Getting Up To Speed On Apple, Qualcomm's Legal Battle
Share us on: By Matthew Bultman
Law360 (January 14, 2019, 3:28 PM EST) -- The two-year legal war between Apple Inc. and Qualcomm Inc. over patents, licensing practices and trade secrets is barreling ahead, with a series of notable legal developments in recent months. Here is everything you need to know to get up to speed.
The sprawling dispute between two of the biggest players in the smartphone industry has been in full swing since January 2017 and revolves around royalties that Qualcomm charges for use of its cellular technology.
Apple has accused Qualcomm of unfair licensing practices, while the chipmaker alleges Apple infringes its patents and exposed its confidential information. There have been significant advancements in the global showdown as of late, including orders from courts in Germany and China.
Here is a look at some of the biggest developments.
ITC, Subterfuge
Apple won an early round in September when an International Trade Commission judge recommended against blocking certain iPhones and iPads that use chips made by Qualcomm rival Intel Corp. from being imported into the U.S.
Although Administrative Law Judge Thomas B. Pender found infringement of a Qualcomm patent on power saving technology, the judge decided a ban was not in the public interest. The case is being reviewed by the full ITC.
Apple, various industry groups, including the Computer & Communications Industry Association, and even some members of Congress have argued such a ban would remove the only competition to Qualcomm in the market for premium LTE chips and could lead to higher prices for consumers.
"An exclusion order would create a monopoly in the open market for baseband chipsets just as 5G deployment begins, which would result in higher prices, less stable supply, and reduced innovation," Rep. Andy Biggs, R-Ariz., wrote in a letter to the ITC.
Around the same time as the ITC judge's decision, Qualcomm accused Apple in California state court of exposing its trade secrets to engineers who were working with Intel. Qualcomm alleged a yearslong campaign of "false promises, stealth, and subterfuge."
The claims came as part of Qualcomm's 2017 lawsuit accusing Apple of violating the terms of a software license agreement. Qualcomm said new information had emerged during discovery and asked to amend its complaint.
"Apple's wrongful behavior extended far beyond breaching the [software agreement] and encompasses a multi-year campaign of sloppy, inappropriate, and deceitful conduct designed to steal Qualcomm's confidential information and trade secrets," Qualcomm wrote in a court filing.
German, Chinese iPhone Bans
The dispute took another turn last month when a German court found Apple infringed a Qualcomm patent on a feature that limits power consumption in smartphones, and forced Apple to pull the iPhone 7 and iPhone 8 from its German stores. The phones remain available through resellers.
The ruling, which Apple has appealed, came after a Chinese court issued preliminary injunctions against the sale of several older versions of the iPhone. The decision was based on patents that allow users to adjust the appearance of photographs and to manage applications with a touch screen.
Apple, which has criticized the infringement cases as a distraction from lawsuits over Qualcomm's licensing practices, continues to sell its older phones in China and shortly after the ruling released a software update that it contends works around Qualcomm's patents.
This has not pleased Qualcomm, which accused Apple of flouting the legal system. In an interview with Bloomberg TV in December, Qualcomm General Counsel Don Rosenberg said the "order is something that needs to be taken very seriously, unlike Apple seems to be."
"It should be taking a bite out of Apple's sales right now in China," he said, adding Qualcomm is seeking an order covering newer iPhone models.
California Trials, No Deals
Back in the U.S., a federal judge in San Diego recently set an April trial date in a lawsuit where Apple is taking aim at Qualcomm's licensing practices.
Apple has alleged that Qualcomm illegally double-dips by selling chips and then separately licensing the underlying intellectual property. This has been referred to as the "no license, no chips" policy. Apple also claims to have been overcharged in licensing fees and royalties.
Several contract manufacturers that make Apple devices, including Foxconn Corp. and Wistron Corp., have become wrapped up in the dispute. The manufacturers have filed their own claims against Qualcomm and are reportedly seeking $9 billion in damages.
In the meantime, Qualcomm is in the midst of a bench trial in the Northern District of California in an antitrust case that was brought by the Federal Trade Commission, which like Apple is challenging Qualcomm's purported "no license, no chips" policy.
"Qualcomm has valuable patents that are fundamental to cellular communications," FTC attorney Jennifer Milici said during opening arguments Jan. 4. "The FTC does not dispute that it has valuable patents ... but this is an antitrust case."
"Making valuable technology does not exempt companies from antitrust laws," Milici added.
It's unclear when the judge will rule in the FTC case, but Apple is likely keeping close tabs on the trial. And it appears there isn't much chance of a deal between the two sides. Earlier this month, Apple CEO Tim Cook said the two sides had not had any recent settlement discussions.
"We haven't been in any settlement discussions with them since the third calendar quarter of last year," Cook said on CNBC's "Mad Money."
--Editing by Brian Baresch and Aaron Pelc.
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