Patents / Intellectual Property
Very High Stakes

China bans sale of most iPhone models after granting Qualcomm an injunction against Apple

Burgess COMMENTARY

Peter Burgess

China bans sale of most iPhone models after granting Qualcomm an injunction against Apple Chinese exec's arrest intensifies trade conflict FILE - In this Dec. 1, 2018, file photo, U.S. President Donald Trump, second right, and China's President Xi Jinping, second left, attend their bilateral meeting at the G20 Summit in Buenos Aires, Argentina. A U.S.-Chinese cease fire on tariffs gives jittery companies a respite but does little to resolve a war over Beijing's technology ambitions that threatens to chill global economic growth.

Chinese exec's arrest intensifies trade conflict

New York (CNN Business)A Chinese court has banned the sale and import of most iPhone models in a stunning decision amid the trade war between the United States and China.

The ban does not cover the new iPhone XS, iPhone XS Plus or iPhone XR, which were not yet available when Qualcomm filed its lawsuit. The phones covered by the ban make up about 10% to 15% of current iPhone sales in China, according to Daniel Ives, analyst at Wedbush Securities.

The court granted a pair of preliminary injunctions requested by Qualcomm, an American microchip maker. Qualcomm claims that Apple violates two of its patents in the iPhone 6S, iPhone 6S Plus, iPhone 7, iPhone 7 Plus, iPhone 8, iPhone 8 Plus and iPhone X. The patents allow people to edit and resize photos on a phone and to manage apps by using a touchscreen, according to Qualcomm.

Trump wants iPhones made in the US. That could be bad news for Americans Trump wants iPhones made in the US. That could be bad news for Americans

The practical effect of the injunction is not yet clear. The ruling was announced publicly Monday but put into effect last week, but Apple said in a statement that all iPhone models remain available in China. The company was still selling some of the models in question, like the iPhone 7 and iPhone 8, on its China website on Tuesday. Qualcomm said in a statement that it would seek to enforce the injunction.

'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 Don Rosenberg, general counsel for Qualcomm.

Apple has accused Qualcomm of playing dirty tricks, including asserting a patent that had already been invalidated by international courts, and other patents that it had never before used. Apple said it will pursue a legal response in court.

'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,' Apple said. Apple on Monday filed a request for the court to reconsider its decision. Qualcomm applauded the ruling, saying Apple owes it money for using its technology.

'We deeply value our relationships with customers, rarely resorting to the courts for assistance, but we also have an abiding belief in the need to protect intellectual property rights,' said Rosenberg. 'Apple continues to benefit from our intellectual property while refusing to compensate us.'

Investors were mostly unmoved. Apple's (AAPL) stock closed up nearly 1% Monday. Qualcomm's (QCOM) stock rose 2%.

Shock ruling adds to threat of trade war escalation

The ruling was a surprise. Product injunctions are rarely granted, and China was widely expected to reject Qualcomm's request for a ban.

Huawei exec's arrest opens a new front in the US-China trade war Huawei exec's arrest opens a new front in the US-China trade war

Although it's impossible to know whether politics played a part in the decision, China and the United States are embroiled in a tit-for-tat trade war that threatens to boil over. Technology is at the heart of the clash between the two countries.

Days after President Donald Trump and President Xi Jinping agreed on a 90-day trade truce, Canada announced that it is holding for extradition to the US the chief financial officer of Huawei, China's biggest telecommunications company. A bail hearing for the Huawei CFO, Meng Wanzhou, continues Tuesday.

If the countries can't come to terms on a lasting agreement by the end of the 90-day window, Trump has threatened to impose tariffs on essentially all Chinese exports to the United States that are not already subject to import taxes.

Global battle between tech giants

Apple and Qualcomm are suing one another in courts across the world. Billions of dollars are at stake, and each side has claimed some victories.

Trump says China is now open to Qualcomm-NXP deal. But it's too late Trump says China is now open to Qualcomm-NXP deal. But it's too late

In 2017, Apple sued Qualcomm for $1 billion after the chipmaker stopped paying for the exclusive right to put its chips in iPhones. Qualcomm withheld its payments after the European Union began investigating them. The EU ultimately deemed the payments illegal, and In January 2018, the European Commission ordered Qualcomm to pay a $1.2 billion fine over the issue.

Apple and Qualcomm are also suing one another in several separate patent disputes. Qualcomm has asked a US federal judge to ban the sale of iPhones in one case. In June, a judge in the Internati onal Trade Commission found that Apple had violated one of Qualcomm's patents related to battery-saving technology.

In July, Qualcomm said Apple would no longer include its modems in iPhones. Qualcomm cut its profit forecast after the announcement.
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Play Video sweetgreen founders fresh money_00000304.jpg How three college friends started this billion dollar company Here's how the Apple Watch's heart monitor works This photo taken on January 11, 2018 shows a Marriott logo in Hangzhou in China's Zhejiang province. Authorities in China have shut down Marriott's local website for a week after the US hotel giant mistakenly listed Chinese-claimed regions such as Tibet and Hong Kong as separate countries. / AFP PHOTO / - / China OUT (Photo credit should read -/AFP/Getty Images) Marriott's guest reservation system hacked 2019 Buick LaCrosse Avenir GM is getting rid of these 6 cars From a drop of blood, this company can predict what your face looks like PHOENIX, AZ - MARCH 05: A worker builds a new home at the Pulte Homes Fireside at Norterra-Skyline housing development on March 5, 2013 in Phoenix, Arizona. In 2008, Phoenix, Arizona was at the forefront of the U.S. housing crisis with home prices falling 55 percent between 2005 and 2011 leaving many developers to abandon development projects. Phoenix is now undergoing a housing boom as sale prices have surged 22.9 percent, the highest price increase in the nation, and homebuilders are scrambling to buy up land. (Photo by Justin Sullivan/Getty Images) Why home builder stocks are getting crushed Why oil is in a bear market A tale of two minimum wages