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Qualcomm wins a ban on sale of some iPhones in China

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Qualcomm said Monday that a Chinese provincial court has ordered Apple subsidiaries to stop selling a wide swath of iPhone models in China that infringe on two Qualcomm patents.

The injunctions by the Fuzhou Intermediate People’s Court offer a bit of good news in for Qualcomm in its long, global legal fight with Apple over patent licensing fees.

“Apple continues to benefit from our intellectual property while refusing to compensate us,” said Don Rosenberg, Qualcomm’s general counsel. “These court orders are further confirmation of the strength of Qualcomm’s vast patent portfolio.”

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Apple, however, contends that rulings aren’t much of a blow. The company said all iPhone models remain available for sale in China.

Apple’s most recent version of the iPhone operating system – iOS12 -- has been designed with a work-around to Qualcomm patents, CNBC reported Monday.

“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,” an Apple spokesman said in a statement. “Qualcomm is asserting three patents they had never raised before, including one which has already been invalidated.”

The iPhone maker added that it will pursue its options in court. It can request that the Fuzhou court reconsider the rulings and argue that Apple’s latest operating system no longer infringes on Qualcomm’s patents.

Apple made similar arguments earlier at the trial in the case, said Rosenberg, Qualcomm’s lawyer. The Fuzhou court issued injunctions anyway that “aren’t specific to the operating system installed on the phones.”

“If Apple is violating the orders, Qualcomm will seek enforcement of the orders through enforcement tribunals that are part of the Chinese court system,” said Rosenberg.

The case involves two non-essential Qualcomm patents that allow consumers to adjust and reformat the size of photographs, as well as manage applications using a touch screen.

It requires four Chinese subsidiaries of Apple to immediately stop infringing on the two patents through sales of several models of iPhones in China. The patent office in China previously found that the patents were valid.

Qualcomm said the injunctions cover seven models – iPhone 6S, iPhone 6S Plus, iPhone 7, iPhone 7 Plus, iPhone 8, iPhone 8 Plus and iPhone X.

The rulings do not cover the latest models of iPhones released this fall, including the iPhone XR and iPhone XS.

China is a large market for iPhone sales. The provincial court’s ruling takes effect throughout the country.

In 2017, Apple sold 38 million iPhones in China, said Linda Sui, director of smartphone services for Strategy Analytics, a technology research firm. China makes up about 17 percent of Apple’s iPhone sales globally.

Qualcomm filed its patent infringement case in Fuzhou in November 2017. The San Diego company has brought about 20 other patent infringement actions against Apple in different courts throughout China, but the Fuzhou court is the first to issue injunctions.

The move comes as tensions between the U.S. and China are on the rise, sparked in part by the arrest last week of a top executive at telecommunications giant Huawei over an alleged scheme to avoid U.S. sanctions against Iran.

Since early 2017, Qualcomm and Apple have been waging a wide-ranging legal war over royalties that Qualcomm charges for use of its patented cellular technology.

It has been a fierce fight. Apple instructed Asian contract manufacturers that build iPhones to stop paying royalties to Qualcomm, and it ditched Qualcomm chips from its latest iPhone models.

Qualcomm has sought to ban iPhones sales in some countries. It also has accused Apple of stealing trade secrets and supplying them to rival Intel.

Beyond China, Apple and Qualcomm have other legal cases pending in Germany, the U.S. and elsewhere, with several key milestones on tap this year and in 2019.

“This is just one blow, and depending on exactly what software version it applies to, may not be a major hit,” said Stacy Rasgon, an analyst with Bernstein Research. “There are many additional larger battles to come.”

Qualcomm Chief Executive Steve Mollenkopf has said that victories in patent infringement cases could help spark negotiations between the companies.

But Apple lawyers said recently in San Diego federal court that there are no settlement talks between the companies, which haven’t spoken in months.

Later this week, the U.S. International Trade Commission will decide whether to review an administrative law judge’s decision not to ban certain iPhone models in the U.S., despite finding that Apple infringed on a Qualcomm power management patent.

Next week, a German court is expected to make a ruling on whether Apple infringed on five Qualcomm patents.

The trial in the U.S. Federal Trade Commission’s antitrust lawsuit against Qualcomm is slated for early January in federal court in San Jose – and could be an important turning point in the legal war between the companies, said Rasgon, the Bernstein analyst.

Finally, the main lawsuit between Apple, Qualcomm and contract manufacturers that build iPhones is scheduled for trial in April in San Diego federal court.

Qualcomm’s shares ended trading Monday up 2 percent at $57.24 on the Nasdaq exchange. Apple’s shares gained about 1 percent to $169.60.

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mike.freeman@sduniontribune.com;

Twitter:@TechDiego

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