Repair shop loses legal battle with Apple over 'counterfeit' iPhone screen import

AppleInsider

In the conclusion of a two-year back-and-forth legal battle, an independent repair shop in Norway has lost an appeal over the import so-called "counterfeit" Apple iPhone screens.

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In a ruling passed down on Thursday, an appeals court affirmed a judgement over independent repair shop owner Henrik Huseby. Huseby is now on the hook for not just destroying what Apple calls "counterfeit" iPhone screens he bought from China, but also for Apple's legal costs of about $26,000.

Huseby owns a small electronics repair shop called PCKompaniet in Norway. To supply parts for that business, he ordered a shipment of 63 iPhone 6 and iPhone 6s replacement screens from Asia, which were seized by Norwegian customs agents in July 2017

Following the Norwegian government informing Apple, the company had a lawyer represented the company propose a settlement. This settlement, as pitched, entailed Huseby paying $3,500, destroying the screens, and promising to no longer sell or deal with any products that infringe Apple's trademarks.

Huseby refused the settlement and took Apple to court. The case hinged on the question of how exactly Huseby obtained the Chinese parts, and how they were marked.

The phone screens in question were Apple parts, refurbished by Chinese resellers, but with the branding obscured. Reports vary whether the branding were completely obliterated, or just marked over with a permanent marker.

Huseby's legal team said that the obfuscation of the label removed them from Apple's control. They reasoned that any branding would be invisible to the consumer, and since there was no possibility that they could be confused with "official" screens, and as Huseby would not be representing them as "official" screens supported by Apple they were not "counterfeit" in any way,

The first ruling on the matter led to a win for Huseby. However, Apple appealed, and won a verdict of the destruction, plus payment of Apple's legal costs of about $12,000.

"We're sending strength and moral support to Henrik Huseby today," Advocacy group Right to Repair Europe said in a statement to The Register. "He took a stand where other businesses were afraid to, and he will pay a heavy price."

Apple has frequently cracked down on suspected counterfeiters, including the seizure of more than $1 million in fake accessories from a London warehouse in 2017 and general warnings about third party and counterfeit power accessories. It's even gone after counterfeit accessories for sale on Amazon.

Apple has also historically opposed "Right to Repair" laws, which have been proposed in 20 U.S. states.

prismatics

Imagine the Apple Stores not opening and you can't repair your shit

If the US thinks about freedom this way, why don't people have freedom to do what they want with their devices.

GeorgeBMac

prismatics said:

Imagine the Apple Stores not opening and you can't repair your shit

If the US thinks about freedom this way, why don't people have freedom to do what they want with their devices.

Yes, that is the now perennial question between anarchy and an orderly, rule based society that protects people and their property.

GeorgeBMac

I'm not getting this:   If they were "refurbished" Apple screens (although I'm not sure how one refurbishes a screen), how are they "Counterfeit"? 

Counterfeit:   "a fraudulent imitation of something else; a forgery."

And, why would they obscure or remove the Apple branding -- which would, if anything, add value.

dewme

This is a good win for Apple and consumers who have to constantly battle with the negative effects of counterfeit products. In this case the parts were actually genuine so consumers receiving them as part of repairs may likely have experienced positive outcomes. However, the illegitimacy of the "machinery" used to source these parts into the repair parts channel rendered them effectively counterfeit. It's the counterfeiting "machinery" that needs to be shut down and these parts were processed by that illegitimate machinery.

This is all about consumer protection, not right to repair. I'm really surprised that individuals and organizations that position themselves as consumer advocates would take up the cause of someone who is violating a core tenet that protects consumers, that being that you get what you pay for in a legal transaction. It's like saying "I'm totally against crime," but if buying stolen property saves me some serious cheddar, then saying "I can look the other way." Can't have it both ways.

rcfa

BS ruling. Any non-authorized repair voids warranty anyway, but last I checked, we own the devices and don’t rent them from Apple.
Also, there is Apple pretending to be a “green” company, and then takes action against refurbished repair parts, while squashing a small shop with an onslaught of lawyers.
Given that the guy won in the first go around, it’s likely fair to say, that Apple’s high-priced lawyers out argued whatever small lawyer the guy could afford; had he had the funds to use some legal top guns, chances are, he would have prevailed.

bageljoey

GeorgeBMac said:

I'm not getting this:   If they were "refurbished" Apple screens (although I'm not sure how one refurbishes a screen), how are they "Counterfeit"? 

