Apple pulls some iPhones in Germany after loss in patent battle

An Apple store in Beijing. A court in China last week ordered a ban on sales of some older Apple iPhone models for violating patents of chipmaker Qualcomm. The German case is Qualcomm's third major bid to secure a ban on iPhones over patent infringem
An Apple store in Beijing. A court in China last week ordered a ban on sales of some older Apple iPhone models for violating patents of chipmaker Qualcomm. The German case is Qualcomm's third major bid to secure a ban on iPhones over patent infringement claims after similar efforts in the US and China.PHOTO: REUTERS

Chip supplier Qualcomm's victory comes a week after it won similar case in China

MUNICH • Chip supplier Qualcomm won a second court skirmish in its worldwide patent battle with Apple on Thursday, with the iPhone maker saying it would pull some older models from its German stores.

Qualcomm's win in Germany comes after it secured a court order last week to ban sales of some iPhone models in China.

Apple, which is contesting both rulings, has continued to offer its iPhones in China but made changes to its iOS operating system in the wake of the Chinese order.

The German victory may affect only a few million iPhones out of the hundreds of millions that Apple sells each year. Still, it is a small but clear win in a complex legal battle that will spin into overdrive in the coming months as antitrust regulators and Apple both take Qualcomm to court in the United States.

Apple alleges that Qualcomm engaged in illegal behaviour to preserve a monopoly on modem chips, which help mobile devices connect to wireless data networks. Qualcomm has in turn accused Apple of using the chip supplier's vast stable of technology innovations without proper compensation.

While a sales ban in China could hurt Apple's bottom line, it is unlikely the two patent skirmishes will sway the outcome of the broader battle, where Qualcomm has suffered a series of setbacks fighting US antitrust regulators.

Qualcomm is not pursuing the software patents in the Chinese case in other jurisdictions, and suffered an early loss while pursuing a US sales ban on the US version of the hardware patent at issue in Germany.

2 WINS, 2 COUNTRIES, 2 WEEKS

Two respected courts in two different jurisdictions just in the past two weeks have now confirmed the value of Qualcomm's patents and declared Apple an infringer, ordering a ban on iPhones in the important markets of Germany and China.

MR DON ROSENBERG, Qualcomm's general counsel.

On Thursday, Apple said it would pull older iPhones from its German stores after a court ruled that Apple had infringed a hardware patent of Qualcomm and banned sales of iPhones there with chips from Apple supplier Qorvo.

"Two respected courts in two different jurisdictions just in the past two weeks have now confirmed the value of Qualcomm's patents and declared Apple an infringer, ordering a ban on iPhones in the important markets of Germany and China," Mr Don Rosenberg, Qualcomm's general counsel, said in a statement.

For each of the two Apple entities it won orders against, Qualcomm needs to post a bond of about €668.4 million (S$1 billion) before it can begin proceedings to enforce the order, a move Qualcomm said it would carry out "within a few days".

The smartphone maker said it was appealing against the decision, but the order goes into effect as soon as Qualcomm posts the bond.

Apple said it would pull some phones from its stores while it pursued an appeal.

"We are of course disappointed by this verdict and we plan to appeal," Apple said in a statement.

"All iPhone models remain available to customers through carriers and resellers in 4,300 locations across Germany. During the appeal process, iPhone 7 and iPhone 8 models will not be available at Apple's 15 retail stores in Germany. iPhone XS, iPhone XS Max and iPhone XR will remain available in all our stores."

 
 

Analyst Stacy Rasgon from research firm Bernstein said Germany was a small iPhone market for Apple, selling about 10 million units a year, with possibly only half of those being the older models affected by the court's order.

When Qualcomm posts the bond to enforce the order, it could seek to extend the ban to Apple's resellers and the newer iPhone models not included thus far, legal experts said.

Qualcomm said the court had granted its request for "a recall and destruction of all accused devices from all retailers in Germany".

But pressing forward with enforcement presents some risks for Qualcomm.

In an earlier proceeding before the US International Trade Commission, US regulators viewed a more extensive set of evidence about whether Qorvo's chips and Apple's phones violated Qualcomm's patents. Those US regulators sided with Apple and Qorvo.

The German case is Qualcomm's third major bid to secure a ban on Apple's lucrative iPhones over patent infringement allegations after similar efforts in the US and China.

A version of this article appeared in the print edition of The Straits Times on December 22, 2018, with the headline 'Apple pulls some iPhones in Germany after loss in patent battle'. Print Edition | Subscribe