The ongoing legal saga between Qualcomm and Apple over iPhone royalty payments took an interesting turn today. According to CNBC, a court in China recently granted Qualcomm an injunction over the import and sale of various iPhone models. The impetus for the ban stems from a handful of random patents Qualcomm claims Apple’s iPhone infringes upon, one of which encapsulates the ability for a user to adjust the orientation of a photo via a touch interface. While the patent in question doesn’t have much to do with the core issue of the dispute, both companies — as tends to happen in complex litigation — are seemingly throwing everything against the wall in an effort to strengthen their negotiating position.
In the wake of the ruling, Apple doesn’t appear to be flustered in the slightest. In a statement on the matter, an Apple spokesperson relayed the following: “Qualcomm’s effort to ban our products is another desperate move by a company whose illegal practices are under investigation by regulators around the world. All iPhone models remain available for our customers in China. Qualcomm is asserting three patents they had never raised before, including one which has already been invalidated. We will pursue all our legal options through the courts.”
As to why Apple is still selling the iPhone in China, the company claims that the patents in question pertain to older iterations of iOS. In other words, every iPhone model Apple currently sells runs iOS 12 and, as a result, is impervious to the import and sales ban.
The sales ban aside, the crux of the ongoing legal tussle between Qualcomm and Apple centers on how royalty rates for the iPhone are calculated. For years, Qualcomm has been charging Apple a royalty rate based on the percentage of the entire cost of an iPhone. Apple naturally believes that this approach artificially inflates the amount of money Apple is obligated to hand over to Qualcomm.
Explaining Apple’s position on the matter, Tim Cook earlier this year said the following during an earnings conference call:
The reason that we’re pursuing this is that Qualcomm’s trying to charge Apple a percentage of the total iPhone value. And they do some really great work around standards-essential patents, but it’s one small part of what an iPhone is. It’s not – it has nothing do with the display or the Touch ID or a gazillion other innovations that Apple has done. And so we don’t think that’s right, and so we’re taking a principled stand on it. And we strongly believe we’re in the right, and I’m sure they believe that they are. And that’s what courts are for.
While it’s possible that a settlement agreement between the two companies is possible, it doesn’t seem probable at this point. Barring any last-minute agreement, a trial is set to take place sometime early next year.
