Qualcomm says Apple's software workarounds undermine case against US iPhone ban [u]

Posted:
in iPhone edited February 19
Apple's software update to get around an alleged Qualcomm patent violation undermines its case against a ban on U.S. iPhone imports, the chipmaker said in a filing last week.

iPhone 7 Plus


Qualcomm is seeking to win a ban from the U.S. International Trade Commission after an ITC judge in September made an initial ruling against such action, saying it would be against the public interest. Administrative law judge Thomas Pender did declare Apple in violation of one of three contested patents, however, leaving the door open to later action.

Pender did not institute an injunction, reasoning that a ban on iPhones with Intel chips would effectively give Qualcomm a monopoly over the wireless modem market. That view is now in question as Apple last week revealed it discovered a software workaround to Qualcomm's design, something it deemed impossible in previous arguments. Qualcomm believes the revelation undermines Pender's decision, which was based on Apple's proclamation that there exists no fix for Qualcomm's patent.

"Apple's public interest arguments throughout the course of this Investigation have all rested on one fundamental idea: that enforcement of the '490 Patent would cause unavoidable harm to the public interest. Apple now admits -- more than seven months after the hearing -- that the alleged harm is entirely avoidable," Qualcomm said in its filing.

In the U.S. Apple has used the public interest angle in its defense, as well as the possibility of a six-month grace period in which changes could be made. Specifically, Apple said it would need six months to confirm that the discovery -- pushed out last fall in iOS 12.1 as a workaround to a Qualcomm patent covering power saving techniques for wireless modems -- is tenable and to sell through inventory of infringing handsets. Apple requested the full commission delay a ruling on an import ban if Pender's decision was ultimately reversed.

Qualcomm is now pushing for a temporary ban, saying Apple has not provided ample evidence to support the request for delay.

The ITC is set to make a final ruling by March 26.

Once Apple's exclusive modem supplier, Qualcomm has been largely pushed to the sidelines because of a global legal battle between the pair over patents and royalties. The fight kicked off in January 2017, when Apple sued over nearly $1 billion in rebates it said were withheld as retaliation for cooperation with antitrust investigators. Private lawsuits are ongoing around the world, and various government bodies have pursued their own cases, sometimes leveling millions of dollars in fines. A trial brought by the U.S. Federal Trade Commission, with Apple's help, concluded late last month.

The main exception to iPhone supply is in Germany, where Apple recently began selling modified iPhone 7 and 8 models with Qualcomm modems to skirt a device ban there.

Updated with additional detail surrounding Qualcomm's filing.

Comments

  • Reply 1 of 19
    Say what?

    If they update the software so it no longer infringes, then isn't that considered a proper solution? What does Qualcomm want Apple to do? Avoid fixing any issues so they can continue to infringe?
    jbdragonlollivermagman1979berndogolsrandominternetpersonbshank
  • Reply 2 of 19
    sflocalsflocal Posts: 4,748member
    I read all this stuff and am still confused.  Qualcomm is suing apple for infringement... now QC is complaining that Apple fixing the problem?

    Is this how I'm reading it?
    jbdragonlollivermagman1979olsrandominternetpersonbshankwatto_cobra
  • Reply 3 of 19
    sflocal said:
    I read all this stuff and am still confused.  Qualcomm is suing apple for infringement... now QC is complaining that Apple fixing the problem?

    Is this how I'm reading it?
    That's the way I'm taking it. Apple was found to be in violation of two software patents so they fixed that and somehow that's not acceptable? I don't get it. 
    lollivermagman1979watto_cobra
  • Reply 4 of 19
    jbdragonjbdragon Posts: 2,185member
    sflocal said:
    I read all this stuff and am still confused.  Qualcomm is suing apple for infringement... now QC is complaining that Apple fixing the problem?

    Is this how I'm reading it?
    That's the way I'm taking it. Apple was found to be in violation of two software patents so they fixed that and somehow that's not acceptable? I don't get it. 
    Well how do you expect Qualcomm to continue to sue to ban the phones if the issues has been fixed? That's not what they wanted Apple to do or expected Apple to do.
    magman1979mwhitewatto_cobra
  • Reply 5 of 19
    jbdragon said:
    sflocal said:
    I read all this stuff and am still confused.  Qualcomm is suing apple for infringement... now QC is complaining that Apple fixing the problem?

