Videogame makers conceded console technological protection measures (TPMs) and other design decisions can impact repairs, commenting April 30 to the FTC's right-to-repair proceeding. The agency posted comments Monday in part after our Freedom of Information Act request for all such comments. The FTC, which hadn't fulfilled our FOIA request, didn't comment on whether the filings just released are all of them. "TPMs and other design choices reflect a necessary weighing of multiple risks," said the Entertainment Software Association, which noted its members include Microsoft, Nintendo of America and Sony Interactive Entertainment. "As a practical matter, the use of TPMs tends to limit the ability to make certain types of repairs to consoles and other products to authorized parties." ESA noted the Digital Millennium Copyright Act prohibits "tampering with the digital locks that copyright owners use to protect this software." "Despite these design decisions" of component integration and cutting manufacturing costs and prices as well as energy use, consoles "generally do not require proprietary tools to open or repair them," the group said in docket FTC-2019-0013. "Compatible tools, such as tri-wing screwdrivers, are inexpensive and widely available." On adhesives, which other commenters that released their filings raised concerns about, console makers sometimes use them "to optimize product design and for safety reasons," ESA said. "Adhesives serve an important safety function in preventing access to lithium-ion batteries, which present special safety considerations (both for repair and proper disposal)." Batteries also came up in the proceeding (see report in this issue.) Consumer Reports, whose comments also were just posted, "does support right to repair generally," a spokesperson emailed when we asked about CR's principles on this matter. "We have been advocating for bills in multiple states." Many states recently introduced such legislation, but some consumer tech interests oppose them (see 1903190031). ESA couldn't immediately provide us with its own right to repair principles, beyond its intellectual property concerns. CR has "developed a model state law, and are working to help enact effective right-to-repair laws in a number of states, including co-sponsoring a bill currently under consideration in California," it said: "Adverse reliability reports" to the product research and ratings provider "demonstrate the common consumer experience of having products break and need repair, and the importance of having convenient and affordable options to obtain repair." CR's model state law is here. Last week, a representative of the group testified for a New Jersey digital right-to-repair bill. It would "require manufacturers to make basic technical information and repair protocols available to independent repair shops and consumers, so consumers can more easily and cheaply get their digital devices repaired, and in some cases, fix the devices themselves," the group's spokesman noted.

Roku components such as the Roku Streaming Stick infringe three Wi-Fi patents held by Aegis 11, alleged (in Pacer) the Luxembourg technology company Friday in U.S. District Court in Wilmington, Delaware. The patents were granted in January 2005, February 2017 and December 2017 and were originally assigned to LG, which was “actively involved with standards-development organizations that developed industry standards relevant to LG’s product portfolios, including LG’s Wi-Fi enabled consumer electronic goods,” said the complaint. Aegis 11 acquired two of the patents from LG in April and the third from Sisvel International this month, it said. Aegis 11 “reserves the right” to treat Roku as “an unwilling licensee,” it said. That frees Aegis 11 to seek “the maximum available reasonable royalty damages” to compensate for Roku’s allegedly infringing activities, regardless of IEEE bylaws requiring the licensing of Wi-Fi patents on reasonable and nondiscriminatory terms, it said. Roku didn’t comment Monday.

The proposed List 4 Section 301 tariffs cover “all of Apple’s major products,” and would harm the company’s “global competitiveness,” said the iPhone maker in heavily redacted comments posted Thursday in docket USTR-2019-0004. “The Chinese producers we compete with in global markets do not have a significant presence in the U.S. market, and so would not be impacted by U.S. tariffs,” said Apple. “A U.S. tariff would, therefore, tilt the playing field in favor of our global competitors.” Tariffs also would reduce Apple’s “U.S. economic contribution,” it said. It vowed last year “to make a total direct contribution to the U.S. economy of over $350 billion over 5 years and we are pleased to report that we are on track to achieve this contribution,” the company said now.

