Qualcomm Granted Ban On Sale Of iPhones In China But Apple Has An Easy Out
What a difference a few weeks make. Back in late November, Qualcomm CEO Steve Mollenkopf said that his company was "on the doorstep" of coming to a resolution with Apple over LTE modem licensing fees and patents. Qualcomm President Cristiano Amon echoed these comments late last week, adding, "We feel like we are probably near the end of this game — we have a lot of legal milestones approaching.
Well, it looks as though a quick and amicable resolution won't be coming anytime soon thanks to legal action in Qualcomm's favor that was executed today. The company announced that the Fuzhou Intermediate People’s Court in China has granted two preliminary injunctions against Apple. More specifically, the injunctions are against four Apple subsidiaries operating in China and bars the sale of several key iPhone products within the country.
The injunctions relate to two patents: one of which pertains to the adjusting and resizing photographs, while the other deals with app management when using a touch screen "when viewing, navigating and dismissing applications on their phones."
Notably, neither one of these patents has anything to do with LTE modems or communications technology of any sorts that the two companies originally butted heads over. Instead, this is a matter of Qualcomm using its considerable resources and patent portfolio to force a deal with Apple.
The injunctions bar the import, sale and offers for sale [in China] of the iPhone 6S, iPhone 6S Plus, iPhone 7, iPhone 7 Plus, iPhone 8, iPhone 8 Plus and iPhone X. Fortunately for Apple, its newly released iPhone XS, iPhone XS Max and iPhone XR are unaffected by the court order.
Interestingly, the ban (as you'll see from Apple's statement below) apparently has little teeth at all. The patents in question deal with software that was used on the iPhones prior to iOS 12. iOS 12 implemented design changes that nullify Qualcomm's claims. So, it would appear that as long as Apple's latest batch of the affected models are shipping with iOS 12 installed (which is most likely the case), the injunctions won’t have much of an effect (if any at all) on Apple’s iPhone sales in China.
This latest turn of events comes at a time when Apple stock has already been under immense pressure over concerns of stagnant sales and poor sales of the iPhone XR in particular. AAPL was down 1.7% on the news.
For its part, Qualcomm executive vice president and general counsel Don Rosenberg wrote:
We deeply value our relationships with customers, rarely resorting to the courts for assistance, but we also have an abiding belief in the need to protect intellectual property rights. Apple continues to benefit from our intellectual property while refusing to compensate us. These Court orders are further confirmation of the strength of Qualcomm’s vast patent portfolio.
Apple in turn chastised Qualcomm's latest move, writing in a statement:
Qualcomm’s effort to ban our products is another desperate move by a company whose illegal practices are under investigation by regulators around the world. All iPhone models remain available for our customers in China. Qualcomm is asserting three patents they had never raised before, including one which has already been invalidated. We will pursue all our legal options through the courts.
Apple and Qualcomm are currently set to appear in court on April 15th, 2019 to air their grievances.