D.C. In the Matter of CERTAIN WIRELESS DEVICES WITH 3G CAPABILITIES AND COMPONENTS THEREOF Investigation No. 337-TA-800 SUBMISSION BY NON-PARTY MICROSOFT CORPORATION IN RESPONSE TO THE COMMISSION'S REQUEST FOR COMMENTS ON THE PUBLIC INTEREST

2 I. SUMMARY On behalf of our client, Microsoft Corporation, we respectfully submit this response to the Commission's request for comments on the public interest in light of the ALJ's Recommended Determination on Remedy and Bonding in the above-captioned investigation. See 78 Fed. Reg. 42, (July 15, 2013). The accused Nokia devices exclusively run Microsoft's Windows Phone 8 mobile operating system ("Windows Phone 8" or "WP8"), which is not accused of infringement in this investigation. A Commission remedial order directed to the accused Nokia smartphones would have significant adverse implications for competitive conditions in the United States smartphone market, U.S. consumers, and Microsoft. Microsoft's Windows Phone operating system is the only multi-vendor mobile operating system competitor to Google's Android. Exclusion of the accused Nokia Windows Phones, which account for of Windows Phone sales in the United States market, II. MICROSOFT'S STRATEGIC PARTNERSHIP WITH NOKIA Windows Phone is a relatively new entrant to the smartphone market, with the first WP8 devices introduced in October Windows Phone is the only mobile operating system platform in the United States, other than Android, that is available to multiple handset manufacturers (ios is proprietary to Apple and is only available with Apple hardware). As of the end of FY 2013, smartphones based on WP8 accounted for approximately percent of all smartphone sales in the United States, an increase from percent at the end of FY 2012,

3 . Microsoft projects that Windows Phone will have a U.S. market-share of percent by the end of FY 2014, rising to percent in Microsoft's strategic partnership with Nokia is a critical component of Microsoft's effort to inject competition and consumer choice into the United States mobile operating system market. That effort began with the development of Windows Phone 7, and continued with Windows Phone 8. Application developers, mobile operators and consumers expect compelling, polished, highly integrated mobile products, which include cutting edge handsets, software, services, applications and customer support. The strategic alliance of Nokia and Microsoft uniquely promotes Windows Phone as a viable alternative mobile operating system, in addition to Google's Android and Apple's ios. Nokia's more than 30 years of handset experience delivers the high quality mobile platform that Windows Phone needs to reach consumers; a significant factor in customer adoption has been that Nokia devices are known for their technical excellence, innovation, and cutting-edge design. 1 Microsoft has invested and continues to invest heavily in supporting the development, sales and marketing of Nokia Windows Phones in the United States, in the form of engineering and marketing support. In fiscal year 2013, the Microsoft Windows Phone division employed an average of full-time equivalent employees in the United States dedicated to the research, development, engineering, and design of WP8, with full-time payroll exceeding $. 1 See, e.g., Best high-end smartphones for the holidays, Review of Nokia Lumia 920, CNET 2012 HOLIDAY GIFT GUIDE (Nov. 30, 2012, 4:36 PM PST), ("[t]he most advanced Windows Phone yet" because "[i]t has a gorgeous display, a speedy dual-core processor, and its 8.7-megapixel camera masters low-light shots. In addition, it integrates voice navigation and wireless charging"); Zach Epstein, The best smartphones of 2012: AT&T, Review of Nokia Lumia 920, BGR MEDIA (Dec. 5, 2012, 10:50 AM), ("Microsoft's platform is a breath of fresh air in a market dominated by two giants..., the Lumia 920 is one of the best Windows Phones that has ever been built"). 2

4 Microsoft invested approximately $ in domestic WP8 research and development activities in FYs 2012 and 2013, with an additional $ in the United States in sales and marketing support for Windows Phone,.. III. AN EXCLUSION ORDER DIRECTED TO NOKIA SMARTPHONES WOULD HARM COMPETITIVE CONDITIONS IN THE UNITED STATES, UNITED STATES CONSUMERS, AND MICROSOFT As previously noted, Nokia accounts for percent of all Windows Phone devices sold in the United States. The adoption of Windows Phone in the marketplace owes much to the uniquely integrated nature of Nokia's products and the Windows Phone operating system, which provides a polished and consistent experience that other operating systems do not always offer. In addition, Windows Phone handsets offer Live Tiles, which allow users to personalize the handset's Start screen with photographs, people, apps, music, games, and more, using Live Tiles of different colors and sizes. Windows Phone also offers the Live App feature, whereby Live Tiles display up-to-theminute information such as weather, news and flight times. 3