About three of four smartphones imported to the U.S. come from China, and those would rise in cost by 22 percent under U.S.-proposed fourth tranche 25 percent duties, said a study for CTA, posted Tuesday in docket USTR-2019-0004. Tariffs would generate a 14 percent cost increase in phones shipped to the U.S. from all countries, it told the U.S. trade representative. The average phone retail price would rise about $70, it said. U.S. consumers will be “forced to reduce overall purchases by 28 percent,” it said. Tariffs on Chinese laptops and tablets imported to the U.S. under Harmonized Tariff Schedule’s 8471.30.01 subheading would raise pricing by 19 percent, said the study. It estimates the retail price of the average laptop would rise $120. Tariffs on videogame consoles imported from China would seriously harm U.S. consumers, said Microsoft, Nintendo and Sony Interactive Entertainment in rare joint comments by the rivals for the removing HTS 9504.50.00 goods from List 4. In 2018, more than 96 percent of the consoles imported to the U.S. came from China, they said. “It would cause significant supply chain disruption to shift sourcing entirely to the United States or a third country, and it would increase costs -- even beyond the cost of the proposed tariffs -- on products that are already manufactured under tight margin conditions.” Proposed penalties on semiconductors and the IT industry “will harm America’s tech companies, and are an ill-equipped tool” to curb China’s “problematic” trade practices, said the Semiconductor Industry Association. The administration’s previous tariffs “encompass nearly the entire semiconductor supply chain,” said SIA. The proposed List 4 tariffs “now threaten virtually all information technology products -- and purchasers of semiconductors -- including key consumer products,” it said. Also, Tuesday was Day II of USTR hearings on proposed List 4 duties, which will stretch to June 25 (see 1906180030).

Best Buy Chief Merchandising Officer Jason Bonfig asked that smartphones, laptops, computers, tablets, TVs, gaming consoles and computer monitors be spared President Donald Trump's threatened fourth tranche of tariffs on China-made products. "U.S. consumers have largely been shielded" so far, Bonfig said during Day 1 of Office of U.S. Trade Representative hearings. Bonfig said brands have been moving manufacturing out of China since enforcement efforts began, but it's a multiyear effort to find new sourcing, and that "cannot be done faster than it’s already going." IRobot CEO Colin Angle has firsthand knowledge of the intellectual property abuses Chinese companies engage in, he testified. But Angle asked the administration not to impose tariffs on the robotic goods it sources from China because his firm, which employs 700 in the U.S., is satisfied with China as a manufacturing platform. Angle, who said iRobot has more than 80 percent of the consumer robot market in the U.S., said his company won a patent-violation case in October, which meant Chinese factories can't export those goods to the U.S. IRobot was the victim of cyberattacks that resulted in intellectual property theft, and two Chinese citizens were indicted for the crime, said Angle. "Moving production to the U.S. would increase our cost of goods sold by 60 percent," Angle said. The Roomba, iRobot's flagship product, has had List 3 tariffs imposed on it since last summer, he said. Comments were due Monday to USTR on the List 4 duties (see 1906170050).

Hearings that begin Monday on the proposed List 4 Section 301 tariffs on $300 billion in Chinese imports not previously dutied will span seven full days through June 25 and include roughly 320 witnesses organized into 54 panels, said the Office of the U.S. Trade Representative Friday. Unless there comes a change in the terms of USTR’s May 17 notice announcing the List 4 tariffs, post-hearing rebuttal comments would be due July 2, seven days after the hearings end, marking the last deadline in the List 4 proceeding before President Donald Trump decides whether to put the duties into effect. USTR ordered List 3 into effect Sept. 24, less than three weeks after post-hearing rebuttals in that proceeding came due Sept. 6. CTA is scheduled to testify the afternoon of June 24 on the same panel as Christie Digital Systems, Jasco Products and JLab Audio. CTA had asked for that arrangement in its June 10 request to appear. Other notables on the witness list: (1) Element Electronics, Best Buy, Roku, iRobot and TCL North America all testifying together Monday on Panel 4; (2) HP testifying Tuesday on Panel 11; (3) the Retail Industry Leaders Association, National Retail Federation and Information Technology Industry Council appearing together Friday on Panel 38; (4) Fitbit appearing June 25 on Panel 50; (5) Sony Interactive Entertainment and Vizio testifying together June 25 on Panel 53.