Counterfeit:   "a fraudulent imitation of something else; a forgery."

And, why would they obscure or remove the Apple branding -- which would, if anything, add value.

If I’m reading this correctly, the repair shop bought genuine Apple parts but not from a licensed seller—at least not licensed to sell to them. To hide that they were not bought legally (and with Apple backing) they had to remove marks identifying the parts as genuine Apple parts. 

It doesn’t seem to say, but Here is a theory: perhaps the Chinese factory had some screens that didn’t meet Apple’s quality control standards. Instead of destroying them, they sold them on a sort of black market for spare Apple parts. 

apple ][

Screw all of these illegitimate repair shops, using shady parts, counterfeit garbage, stolen parts and illegally obtained parts.

I've used Apple products for decades and have never once had a need or a use to visit any of these repair shops. I couldn't care less if they all closed down tomorrow.

If a repair shop wants to service Apple devices, then either do it by the book or GTFO. They don't get to make their own rules.

mike1

rcfa said:

Given that the guy won in the first go around, it’s likely fair to say, that Apple’s high-priced lawyers out argued whatever small lawyer the guy could afford; had he had the funds to use some legal top guns, chances are, he would have prevailed.

Your expertise regarding Norwegian appeals law is astounding.

The whole reason the appeal process exists is to correct erroneous decisions handed down by lower courts, due to misinterpretation of the law or the mistakes in the legal process.

hammeroftruth

The first indication that this was a bit shady was when the shipment was seized and the repair shop appears that they never addressed that issue with the government. If that was cleared up, then Apple wouldn’t have any legal ground. The fact that the labeling on the screens that shows they were Apple products were obscured or tampered with prevents the repair shop in proving they were Apple products. 

I’m all for repairing your device.  You just need to know the risks before doing it. Most of the time it’s not worth it, unless it’s something simple like a battery and even then, battery replacements are the most dangerous repair you can perform if things go wrong. 

You’re better off having Apple or an authorized repair company fix your device. 

If you can’t find one, or your local Apple Store is closed, you can still find an authorized repair by going to support.apple.com. You can also have Applecare help fix your device if none of the above are available. 

apple ][

hammeroftruth said:

I’m all for repairing your device.  You just need to know the risks before doing it. Most of the time it’s not worth it, unless it’s something simple like a battery and even then, battery replacements are the most dangerous repair you can perform if things go wrong. 

You’re better off having Apple or an authorized repair company fix your device. 

Even a battery repair sounds like a dumb decision to make, because not all batteries are created equally, and I wouldn't trust any of the many repair shops that offers repairs for cheap to be giving me a good or legitimate battery.

beowulfschmidt

AppleInsider said:

"We're sending strength and moral support to Henrik Huseby today," Advocacy group Right to Repair Europe said in 

a statement to The Register. "He took a stand where other businesses were afraid to, and he will pay a heavy price."

Seems like Right to Repair Europe ought to have the courage of their convictions, put their money where their mouth is, and right the wrong they perceive.

melgross

prismatics said:

Imagine the Apple Stores not opening and you can't repair your shit

If the US thinks about freedom this way, why don't people have freedom to do what they want with their devices.

It’s kind of a funny thing. You’re allowed to repair your stuff. But companies who want to do so aren’t given the rights to buy the parts, or the equipment, or to know the encrypted data needed.

a lot of this hinges on security. If you don’t care about that, buy a brand that doesn’t care either. Then you won’t have a problem breaking it when you try to repair it.

cesco

Cue the  shirt-tearing lamentations of one Louis Rossmann.

GeorgeBMac

bageljoey said:

GeorgeBMac said:

I'm not getting this:   If they were "refurbished" Apple screens (although I'm not sure how one refurbishes a screen), how are they "Counterfeit"? 

Counterfeit:   "a fraudulent imitation of something else; a forgery."

And, why would they obscure or remove the Apple branding -- which would, if anything, add value.

