Qualcomm Goes for Apple’s Jugular, Seeks iPhone Import Ban

Jul 06, 2017

Qualcomm further escalated its legal battle with Apple on Thursday, filing a new patent infringement lawsuit and seeking to have imports of some iPhones and iPads banned from the country.

In a federal lawsuit filed on Thursday, the dominant communications chip maker said Apple was violating six of its patents that cover key mobile technologies. But none of the six are part of wireless industry standards required for mobile phones to communicate, Qualcomm said. Apple stopped its manufacturers from paying Qualcomm royalties on iPhones and iPads with mobile chips in April.

In a separate action to be filed with the U.S. International Trade Commission on Friday, Qualcomm says all iPhones and iPads that contain competing mobile communications chips should be barred from the country. About half of all iPhones now contain wireless modem chips made by Intel (intc). Qualcomm said it could take up to 18 months for the ITC to act on its complaint, so upcoming new iPhones expected in the fall wouldn't be blocked.

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The moves follow Apple's lawsuit in January charging that Qualcomm was abusing its dominant position to charge excessive royalties. The lawsuit, and similar actions by regulators around the world, challenges Qualcomm's core business practice of calculating its royalties as a percentage of the value of an entire phone, not just on the value of the mobile chip components. The threat has pushed Qualcomm (qcom) stock down 16% so far this year.

Qualcomm carefully selected the six patents to demonstrate that its intellectual property extends beyond the technologies included in industry standards, where its rights to charge royalties are somewhat constrained.

That makes the latest lawsuit narrower and more focused that earlier back and forth filings by Apple and Qualcomm, Patrick Moorhead, president of Moor Insights & Strategy, says. "Qualcomm likely narrowly defined it to increase their chances of success," Moorhead said. "Qualcomm has no obligation to grant those patents."

Apple repeated its stance that it had tried to negotiate before suing and that Qualcomm is abusing its position.

"They supply us with a single connectivity component, but for years have been demanding a percentage of the total cost of our products - effectively taxing Apple's innovation," Apple said in a statement. "We believe deeply in the value of intellectual property but we shouldn't have to pay them for technology breakthroughs they have nothing to do with."

Among the six patents are processes used by smartphones to save battery life while communicating and to implement a technology called carrier aggregation that combines different spectrum channels to increase data speeds. U.S. carriers are moving to quickly deploy carrier aggregation to help customers reach gigabit-per-second download speeds.

"If Apple was a willing licensee and Apple was someone who was, like everybody else, willing to pay for what they use, we wouldn't be suing them on these patents," Don Rosenberg, Qualcomm's general counsel, said in an interview. "But they're not, and we felt we were put in a position, given all the lawsuits they've brought against us around the world, of not simply having to defend ourselves but having to take some affirmative action ourselves."

All six patents were granted between 2013 and 2017, a period not covered by Qualcomm's prior agreements with Apple's (aapl) iPhone manufacturers, the company said.

"They're neither standards nor licensed," Rosenberg explained.

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