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Apple, Qualcomm gird for next phase of patent battle after mixed US rulings

Split decisions by a U.S. government panel in acrimonious patent disputes between iPhone-maker Apple and chip supplier Qualcomm left their battle lines largely unchanged ahead of a U.S Federal Trade Commission ruling and a major trial next month.

The International Trade Commission, a government agency empowered to hear disputes over patented technology, issued a final ruling in one case that went in Apple’s favour while an ITC administrative judge made a non-binding recommendation that supported Qualcomm in another.

In both cases Qualcomm Inc sought to have imports of Apple Inc iPhone 7, 8 and X models containing chips made by Intel Corp banned. Because iPhones are made overseas, banning imports would choke Apple’s sales of the phones in the United States.

The two American companies have been locked for two years in a legal dispute in which Apple has accused Qualcomm of unfair patent licensing practices. Qualcomm has in turn accused Apple of patent infringement.

“Qualcomm is using these cases to distract from having to answer for the real issues, their monopolistic business practices,” Apple said in a statement.

After praising the first decision in its favour, Qualcomm said it would seek “reconsideration” of the second decision because it was at odds with a jury trial that the chip supplier won earlier this month in federal court in San Diego, where jurors found Apple infringed three Qualcomm patents.

“The Commission‘s decision is inconsistent with the recent unanimous jury verdict finding infringement of the same patent after Apple abandoned its invalidity defence at the end of trial,” Qualcomm said in a statement. “We will seek reconsideration by the Commission in view of the jury verdict.”

Gaston Kroub, a patent lawyer in New York not involved in the cases, said Qualcomm’s strategy at the ITC was to use the threat of an import ban to pressure Apple into reaching a settlement of all patent and antitrust claims between the companies.

“Qualcomm will be happy they got at least something, but at the end of day, with this final determination, Apple will be emboldened to think it can continue to ward off Qualcomm’s attacks,” Kroub said. “I don’t see anything here that would impact Apple’s defence strategy.”

The focus moves now to skirmishes that will likely be more important. A ruling is expected soon in an antitrust case brought by the U.S. Federal Trade Commission accusing Qualcomm of abusing a monopoly on mobile chip technology.

A case brought by Apple making similar claims goes to trial in April in California over allegations Qualcomm seeks inflated royalties for licensing its technology in violation of antitrust laws.

After the non-binding decision in Qualcomm’s favour was announced on Tuesday, Apple shares closed down 1 percent to $186.79 in regular trading, and Qualcomm closed up 2.4 percent to $58.

But the stocks reversed direction in late trading after the announcement of the binding decision that favoured Apple. Apple shares were up .73 percent and Qualcomm shares down .69 percent.

Qualcomm has filed lawsuits in the United States, China, Germany and other countries accusing iPhone of using its technology without authorization.

Qualcomm has won sales bans against Apple in China and Germany, though the China ban has not been enforced and Apple resumed sales of phones in Germany by shipping phones with only Qualcomm chips.

Apple has also racked up victories by having many of Qualcomm’s patents invalidated, at least on a preliminary basis. And the chip supplier has been dealt setbacks in its FTC trial, where a pre-trial ruling forced it to license its technology to other chip firms.

Of the two cases decided on Tuesday by the ITC, the ruling favourable to Apple can only be appealed to a federal court. The ruling favourable to Qualcomm faces review by the full six-member ITC, which will make a final decision.

Source

Prakash Poojary
Business Analyst

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