If I’m reading this correctly, the repair shop bought genuine Apple parts but not from a licensed seller—at least not licensed to sell to them. To hide that they were not bought legally (and with Apple backing) they had to remove marks identifying the parts as genuine Apple parts. 

It doesn’t seem to say, but Here is a theory: perhaps the Chinese factory had some screens that didn’t meet Apple’s quality control standards. Instead of destroying them, they sold them on a sort of black market for spare Apple parts. 

Yeh, that makes sense.

it's not that they were in any way counterfeit (at least not in the normal use of the term) but were sold outside of regular, authorized channels -- which then made selling them as legitimate Apple products legally shaky or downright illegal.

But, there's no reason to think they were inferior rejects -- although that is certainly possible.   The factory where they were made could have been selling off "excess stock" or they could have been salvaged from phones that either didn't pass inspection or were stolen.  There are multiple possibilities.

Perhaps an analogy is myself:   I bought a used Apple SSD and installed it in a 2017 MacBook Air.   If Apple knew, they would not approve.   But otherwise, it is totally, completely legitimate and up to both specs and standards.

caskey

prismatics said:

Imagine the Apple Stores not opening and you can't repair your shit

If the US thinks about freedom this way, why don't people have freedom to do what they want with their devices.

This specific case took place in Norway, not the US

larryjw

melgross said:

prismatics said:

Imagine the Apple Stores not opening and you can't repair your shit

If the US thinks about freedom this way, why don't people have freedom to do what they want with their devices.

It’s kind of a funny thing. You’re allowed to repair your stuff. But companies who want to do so aren’t given the rights to buy the parts, or the equipment, or to know the encrypted data needed.

a lot of this hinges on security. If you don’t care about that, buy a brand that doesn’t care either. Then you won’t have a problem breaking it when you try to repair it.

"[R]ights to buy the parts"? I'm not accepting this as a Right. It's a contractual issue, not a Right. Authorized repair shops can get authorized and genuine parts; unauthorized cannot. Somehow, this repair shop must have been intimating some level of authorization to its customers. 

davidw

GeorgeBMac said:

bageljoey said:

GeorgeBMac said:

I'm not getting this:   If they were "refurbished" Apple screens (although I'm not sure how one refurbishes a screen), how are they "Counterfeit"? 

Counterfeit:   "a fraudulent imitation of something else; a forgery."

And, why would they obscure or remove the Apple branding -- which would, if anything, add value.

If I’m reading this correctly, the repair shop bought genuine Apple parts but not from a licensed seller—at least not licensed to sell to them. To hide that they were not bought legally (and with Apple backing) they had to remove marks identifying the parts as genuine Apple parts. 

It doesn’t seem to say, but Here is a theory: perhaps the Chinese factory had some screens that didn’t meet Apple’s quality control standards. Instead of destroying them, they sold them on a sort of black market for spare Apple parts. 

Yeh, that makes sense.

it's not that they were in any way counterfeit (at least not in the normal use of the term) but were sold outside of regular, authorized channels -- which then made selling them as legitimate Apple products legally shaky or downright illegal.

But, there's no reason to think they were inferior rejects -- although that is certainly possible.   The factory where they were made could have been selling off "excess stock" or they could have been salvaged from phones that either didn't pass inspection or were stolen.  There are multiple possibilities.

Perhaps an analogy is myself:   I bought a used Apple SSD and installed it in a 2017 MacBook Air.   If Apple knew, they would not approve.   But otherwise, it is totally, completely legitimate and up to both specs and standards.

"it's not that they were in any way counterfeit (at least not in the normal use of the term) but were sold outside of regular, authorized channels -- which then made selling them as legitimate Apple products legally shaky or downright illegal."

It's more than that. One can not re-brand another product, as their own or someone else's. In other words, this repair shop can not re-brand Apple products as some other off brand or their own. This falls under "reverse passing off". Where "passing off" is slapping someone else trademark on another, usually inferior, product, "reversing passing off" is the removal of someone else trademark on a product and passing it off as your own or a no name brand (white label). 

