Qualcomm dealt early blow in second ITC action against Apple

Posted:
in General Discussion edited September 2018
Qualcomm's second U.S. International Trade Commission complaint against Apple is not going as planned. Staff for the agency this week issued a recommendation that found none of the chipmaker's remaining patents-in-suit infringed, adding that an iPhone import ban would adversely impact the cellular modem market.

iPhone 7


Recommendations from the ITC's Office of Unfair Import Investigations, more commonly referred to as "ITC staff," arrived on Monday as part of an evidentiary hearing in Qualcomm's second ITC complaint against Apple, reports Florian Mueller of FOSS Patents.

Specifically, staff lawyers found that while Qualcomm's three leveraged patents are valid, Apple did not infringe on them.

Further, Qualcomm failed to establish a domestic industry with one of its patents-in-suit, a requirement to prove violation of Section 337 of the Tariff Act of 1930. The immediate ITC action is a Section 337 investigation based on a complaint Qualcomm lodged against Apple last year. In order to satisfy procedural requirements, Qualcomm must prove that there is an industry in the U.S. relating to the product at issue, in this case baseband processors.

Finally, ITC staff found the proposed U.S. import ban for which Qualcomm is pushing would negatively impact competition in the baseband processor market and might adversely affect the production of alternative hardware.

Qualcomm seeks the ban of iPhone models powered by Intel baseband chips, which if effected would leave only those models with Qualcomm chips for sale. This strategy was employed to skirt the ITC's public interest considerations, Mueller said.

"Given that Intel is the only major competition Qualcomm is now -- at long last -- facing in the baseband chip market, I felt all along that this litigation tactic didn't alleviate the public-interest concern," Mueller said. "Arguably, it exacerbated the situation, also from an antitrust point of view."

While ITC staff act as a neutral third party, administrative law judge judges often side with their recommendations. These opinions are often adopted by the Commission, which makes the final determination in such matters, according to Mueller.

Despite the less-than-rosy start to its second ITC complaint -- or perhaps because of it -- Qualcomm CEO Steve Mollenkopf in an interview with Bloomberg on Tuesday said he sees a settlement on the horizon.

"We have a dispute over the price of IP, we think that's moving now into a period of time now where our strategy is unfolding and the environment is such that I think you're in a position where a deal can get done," Mollenkopf said.

The comments echo previous statements from Mollenkopf suggesting Apple is simply maneuvering for favorable pricing on Qualcomm technology. He said much the same in interviews with Fortune and the The Wall Street Journal last year, prognosticating that Apple would ultimately settle out of court.

Apple hurled the first stone in the legal scrum early last year in a lawsuit claiming Qualcomm abuses its "monopoly power" over the wireless modem industry to demand excessive royalties. That suit further claims Qualcomm withheld almost $1 billion in promised rebates as retribution for Apple's participation in a South Korean antitrust investigation.

Qualcomm counter-sued three months later and has since filed multiple claims against Apple including two complaints with the ITC and lawsuits in China. Apple, too, has lodged Chinese actions.

Interestingly, ITC staff in the first complaint issued a recommendation in favor of Qualcomm, saying the investigation's presiding administrative law judge should find Apple in infringement of a patent relating to battery technology. A final initial determination in that case is due later this month.

Comments

  • Reply 1 of 15
    Oooooops ..we messed up guys ....LOL
    edited September 2018 ols
  • Reply 2 of 15
    Rayz2016Rayz2016 Posts: 4,556member
    We have a dispute over the price of IP, we think that's moving now into a period of time now where our strategy is unfolding unravelling

    Fixed. 
    olsdarren mccoyPickUrPoisonhubbaxronnjbdragonanantksundarammagman1979jony0
  • Reply 3 of 15
    olsols Posts: 33member
    And someone may think that those highly paid plaintiffs have checked this before. I hope they were not working on a no-win no-fee basis. 

    Just LOL
  • Reply 4 of 15
    lkrupplkrupp Posts: 6,784member
    Apple is so big now that any disruption in its business will ripple through the entire economy. Did anyone, other then the haters, really think the ITC would ban all those Apple products with Intel modems in them? Remember the clickbait headline from AppleInsider? “Apple U.S. imports imperiled..."