    Is this how I'm reading it?
    That's the way I'm taking it. Apple was found to be in violation of two software patents so they fixed that and somehow that's not acceptable? I don't get it. 
    Well how do you expect Qualcomm to continue to sue to ban the phones if the issues has been fixed? That's not what they wanted Apple to do or expected Apple to do.
    I would think it would be pretty naive of Qualcomm to think Apple would just sit around and do nothing. 
    magman1979mwhitewatto_cobra1st
  • Reply 6 of 19
    I think what Qualcomm was expecting was for Apple to take the usual route of filing to have the patents invalidated and argue they weren’t in violation for whatever reason. Instead they were smart about it. No harm no foul. 
    watto_cobra
  • Reply 7 of 19
    dewmedewme Posts: 2,193member
    It would be nice if Qualcomm and Apple would focus on resolving their business relationships through negotiation at the CEO level. Constantly resorting to using the legal system as a club to attack those you can not or will not talk to is a sign of weakness and ineffectual leadership. What the hell are these so-called leaders being paid for if they cannot solve fundamental business problems on their own? When did so-called leaders of industry become nothing more than utterly pathetic hood ornaments? 
    edited February 19 prairiewalker
  • Reply 8 of 19
    Qualcomm claims a patent for wireless transmission of video, data and audio - and battery saving like throttling the CPU to conserve battery charge - maybe I should take out a patent on "breathing air"
    prismaticswatto_cobra
  • Reply 9 of 19
    boogabooga Posts: 1,080member
    dewme said:
    It would be nice if Qualcomm and Apple would focus on resolving their business relationships through negotiation at the CEO level. Constantly resorting to using the legal system as a club to attack those you can not or will not talk to is a sign of weakness and ineffectual leadership. What the hell are these so-called leaders being paid for if they cannot solve fundamental business problems on their own? When did so-called leaders of industry become nothing more than utterly pathetic hood ornaments? 
    I believe they tried that. The crux of the matter appears to be that Qualcomm agreed to offer “FRAND” (fair, reasonable, and non-discriminatory) Licensing terms in exchange for having their parents made part of the 4G standard. So you can’t really avoid all of them, assuming they’re valid. But then they turned around and tried to take a percentage of total device value as licensing. So if Apple offers a better screen or battery and charges more, Qualcomm expects more money too for the exact same part and function. Apple says that’s not fair, reasonable, and considering Apples unique place in the industry, not non-discriminatory either. Neither side will budge and it’s a fundamental difference of opinion. If Apple loses, all devices which implement any modern spec will become a minefield of patent percentages. Usually there isn’t that clear a bad guy, but here it’s pretty clear it’s Qualcomm acting against the industry and public good. Hopefully they lose soon and hard. 
    muthuk_vanalingamradarthekatrandominternetpersonprismaticstobianshrave10watto_cobra1st
  • Reply 10 of 19
    dewme said:
    It would be nice if Qualcomm and Apple would focus on resolving their business relationships through negotiation at the CEO level. Constantly resorting to using the legal system as a club to attack those you can not or will not talk to is a sign of weakness and ineffectual leadership. What the hell are these so-called leaders being paid for if they cannot solve fundamental business problems on their own? When did so-called leaders of industry become nothing more than utterly pathetic hood ornaments? 
    This is not a fundamental business problem. Qualcomm wants to be allowed to continue in its illegal and anti competitive pricing scheme. When they got investigated over this, Apple provided factual information that they are breaking the law. They decided to punish Apple for not lying, covering up or supporting their scheme. Qualcomm figured, bet the farm really, that Apple would kowtow like so many other companies had before. When Apple didn’t and it became clear that Qualcomm’s usual bullying tactics of threats and fear of legal fees/adverse outcome (Apple can outlast them and more importantly it can afford to lose) were not going to work they collectively shit themselves (oh to be a fly on the wall in that boardroom). They have no way out; there are really only two outcomes.