Right now, an iPhone 6 LCD assembly cost less than $20 on eBay, but they are not sold as an Apple branded LCD. Even if the company that makes them might be the same company that makes the LCD's for Apple, they are sold as Apple compatible parts. The buyers knows that chances are, these LCD's are not as good as the LCD's made for Apple, with the Apple trademark, but will buy them because they are 1/5 the price of an Apple branded  LCD and 1/2 the price of a used Apple branded LCD. 

Now suppose this repair shop was able to purchase real Apple branded iPhone 6  LCD's at a great discount, from a grey market source that obscures the Apple trademark to make the transaction less illegal. Even if the repair shop did not advertise that the LCD's they used to repair iPhones  were made by Apple, they can not sell them as not being made by Apple, that would be "reverse passing off".

This shop might have been able to charge more for repair work using these screens, than using the non Apple branded eBay LCD's because they are a much higher quality screen and people that knows the difference would be wiling to pay more for their repair work. Even if they were never told that the LCD's are real Apple LCD's. The shop ends up making more profits than if they were to buy and use the eBay LCD's for their repairs. Word of mouth would be that this shop was using Apple quality LCD's for their repair work, at half the price of an Apple branded LCD. Even if the shop were not to mark up the price of the Apple branded LCD's they purchased, (with the Apple trademarked removed), they still benefit from being able to charge more for the repair work with these LCD's, because people are willing to pay more because of what they think are high quality non Apple branded LCD's being used. The shop was taking advantage of Apple quality product, without giving credit to or paying, Apple.  

chasm

While I'm not a lawyer, the reason Huesby ultimately lost seems kind of obvious to me: unauthorized source with no legal license to sell Apple parts "refurbishes" them themselves, opening Apple up to possible obligation or litigation to fix the mess Huesby created when or if the parts don't perform to the standard of genuine Apple-supplied parts. As BagelJoey pointed out, the source for these spare parts is likely from factories that had to reject them for being sub(Apple)standard.

Not mentioned in the story (but clearly inferred) is that Huesby was not an Apple Authorized Repair Provider. If he was, he ain't now -- let's put it that way.

Huesby was an idiot to reject Apple's initial offer, an opinion he would likely agree with now that it's going to cost him all that and thousands in his (and Apple's) legal expenses. Stick to fixing PCs -- at least Windows users are used to and comfortable with shady Out-of-Warranty repair places (there's practically one on every block in big cities). You won't have to deal so much with manufacturers who have standards.  

melgross

larryjw said:

melgross said:

prismatics said:

Imagine the Apple Stores not opening and you can't repair your shit

If the US thinks about freedom this way, why don't people have freedom to do what they want with their devices.

It’s kind of a funny thing. You’re allowed to repair your stuff. But companies who want to do so aren’t given the rights to buy the parts, or the equipment, or to know the encrypted data needed.

a lot of this hinges on security. If you don’t care about that, buy a brand that doesn’t care either. Then you won’t have a problem breaking it when you try to repair it.

"[R]ights to buy the parts"? I'm not accepting this as a Right. It's a contractual issue, not a Right. Authorized repair shops can get authorized and genuine parts; unauthorized cannot. Somehow, this repair shop must have been intimating some level of authorization to its customers. 

It’s actually a legal term. And yes, it’s contractual term. It has nothing to do with “the rights of man,”

EsquireCats

I think the confusion comes from this being projected as about the right to repair, when it's actually about transactions in counterfeit or stolen goods. Normally a store can source compatible parts and use them in repairs, provided that those parts themselves are legitimately produced and sourced.
With Apple's screens this is a difficult proposition as it is a complex component where Apple also holds some IP that they won't license to 3rd parties, and the tight specifications of the iPhone usually mean that there aren't many alternative design options.

Naturally a person or business can't be in receipt of stolen or counterfeit goods (and obviously those items can't be sold.)

If the screens are replications of Apple's design then they are counterfeits.
If they're identical to Apple's design but with the branding obviously marked away then there is the issue of stolen goods. While the goods are likely from Apple's factory, they can't be tracked to legitimate sales and disposals, and are now indistinguishable from stolen goods.

Operators of repair stores should always be aware of the source of their parts - they are the essential cog in the rebirthing of stolen parts.

Cases like this actually work in favour of 'Right to Repair' legislation because it demonstrates that criminally driven black markets for Apple components exists on part due to Apple not providing trivial access to parts.