Apple-Qualcomm fight

China court bans sales of older iPhone models

A Chinese court has ordered a sales ban of some older Apple iPhone models in China for violating two patents of chipmaker Qualcomm.

SAN FRANCISCO • A court in China has ordered a ban on sales of some older Apple iPhone models in the country for violating two patents of chipmaker Qualcomm, though intellectual property (IP) lawyers said enforcement of the ban was likely still a distant threat.

The case, brought by Qualcomm, is part of a global patent dispute between the two US companies that includes dozens of lawsuits. It creates uncertainty over Apple's business in one of its biggest markets at a time when concerns over waning demand for new iPhones are battering its shares.

Apple said on Monday that all of its phone models remained on sale in mainland China and that it had filed a request for reconsideration with the court, the first step in a long appeal process that could end up at China's Supreme Court.

"It's incredibly unlikely, I'd say almost impossible" that Apple would have to stop sales, said a Beijing-based IP lawyer who has no direct connection with the Apple-Qualcomm case but has worked with large US tech firms.

"In all likelihood it will drag on for some time. It's worth keeping in mind that this is just one battle in a larger rift," he said, referring to the legal fight between Qualcomm and Apple that stretches from courts in Europe to South Korea.

Qualcomm said in a statement on Monday that the Fuzhou Intermediate People's Court had found that Apple infringed two patents held by the chipmaker and ordered an immediate ban on sales of older iPhone models, from the 6S through the X.

Apple said the trio of new models released in September were not part of the case. It added: "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."

 

China, Hong Kong and Taiwan together form Apple's third-largest market, accounting for about one-fifth of the company's US$265.6 billion (S$365 billion) sales in its most recent fiscal year.

Qualcomm, the biggest supplier of chips for mobile phones, filed its case late last year, arguing that Apple infringed patents on features related to resizing photos and managing apps on a touch screen.

In July, the same Chinese court banned the import of some microchips by Micron Technology into China, citing violation of patents held by Taiwan's United Microelectronics Corp .

In the provincial Chinese court, which is separate from China's specialised intellectual property courts in Beijing, one party can request a ban on a rival firm's product without the opponent getting a chance to present a defence.

IP lawyers said an appeal process could take the case up to the Fujian provincial high court and then could go as far as the Supreme Court in Beijing, a process that would likely take many months given the high profile of the case.

To enforce the ban, Qualcomm separately will have to file complaints in what is known as an enforcement tribunal, where Apple will also have a chance to appeal.

Patent lawyer Yiqiang Li at Faegre Baker Daniels said the Chinese injunction could put pressure on Apple to reach a global settlement with Qualcomm.

The ruling comes as Beijing and Washington are locked in a tense trade dispute. The two sides have agreed to trade negotiations that must be concluded by March 1.

While IP lawyers said the case was not directly political, most agreed it could be drawn into broader Sino-US trade tensions, where technology and IP have been a core focus.

The iPhone models affected by the preliminary ruling in China are the 6S, 6S Plus, 7, 7 Plus, 8, 8 Plus and X. Qualcomm has also asked regulators in the United States to ban the importation of several iPhone models over patent concerns, but American officials have so far declined to do so.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 12, 2018, with the headline 'China court bans sales of older iPhone models'. Print Edition | Subscribe