Telecoms

Patent paralysis

Court in Fuzhou stops sales of iPhones

Apple-w

Fewer phones on offer?

In October 2010, Motorola Mobility went after Apple, claiming that it had infringed 18 of the company’s patents. Apple quickly returned the favour, suing Motorola for infringing on its iPhone patents. At one point, according to The Verge, a US tech portal, there were about 20 legal actions underway between the two companies.

But in December 2011, Motorola scored a fairly big victory: a German court ruled that the design of every iPhone up to the iPhone 4S, plus the two 3G iPads, had infringed a Motorola patent. As a result Motorola could enforce an injunction against sales of Apple’s products in Germany.

The ruling came right before Christmas and Apple investors fretted that it would affect Apple’s sales in the German market. But the ruling applied to new imports, not existing stock. In the end there was no shortage of Apple products during the festive shopping period.

Fast forward to the current Christmas holiday and it seems that Apple’s legal team in China are going to be busy over the break.

Early this week US chipmaker Qualcomm announced that the Fuzhou Intermediate People’s Court had found in its favour in another infringement case, relating to patents for photo editing and managing apps using a touch screen. The court issued a preliminary injunction that bars the tech giant from selling various older versions of the iPhone in China.

This comes after the Chinese patent office, the SIPO, found the Qualcomm patents to be valid.

Apple has countered by saying that the ban applies to devices running on older operating systems and that iPhones relying on the newer iOS 12 version of the software are safe to sell.

Qualcomm and Apple have been embroiled in a multi-year legal dispute over patent royalties. The chipmaker took Apple to court on claims that it had failed to pay a percentage of its iPhone revenues in return for the use of Qualcomm patents. Apple, disputing Qualcomm’s rights on royalties, responded by suing the company in three countries, including the US and China.

“Apple continues to benefit from our intellectual property while refusing to compensate us,” claimed Don Rosenberg, Qualcomm’s executive vice president and general counsel.

Apple described Qualcomm’s latest efforts as a “desperate move by a company whose illegal practices are under investigation by regulators around the world”.

At the moment most of the iPhone models in question are still available for sale on JD.com and Tmall, two of China’s largest online shopping sites. Qualcomm has already petitioned the court with video evidence that Apple is still selling some of the identified models and that this violates the injunction imposed earlier this week. It also filed a fresh suit to extend the ban to the newer XS and XR models.

If the action is enforced, it could constrain some of Apple’s revenues in mainland China where sales account for about 20% of the company’s revenues, making it Apple’s third largest market (Hong Kong and Taiwan will not be impacted).

Fang Jing, a telecoms analyst, told National Business Daily that the effect of the ban should be limited, however, because the ruling currently focuses on the older models, which he estimates to account for no more than 6.7% of global smartphone sales.

As it turns out, it’s not only Apple that has queried some of the patent fees demanded by Qualcomm. The chipmaker has pointed out previously that a major Chinese handset manufacturer has followed Apple’s lead in refusing to pay up. “Many people believe that this is Qualcomm putting on a show to demonstrate to handset makers, especially those in China, the consequences of fighting against its monopoly,” claims Lanjing Caijing, a finance news portal.

“[Using a Chinese idiom] ‘Being squeezed to the edge of the bed, how can one tolerate other people snoring away?’ Needless to say, Qualcomm cannot simply ignore the crisis,” Lanjing Caijing continues. “So this patent dispute not only hits Apple in China, a market that has significant contribution to its bottom line, it also sends a warning to the top Chinese mobile manufacturers like Huawei, Oppo, Vivo and Xiaomi.”


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