    1) Most likely. The case is taken to its conclusion and they lose. In this case its game over for them. They have already lost Apple’s future business. Government penalties, civil suits from their other clients who have been similarly fleeced and, critically, being forced to offer terms that are compliant with the law going forward. While they may not necessarily go out of business, Qualcomm will be a mere shadow of it’s former self. Stock price will plummet and it’s shareholders will come seeking blood. They could have left well enough a lone, but sadly hubris and blind greed will have done in the company.

    2) They get Apple to drop it’s suit and parlay that into a successful defense against the government suit. It stands to reason they could pull this off especially if Apple were to stand down as it would give validation to their licensing scheme. This outcome would represent the closest return to the status quo which is going to save the executives their jobs as the bulk of Qualcomm’s income will be preserved (the fleecing continues). They might even increase in value as they would be unlikely to be challenged again. Qualcomm really wants this outcome, but realistically the only way this happens is a sweeping ban that is so catastrophic to Apple’s bottom line it would be forced to comply.

    How do you deal with a company that takes the stance “I will do what I want because I can, even if it is illegal”. Answer is you can’t, behavior like this only exists because the people who engage in it are not held accountable. The parallels to current political situation in the US is uncanny.
    edited February 19 muthuk_vanalingamradarthekatrandominternetpersonflyingdpmacseekerGabyfotoformatManyMacsAgogordoncywatto_cobra
  • Reply 11 of 19
    Qualcomm really is the opposite of impressive with their tactics.  

    How about a news break:  Qualcomm open sources modem technology, ala Tesla!   

    W H A T ? !  :smiley: 
    edited February 20
  • Reply 12 of 19
    booga said:
    I believe they tried that. The crux of the matter appears to be that Qualcomm agreed to offer “FRAND” (fair, reasonable, and non-discriminatory) Licensing terms in exchange for having their parents made part of the 4G standard. So you can’t really avoid all of them, assuming they’re valid. But then they turned around and tried to take a percentage of total device value as licensing. So if Apple offers a better screen or battery and charges more, Qualcomm expects more money too for the exact same part and function. Apple says that’s not fair, reasonable, and considering Apples unique place in the industry, not non-discriminatory either. Neither side will budge and it’s a fundamental difference of opinion. If Apple loses, all devices which implement any modern spec will become a minefield of patent percentages. Usually there isn’t that clear a bad guy, but here it’s pretty clear it’s Qualcomm acting against the industry and public good. Hopefully they lose soon and hard. 

    Not only are the licensing terms not fair, reasonable nor non-discriminatory, but there is the whole "double-dipping" thing, which is what a lot of companies and governments around the world are disputing with Qualcomm, it's not just Apple disputing...

    Essentially, Qualcomm wants to license BOTH the assembling company for the part (Foxconn, etc), AND the device company (Apple) for the same part. Normally, a license for a part covers its use in whatever it is put into. Apple accounts for licensing, and is good with that, but just once -- either Foxconn gets the bill and passes it onto Apple, or Apple gets the bill. But Qualcomm shouldn't be doing both.

    Apple's complaint to Qualcomm about that was partly how Apple got some rebate from Qualcomm (but Apple had to "agree" to let Qualcomm be the exclusive supplier of modems as well). Then Qualcomm withdrew the rebates (1B per year) over Apple testifying in someone else's case against Qualcomm (in S Korea, I think).

    edited February 20 watto_cobra
  • Reply 13 of 19
    It's an entirely reasonable legal argument (which says nothing at all about whether it's reasonable in the broader sense).  The judge's refusal to ban was, at least in part, based on Apple's assertion that they couldn't "fix" the problem and that a ban reduce competition.  Now that Apple has, in fact, admitted that they can fix the issue, a ban on "unfixed" phones becomes reasonable again.

