Qual­comm loses first round in Ap­ple patent fight

Business Standard - - WORLD - SU­SAN DECKER BLOOMBERG

Ap­ple’s iPhones shouldn’t be banned from the US even though they in­fringe a patent owned by Qual­comm, a US In­ter­na­tional Trade Com­mis­sion judge found Fri­day.

Judge Thomas Pen­der found that Ap­ple in­fringed one of three Qual­comm patents in the case but de­clined to rec­om­mend the im­port ban sought by Qual­comm. The judge’s recommendation “makes no sense,” Qual­comm said.

The judge’s find­ings are sub­ject to re­view by the full com­mis­sion, which has the fi­nal say. If the com­mis­sion goes along, it would elim­i­nate a pow­er­ful bar­gain­ing chip Qual­comm could use to push Ap­ple into agree­ing to pay li­cense fees. “Qual­comm has con­tin­ued to un­fairly de­mand roy­al­ties for tech­nolo­gies they have noth­ing to do with to pro­tect their mo­nop­oly,” Ap­ple said in a state­ment. “We’re glad the ITC stopped Qual­comm’s at­tempt to dam­age com­pe­ti­tion and ul­ti­mately harm in­no­va­tors and US con­sumers.”

Qual­comm is seek­ing an im­port ban of Ap­ple’s iPhones that have chips made by In­tel. This is the first of two cases brought by Qual­comm be­fore the trade agency in Wash­ing­ton. Goes against man­date

“We are pleased the ALJ found in­fringe­ment of our patented tech­nol­ogy, but it makes no sense to then al­low in­fringe­ment to con­tinue by deny­ing an im­port ban,” Qual­comm Gen­eral Coun­sel Don­ald Rosenberg said in a state­ment, re­fer­ring to the ad­min­is­tra­tive law judge.

“That goes against the ITC man­date to pro­tect Amer­i­can in­no­va­tors by block­ing the im­port of in­fring­ing prod­ucts,” Rosenberg said. “There are many ways Ap­ple could stop in­fring­ing our tech­nol­ogy with­out af­fect­ing the pub­lic in­ter­est.”

Qual­comm will look to the full com­mis­sion de­ci­sion and will pur­sue more than 40 other patent-in­fringe­ment cases brought against Ap­ple glob­ally, he said.

The trade agency doesn’t have the au­thor­ity to force Ap­ple to pay patent roy­al­ties. Qual­comm is seek­ing that in district court, and the judge’s in­fringe­ment find­ing, if up­held by the com­mis­sion, could help the chip-maker there.

Mas­sive lever­age

“The lever­age would be mas­sive with the im­port ban, but the in­fringe­ment still pro­vides them with some­thing,” said Matt Lar­son, an an­a­lyst with Bloomberg In­tel­li­gence. “It could cre­ate ex­po­sure for Ap­ple later, which is help­ful to Qual­comm in the cur­rent li­cens­ing dis­cus­sion.”

Dur­ing the trial, Ap­ple ar­gued it wouldn’t be in the pub­lic’s in­ter­est to have phones with In­tel chips kept from the US mar­ket. While the judge’s full find­ings won’t be pub­lic un­til both sides get a chance to redact con­fi­den­tial in­for­ma­tion, Amer­ica’s role in de­vel­op­ing the next gen­er­a­tion of mo­bile com­mu­ni­ca­tions was a key is­sue in the case.

The com­mis­sion’s job is to pro­tect US mar­kets from un­fair trade prac­tices and it has to bal­ance patent rights with what’s best for the econ­omy. It’s sched­uled to make a fi­nal de­ci­sion by Jan­uary. A dif­fer­ent trade judge is sched­uled to re­lease her find­ings in a sec­ond case that same month, and the pub­lic’s in­ter­est is a prime is­sue in that case as well.

Chips phased out

Ap­ple has phased out its use of Qual­comm chips dur­ing the dis­pute and its lat­est phones don’t use any of the San Diegob­ased chip-maker’s prod­ucts. In urg­ing the agency not to block its phones with In­tel chips, Ap­ple con­tends that the com­pe­ti­tion be­tween the two dom­i­nant chip-mak­ers is cru­cial to pro­pel de­vel­op­ment of the next gen­er­a­tion of com­mu­ni­ca­tions, known as 5G.

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