    Also, Qualcomm makes batteries?
  • Reply 5 of 15
    QC wants a deal? Well they would from a point of weakness.
    Personally, I hope that the dispute goes to trial and that the end result is that there is a precident against 'double dipping'.
    Then it will be 'this is the price for the device' and the seller can't come back and ask like Oliver Twist, "I want some more!"

    jbdragon
  • Reply 6 of 15
    gatorguygatorguy Posts: 20,280member
    lkrupp said:
    Apple is so big now that any disruption in its business will ripple through the entire economy. Did anyone, other then the haters, really think the ITC would ban all those Apple products with Intel modems in them? Remember the clickbait headline from AppleInsider? “Apple U.S. imports imperiled..."

    Also, Qualcomm makes batteries?
    I think this is just one of the two ITC cases going on. In the first one the ITC staff determined mostly the opposite, recommending that a trade judge find that Apple Inc. infringed at least one of Qualcomm Inc.’s patents. That's the one that could lead to blocking the import of some iPhones. It does get confusing when there's multiple cases going on. 

    EDIT: Yes I'm correct. and that's even stated in the AI article. Read the last paragraph. The case being discussed in this article has no effect on the other one where the staff made a different recommendation. Note that the judge is not bound to follow the staff recommendations. 
    https://www.econotimes.com/ITC-Recommendation-To-Find-Apple-Guilty-Of-Patent-Infringement-Could-Lead-To-iPhone-Ban-1373247
    edited September 2018 muthuk_vanalingam
  • Reply 7 of 15
    gatorguy said:
    lkrupp said:
    Apple is so big now that any disruption in its business will ripple through the entire economy. Did anyone, other then the haters, really think the ITC would ban all those Apple products with Intel modems in them? Remember the clickbait headline from AppleInsider? “Apple U.S. imports imperiled..."

    Also, Qualcomm makes batteries?
    I think this is just one of the two ITC cases going on. In the first one the ITC staff determined mostly the opposite, recommending that a trade judge find that Apple Inc. infringed at least one of Qualcomm Inc.’s patents. That's the one that could lead to blocking the import of some iPhones. It does get confusing when there's multiple cases going on. 

    Maybe if you pray hard enough Apple will somehow come out on the losing end in all this.
    Rayz2016ronnlkruppmagman1979
  • Reply 8 of 15
    gatorguygatorguy Posts: 20,280member
    gatorguy said:
    lkrupp said:
    Apple is so big now that any disruption in its business will ripple through the entire economy. Did anyone, other then the haters, really think the ITC would ban all those Apple products with Intel modems in them? Remember the clickbait headline from AppleInsider? “Apple U.S. imports imperiled..."

    Also, Qualcomm makes batteries?
    I think this is just one of the two ITC cases going on. In the first one the ITC staff determined mostly the opposite, recommending that a trade judge find that Apple Inc. infringed at least one of Qualcomm Inc.’s patents. That's the one that could lead to blocking the import of some iPhones. It does get confusing when there's multiple cases going on. 

    Maybe if you pray hard enough Apple will somehow come out on the losing end in all this.
    Actually I'm on Apple's side ( and the other licensee's who are bound by the same terms) as you should well know. Qualcomm is far too greedy with licensing terms for my liking. It's not the first time you and I have discussed it. Nice try but wrong again.  
    edited September 2018 muthuk_vanalingamjony0
  • Reply 9 of 15
    ronnronn Posts: 315member
    gatorguy said:
    lkrupp said:
    Apple is so big now that any disruption in its business will ripple through the entire economy. Did anyone, other then the haters, really think the ITC would ban all those Apple products with Intel modems in them? Remember the clickbait headline from AppleInsider? “Apple U.S. imports imperiled..."

    Also, Qualcomm makes batteries?
    I think this is just one of the two ITC cases going on. In the first one the ITC staff determined mostly the opposite, recommending that a trade judge find that Apple Inc. infringed at least one of Qualcomm Inc.’s patents. That's the one that could lead to blocking the import of some iPhones. It does get confusing when there's multiple cases going on. 