5 From a consumer perspective, remedial orders barring the sale of Nokia smartphones in the United States would also significantly harm Microsoft's competitive position relative to Apple's ios and Google's Android operating systems. Microsoft represents the primary remaining competition for the Apple/Google "duopoly" in the United States smartphone market. The adverse effects of such an exclusion order, which would instantly eliminate of Windows Phone handsets, harmful impact of an exclusion order directed to Nokia Windows Phone devices. 4

6 IV. CONCLUSION Remedial orders directed to Nokia smartphones that run Microsoft's Windows Phone 8 operating system would have a very significant adverse impact on competitive conditions in the United States smartphone market and on Microsoft's U.S. investments directed to Windows Phone. Microsoft respectfully requests that the Commission, should it find a violation of Section 337, take steps to allow further briefing and the development of a much fuller evidentiary record on the public interest implications of remedial orders. The five-pages allowed for in this response are not sufficient properly to address the Commission's statutorilymandated consideration of the public interest factors. 5

7 Dated: August 7, 2013 Respectfully submitted, /s/ Jonathan J. Engler V. James Adduci II Jonathan J. Engler ADDUCI, MASTRIANI & SCHAUMBERG, L.L.P Connecticut Avenue, NW, Twelfth Floor Washington, DC Telephone: (202) Facsimile: (202) Counsel for Microsoft Corporation MSFT

8 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing SUBMISSION BY NON-PARTY MICROSOFT CORPORATION IN RESPONSE TO THE COMMISSION'S REQUEST FOR COMMENTS ON THE PUBLIC INTEREST (PUBLIC) was served, in the manner indicated below, this 7 th day of August 2013: The Honorable Lisa R. Barton Acting Secretary U.S. INTERNATIONAL TRADE COMMISSION 500 E Street, S.W. Washington, DC The Honorable David P. Shaw Administrative Law Judge U.S. INTERNATIONAL TRADE COMMISSION 500 E Street, S.W., Room 317 Washington, DC Brian Koo, Esq. Office of Unfair Import Investigations U.S. INTERNATIONAL TRADE COMMISSION 500 E Street, S.W., Room 401 Washington, DC VIA ELECTRONIC FILING VIA HAND DELIVERY (1 COPY) (patricia.chow@usitc.gov) (Brian.Koo@usitc.gov) COUNSEL FOR COMPLAINANTS INTERDIGITAL COMMUNICATIONS, LLC, INTERDIGITAL TECHNOLOGY CORPORATION, AND IRP LICENSING, INC. Maximilian A. Grant, Esq. LATHAM & WATKINS LLP 555 Eleventh Street, NW, Suite 1000 Washington, DC David S. Steuer, Esq. WILSON SONSINI GOODRICH & ROSATA 650 Page Mill Road Palo Alto, CA (#INTERDIGITALITC3@lw.com)) VIA HAND DELIVERY (WSGR-Interdigital-ITC3@wsgr.com) VIA FIRST CLASS MAIL COUNSEL FOR RESPONDENTS NOKIA CORPORATION AND NOKIA, INC. Scott J. Pivnick, Esq. ALSTON & BIRD The Atlantic Building 950 F Street, NW Washington, DC (Nokia.IDC.800@alston.com) VIA HAND DELIVERY

9 COUNSEL FOR RESPONDENTS HUAWEI TECHNOLOGIES CO., AND FUTUREWEI TECHNOLOGIES, INC. Sturgis M. Sobin, Esq. COVINGTON & BURLING LLP 1201 Pennsylvania Avenue, NW Washington, DC VIA HAND DELIVERY COUNSEL FOR RESPONDENT ZTE CORPORATION AND ZTE (USA) Jay H. Reiziss, Esq. BRINKS HOFER GILSON & LIONE 1850 K Street, NW, Suite 675 Washington, DC (ZTE337@brinkshofer.com) VIA HAND DELIVERY /s/ Sara J. Ferguson, Paralegal ADDUCI, MASTRIANI & SCHAUMBERG, L.L.P Connecticut Avenue, NW, 12 th Floor Washington, DC MSFT E-Filing.docx 2