    Of course, since Apple has the ability to "fix" all new phones, a ban on "unfixed" phones becomes moot, simply because there won't be any "unfixed" phones being imported in rather short order.
    stompywatto_cobra
  • Reply 14 of 19
    dewme said:
    It would be nice if Qualcomm and Apple would focus on resolving their business relationships through negotiation at the CEO level. Constantly resorting to using the legal system as a club to attack those you can not or will not talk to is a sign of weakness and ineffectual leadership. What the hell are these so-called leaders being paid for if they cannot solve fundamental business problems on their own? When did so-called leaders of industry become nothing more than utterly pathetic hood ornaments? 
    This is not a fundamental business problem. Qualcomm wants to be allowed to continue in its illegal and anti competitive pricing scheme. When they got investigated over this, Apple provided factual information that they are breaking the law. They decided to punish Apple for not lying, covering up or supporting their scheme. Qualcomm figured, bet the farm really, that Apple would kowtow like so many other companies had before. When Apple didn’t and it became clear that Qualcomm’s usual bullying tactics of threats and fear of legal fees/adverse outcome (Apple can outlast them and more importantly it can afford to lose) were not going to work they collectively shit themselves (oh to be a fly on the wall in that boardroom). They have no way out; there are really only two outcomes.

    1) Most likely. The case is taken to its conclusion and they lose. In this case its game over for them. They have already lost Apple’s future business. Government penalties, civil suits from their other clients who have been similarly fleeced and, critically, being forced to offer terms that are compliant with the law going forward. While they may not necessarily go out of business, Qualcomm will be a mere shadow of it’s former self. Stock price will plummet and it’s shareholders will come seeking blood. They could have left well enough a lone, but sadly hubris and blind greed will have done in the company.

    2) They get Apple to drop it’s suit and parlay that into a successful defense against the government suit. It stands to reason they could pull this off especially if Apple were to stand down as it would give validation to their licensing scheme. This outcome would represent the closest return to the status quo which is going to save the executives their jobs as the bulk of Qualcomm’s income will be preserved (the fleecing continues). They might even increase in value as they would be unlikely to be challenged again. Qualcomm really wants this outcome, but realistically the only way this happens is a sweeping ban that is so catastrophic to Apple’s bottom line it would be forced to comply.

    How do you deal with a company that takes the stance “I will do what I want because I can, even if it is illegal”. Answer is you can’t, behavior like this only exists because the people who engage in it are not held accountable. The parallels to current political situation in the US is uncanny.
    Agree, too easy to put shareholder interest above the law, especially the loophole that you can steal, give it away, make no money and not worth being sued, like Sun vs Google for Android, or Netscape vs Microsoft for IE
    watto_cobra
  • Reply 15 of 19
    sflocal said:
    I read all this stuff and am still confused.  Qualcomm is suing apple for infringement... now QC is complaining that Apple fixing the problem?

    Is this how I'm reading it?
    Qualcomm's position is that Apple being able to fairly easily design around the infringed patent (if the USITC determines that it was infringed) undercuts Apple's public interests arguments against an exclusion or cease-and-desist order.

    If the USITC decides that Apple's devices do infringe the patent in question, it must then decide what remedy - if any - to impose. Generally speaking, an exclusion order would be appropriate if infringement is found. However, the USITC is supposed to take into consideration certain public interest factors and may, based on them, decline to impose an exclusion order even when there is infringement.

    So Qualcomm is arguing that there wouldn't be that much damage from an order barring the import of infringing devices because Apple could, fairly easily, make devices which didn't infringe. So the USITC should bar the importation of devices which still infringe.
    beowulfschmidtwatto_cobra
  • Reply 16 of 19

    AppleInsider said:...

    Qualcomm is seeking to win a ban from the U.S. International Trade Commission after an ITC judge in September made an initial ruling against such action, saying it would be against the public interest. Administrative law judge Thomas Pender did declare Apple in violation of one of three contested patents, however, leaving the door open to later action.

    Pender did not institute an injunction, reasoning that a ban on iPhones with Intel chips would effectively give Qualcomm a monopoly over the wireless modem market. That view is now in question as Apple last week revealed it discovered a software workaround to Qualcomm's design, something it deemed impossible in previous arguments. Qualcomm believes the revelation undermines Pender's decision, which was based on Apple's proclamation that there exists no fix for Qualcomm's patent.

