Qualcomm says Apple's software workarounds undermine case against US iPhone ban [u]
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.
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.
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
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?
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.
How about a news break: Qualcomm open sources modem technology, ala Tesla!
W H A T ? !
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).
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.
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.
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.
"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