CTA members identified 139 “line items for technology sector products” they want removed from the coming fourth tranche of tariffs on Chinese imports, commented the association, posted Tuesday in docket USTR-2019-0004. “The annual import value from China of those items alone totals over $167 billion, over half of the entire value of the products on List 4.” Any additional such tariffs would be “detrimental” to CTA members, but a 25 percent duty “could be catastrophic,” said the association. About 400 companies, associations or individuals filed requests by Monday's deadline to speak at hearings that begin June 17 on the proposed tariffs. It took six days of hearings last summer to accommodate the roughly 350 witnesses who testified on List 3. The Office of the U.S. Trade Representative is expected to release a List 4 hearing schedule Friday. “Increasing integration” of information and communication technologies in other sectors means “punitive tariffs” on technology products “will cause a ripple effect” of harm, the group said. Best Buy Chief Merchandising Officer Jason Bonfig will testify at the hearings “on the inefficacy of the proposed tariffs in achieving the objectives outlined by USTR,” said the retailer's lawyers. Best Buy urges USTR to remove laptops, smartwatches, PC monitors, TVs and videogame consoles from List 4. A second filing also cited smartphones.

Best Buy is “actively addressing the risks" of increases to tariffs on Chinese imports, it said in an SEC 10-Q Friday for fiscal Q1 ended May 4. “We have been able to minimize the impact on our business” from the List 3 tariffs “by accelerating purchases and working with our vendors,” it said. The company expects the Trump administration “to continue to seek input into potential further tariff developments,” including the proposed List 4 tariffs on all Chinese imports not previously dutied: “We intend to remain fully engaged in this process. We are also looking into a range of mitigation actions. While our outlook for fiscal 2020 includes the impact of List 3 tariffs increasing from 10% to 25%, we cannot predict, at this stage, the likelihood or impact of further expansion of tariffs to other products we sell or potential new tariffs.” Best Buy paid $125 million for health services company Critical Signal Technologies, completing it May 9, said the retailer. Best Buy disclosed the purchase as part of its connected-health strategy on its May 23 earnings call, but didn't discuss the terms (see 1905230038 or 1905230019).

Antitrust law shouldn’t be used to settle patent disputes, DOJ Antitrust Chief Makan Delrahim said Thursday amid Qualcomm’s antitrust appeal against the FTC (see 1905220035). Antitrust remedies aren’t the proper tools for settling fair, reasonable and nondiscriminatory (FRAND) terms disputes, he told the Organisation for European Economic Cooperation in Paris. Delrahim didn’t directly mention Qualcomm. Relief through contract law is the correct route for deciding proper FRAND interpretations, he said. “Sophisticated commercial parties often view FRAND commitments as a cost-control mechanism” but a more troubling trend is implementers using FRAND “as a source of leverage to demand subcompetitive royalty rates from the owners of patents for new technologies, under threat of litigation,” he said.

"Secondary impacts” of the third U.S. tranche of tariffs on Chinese products to customers of Texas Instruments “is very difficult to measure,” said Vice President-Investor Relations Dave Pahl. “Do we think tariffs are bad thing and do they ultimately destroy demand? Economic theory says it does. So that’s not something that we’re big fans of.” TI's "direct impact is real easy to measure, and it's a number very close to zero," Pahl told a Bank of America Merrill Lynch investor conference Tuesday. U.S. trade law for the semiconductor industry defines country of origin “pretty much” by where products are “assembled and tested,” said Pahl. “We do have assembly test operations in China,” plus a half-dozen other “assembly test sites,” mostly in Asia, so "we can move things around,” he said. The chipmaker hypothetically could move assembly and test operations completely out of China, “given enough time and energy,” Pahl said. “But I don’t think we’d want to. China continues to be an important market.” VTech Communications, which bills itself as “the major supplier” of cordless phones and baby monitors in the U.S., is “hearing” from its big retail customers “that they will pass along the costs directly to consumers” if the Trump administration makes good its threat to impose 25 percent List 4 tariffs on Chinese goods not previously dutied, commented the vendor Tuesday in docket USTR-2019-0004. “This will mean additional financial burden to many low to middle income family households” in the U.S. that “still rely on the corded or cordless telephone as their primary device for communication,” it said. Best Buy and Walmart are among VTech's biggest retail customers, and say 25 percent tariffs would mean price increases (see 1905230038). Wednesday, the Office of the U.S. Trade Representative extended by two weeks to June 15 the deadline when List 3 goods can enter the U.S. at the former 10 percent duty rate if they were already on the water when the tariff increase to 25 percent took effect May 10.