    EDIT: Yes I'm correct. The case being discussed in this article has no effect on the other one where the staff made a different recommendation.
    https://www.econotimes.com/ITC-Recommendation-To-Find-Apple-Guilty-Of-Patent-Infringement-Could-Lead-To-iPhone-Ban-1373247
    Different case, but same argument: any disruption to Apple's business would cause a larger disruption to the larger U.S.  economy (let's not even discuss the virtual monopoly that QC would enjoy with government assistance). The impact of any proposed ban is significant and should be impose sparingly.
  • Reply 10 of 15
    gatorguygatorguy Posts: 20,280member
    ronn said:
    gatorguy said:
    lkrupp said:
    Apple is so big now that any disruption in its business will ripple through the entire economy. Did anyone, other then the haters, really think the ITC would ban all those Apple products with Intel modems in them? Remember the clickbait headline from AppleInsider? “Apple U.S. imports imperiled..."

    Also, Qualcomm makes batteries?
    I think this is just one of the two ITC cases going on. In the first one the ITC staff determined mostly the opposite, recommending that a trade judge find that Apple Inc. infringed at least one of Qualcomm Inc.’s patents. That's the one that could lead to blocking the import of some iPhones. It does get confusing when there's multiple cases going on. 

    EDIT: Yes I'm correct. The case being discussed in this article has no effect on the other one where the staff made a different recommendation.
    https://www.econotimes.com/ITC-Recommendation-To-Find-Apple-Guilty-Of-Patent-Infringement-Could-Lead-To-iPhone-Ban-1373247
    Different case, but same argument: any disruption to Apple's business would cause a larger disruption to the larger U.S.  economy (let's not even discuss the virtual monopoly that QC would enjoy with government assistance). The impact of any proposed ban is significant and should be impose sparingly.
    As I noted the judge who will decide the case is not bound by the staff recommendations. I tend to agree with you. Even if the ITC finds for Qualcomm and imposes an import ban on the Intel modems I would expect Trump to overrule it just as Obama stepped in the last time an import ban was placed on Apple products. 
  • Reply 11 of 15
    ronnronn Posts: 315member
    gatorguy said:
    As I noted the judge who will decide the case is not bound by the staff recommendations. I tend to agree with you. Even if the ITC finds for Qualcomm and imposes an import ban on the Intel modems I would expect Trump to overrule it just as Obama stepped in the last time an import ban was placed on Apple products. 
    Judges usually side with the staff recommendations. I suspect QC and Apple will settle, but wouldn't be surprised if Apple prevails on one of the suits beforehand.
  • Reply 12 of 15
    Maybe if Judge Lucy Koh, who famously doesn't understand the tech industry, was presiding, Qualcomm would have had a ghost of a chance.

    Then again, QC management has always done things that didn't seem well thought out.  Like paying millions for pro football stadium naming rights to promote an electronic components brand name.  What consumer buys Qualcomm chips?

    And no, there never was an Intel Stadium.
  • Reply 13 of 15
    Rayz2016Rayz2016 Posts: 4,556member
    gatorguy said:

    Actually I'm on Apple's side 
    Then Google must be in line for the same Qualcomm nonsense.  🤔

  • Reply 14 of 15
    gatorguygatorguy Posts: 20,280member
    Rayz2016 said:
    gatorguy said:

    Actually I'm on Apple's side 
    Then Google must be in line for the same Qualcomm nonsense.  ߤ䦬t;br>
    Not that I'm aware of tho they would also be required to license Qualcomm patents like most other smartphone companies. No disputes between the two have been reported.
    edited September 2018 muthuk_vanalingam
  • Reply 15 of 15
    chasmchasm Posts: 1,266member
    I'm on no one side in this dispute. On the whole, Qualcomm's business model is -- long term -- going to be found illegal and unsustainable, but that doesn't make it impossible that Apple infringed or wrongly reverse-engineered one of QC's patents. What these two cases seem to be saying that this point (or the ITC staff seem to be saying) is "Apple likely infringed a patent, but did not infringe these other three patents." Nobody has to be a perfect angel here.

    The end game wrt this matter is that QC is now in a weaker position than before; they won a battle, perhaps, but they've lost the war. Based on my understanding of the case from my own readings and some help from Florian Mueller, that's about where we should be with this.
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