Apple Dodges One Import Ban in Qualcomm Fight,
Faces Another
Qualcomm Inc. has fired multiple legal shots at Apple
Inc. aiming to use patents to get
an import ban on the iPhone. In separate rulings Tuesday, one hit and one missed.
The U.S.
International Trade Commission on
Tuesday, 26 March 2019 invalidated a Qualcomm patent for a battery-saving feature.
Earlier in the day, a separate trade judge said Apple infringed a different Qualcomm
patent and recommended certain older models of the iPhone be banned.
The commission is scheduled to release a final decision
in that case in July.
The cases are among some 80 worldwide
between the companies in a dispute that’s lasted more than
two years. Qualcomm is hoping a victory, particularly an import ban, could give
it greater leverage
in technology licensing negotiations. Qualcomm says it’s
due billions of dollars in unpaid royalties on the iPhone as the two tech giants
argue over the value of the chipmaker’s patents.
The Cupertino, California-based
Apple denied infringing any of the patents in the two cases and claimed Qualcomm
is trying to shut its only U.S.-based competitor out of the market, something Apple
argues will hinder the development of the fifth-generation of mobile communications.
In both cases at the trade agency, Apple argued that no import ban should be imposed even if a patent violation is found.
"We’re pleased the ITC has
found Qualcomm’s latest patent claims invalid, it’s another important step to making
sure American companies are able to compete fairly in the marketplace,” Apple said
in a statement following the second ruling. “Qualcomm is using these cases to distract
from having to answer for the real issues, their monopolistic business practices.”
Qualcomm, based in San Diego,
argued that the opposite is true. If it can’t enforce its patents, that will lessen
the value of its innovation and give rivals, particularly China’s Huawei
Technologies Co., a chance to gain greater
market share. Qualcomm has called the Intel products inferior, and accused Intel
and Apple of incorporating unlicensed Qualcomm inventions into the Intel chips to
improve their quality.
In the earlier case on Tuesday,
ITC Judge MaryJoan McNamara said she would be recommending
an import ban on certain models of iPhones, which are made
in China, according to a notice posted on the Washington agency’s electronic docket. The
judge found no violation of two other Qualcomm patents in the case.
Qualcomm jumped as much as much
as 2.6 percent in New York on that earlier ruling. Both stocks reflected the partial
wins and losses in extended trading following the commission decision. Apple was
up less than one percent while Qualcomm fell less than one percent.
In the case before McNamara,
Qualcomm contended that Apple iPhones with Intel Corp. chips infringed two patents
related to ways to improve the speed and quality of data downloads and one for a
power-saving feature. It’s seeking an order that would
ban imports of those iPhones. The judge’s finding of infringement related to the
power-saving feature, according to the notice. Her full findings aren’t yet public, and won’t be until both sides get a chance
to redact confidential information.
“We appreciate Judge McNamara’s
recognition of Apple’s infringement of our hardware patent and that she will be
recommending an import ban and cease and desist order,” Qualcomm General Counsel
Don Rosenberg said in a statement when the earlier notice came out. The company
had no immediate comment on the later-issued decision from the full commission.
The original complaint in the
McNamara case linked that patent only to the iPhone 7 and iPhone 7 Plus, but it was unclear which models would be affected by
this decision. If the ban only applies to those models, it could have a multibillion-dollar
impact on Apple for each year that it still offers those devices. The company will
probably discontinue them in the next two years.
The second decision announced
Tuesday targeted a broader range of iPhones, including the iPhone 7, iPhone 8 and
iPhone X, and only ones that had Intel chips. Models that had Qualcomm chips would not be affected. The commission’s full decision, which
sidestepped arguments for now over whether the legal battle between the two tech
titans has broader implications for the U.S. supremacy in the fifth generation of
telecommunications, is not yet public.
Apple, chafing under what it
considers onerous and expensive licensing requirements, has directed its contractors
to stop paying Qualcomm until the two sides can reach a new deal. It’s also turned to Intel to supply the modem chips on its newest
models.
Apple likely generated about
$58 billion from the iPhone in the U.S. in its 2018 fiscal year. The majority of
iPhone sales last year were from newer models like the iPhone X, iPhone 8, and iPhone
8 Plus.
By all accounts, Qualcomm’s technology
underpins all modern communications and it’s a large player
in the development of industry standards, spending billions of dollars on research
each year. It’s also richly rewarded -- the company makes
money off the chips in all mobile devices, and also gets paid for the use of its
inventions in chips made by others.
The Federal Trade Commission
has accused Qualcomm of using its patents on industry standards to shut out competitors
from the market and demand high licensing fees, and the two sides await a judge’s
ruling in that case. The patents in this case don’t relate
to standardized technology but Apple claims Qualcomm is using the ITC to maintain
monopoly power.
The cases are In the Matter of
Certain Mobile Electronic Devices and Radio Frequency and Processing Components,
337-1093 and 337-1065, both U.S. International Trade Commission (Washington).