    ...
    To be clear, ALJ Pender didn't institute an exclusion order because that isn't something the ALJ does in such cases. He made a recommendation for what the ITC should do.

    If the ITC decides that there was indeed infringement (because it decided to review that decision from the ALJ), then it has to decide whether or not to impose an exclusion order and/or cease-and-desist order. The ALJ (1) decides whether there's infringement and (2) recommends, but doesn't decide on, a remedy. The ITC then decides (1) whether or not to review the ALJ's infringement decision (if it doesn't review that decision, that decision stands) and (2) if there is infringement, regardless of the remedy recommendation, decides on the remedy.

    Then, of course, there are other steps in the process if an exclusion and/or cease-and-desist order is imposed.
    beowulfschmidtwatto_cobra
  • Reply 17 of 19
    gatorguygatorguy Posts: 21,267member
    booga said:
    dewme said:
    It would be nice if Qualcomm and Apple would focus on resolving their business relationships through negotiation at the CEO level. Constantly resorting to using the legal system as a club to attack those you can not or will not talk to is a sign of weakness and ineffectual leadership. What the hell are these so-called leaders being paid for if they cannot solve fundamental business problems on their own? When did so-called leaders of industry become nothing more than utterly pathetic hood ornaments? 
    I believe they tried that. The crux of the matter appears to be that Qualcomm agreed to offer “FRAND” (fair, reasonable, and non-discriminatory) Licensing terms in exchange for having their parents made part of the 4G standard. So you can’t really avoid all of them, assuming they’re valid. But then they turned around and tried to take a percentage of total device value as licensing. 
    If the standards allow for it then it is legal until final judicial rulings say it isn't. As it stands basing SEP royalties on a finished product cost is F/RANDly. For instance Ericsson is going thru a similar exercise with HTC, and the royalties based on product cost were deemed F/RAND just this week by a Federal judge. this sounds much like Qualcomm's licensing, tho theirs is on steroids:

    "HTC argued that Ericsson’s royalty rates are unreasonable on a number of grounds, including that they are based on the value of the smartphones HTC produces rather than the chips that incorporate the SEPs within the phones. HTC also alleged that Ericsson’s rates do not account for “royalty stacking,” whereby an SEP holder must pay royalties to multiple patent holders to comply with a standard. HTC brought antitrust as well as breach of contract claims. The court, however, severed the antitrust claims and sent them to arbitration prior to trial because they related to past license agreements with enforceable arbitration provisions. The court also severed HTC’s other claims relating to alleged past overcharges, while leaving intact the portion of HTC’s suit seeking licenses to Ericsson’s SEPs on FRAND terms going forward.

    Last October, Ericsson moved for a ruling that its FRAND commitment to the European Telecommunications Standards Institute (ETSI) does not require it to base its royalty rates on the “smallest salable patent-practicing unit” (SSPPU)—in this case, chips. The court held in a January ruling that ETSI’s Intellectual Property Rights policy, adopted in 1994, does not automatically require SEP holders to use the SSPPU as a royalty base. Instead, what constitutes a FRAND royalty rate depends on the particular facts of the case"

    https://www.natlawreview.com/article/federal-jury-finds-ericsson-s-licensing-offer-to-htc-frand
    edited February 25
  • Reply 18 of 19
    1st1st Posts: 394member
    just wondering, does Qcom expect to earn licensing fee from whole handsets $ that use their 5G chipset and processor? including the phone that cost more than $2600?
  • Reply 19 of 19
    gatorguygatorguy Posts: 21,267member
    1st said:
    just wondering, does Qcom expect to earn licensing fee from whole handsets $ that use their 5G chipset and processor? including the phone that cost more than $2600?
    Yes they do, but I don't think you realize the phone costs are capped at $400 (I think. Could be $500).  In other words a $1500 iPhone pays the same in QC royalties as a $500 OnePlus Android phone. Benefit Apple. 
    edited February 26 1st
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