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Apple pull iPhones in Germany as Qualcomm expands global wins

MUNICH/SAN FRANCISCO (Reuters) – Chip supplier Qualcomm Inc won a second court skirmish in its global patent battle with Apple Inc on Thursday, with the iPhone maker says that it would attract some older models of the German stores.

A woman looks at the screen of her mobile phone in front of an Apple logo outside its store in Shanghai, China 30 July 2017. REUTERS/Aly Song

Qualcomm’s win in Germany, comes weeks after it secured a court order in China to ban sales of some models of the iPhone in that country. Apple, which is appealing both judgments, it is held all the iPhones on sale in China, but changes to its iOS operating system in the wake of the Chinese order.

The German victory may have an impact on of only a few million iPhones out of the hundreds of millions that Apple sells every year, but it is a high-profile part of a larger legal battle that will spin into overdrive in the coming months, with the antitrust regulators and Apple both taking Qualcomm to court in the United States.

Apple claims that Qualcomm engaged in illegal conduct to maintain a monopoly on the modem chips that help mobile devices connect to wireless data networks. Qualcomm has, in turn, Apple is accused of using large stable of technological innovations without proper compensation.

On Thursday, Apple said it would pull older iPhones from the German stores after a court there ruled that Apple infringed a hardware patents from Qualcomm Inc and a ban on the sale of iPhones there with chips from Apple’s supplier Qorvo Inc.

Qualcomm needs to post a bond of 668.4 million euros, or $765 million, before he can start the procedure for the enforcement of the order, a movement that can take a few days due to holiday-related court closures next week. Apple said that it was an appeal against the decision, but the order goes into effect as soon as Qualcomm messages of the bond.

The shares of Apple declined 0.6 percent to $159.89 in the afternoon trade. Qualcomm shares rose 1 percent to 57.22.

Apple said that it would attract some of the phones from its stores, while the profession.

“We are obviously disappointed by this ruling, and we plan to appeal,” Apple said in a statement. “All models of the iPhone will continue to be available for customers through service providers and resellers in 4,300 locations in Germany. During the appeal procedure, iPhone 7 and iPhone 8 models are not available in Apple’s 15 stores in Germany. iPhone XS iPhone XS Max and iPhone XR will remain available in all our stores.”

Stacy Rasgon, an analyst at research firm Bernstein, said in a note that Germany was a small iPhone market from Apple, selling around 10 million units per year, with possible only half of those who have the older models affected by the court.

If Qualcomm messages of the bond to the enforcement of the order, it may seek to extend the ban of Apple resellers, and the newer iPhone models are not so far, legal experts say.

The case is part of a broader court conflict between the two, in which Apple has asserted that Qualcomm engaged in anti-competitive business practices to secure a monopoly on the so-called modem chips that help mobile phones connect to wireless data networks. The US Federal Trade Commission has also sued Qualcomm over the state of affairs in a case brought to court in California next month.

Qualcomm has asserted in courts all over the world that Apple violated patents and requested a ban on iPhone sales in the United States and China.

The German case is Qualcomm’s third major attempt to put a ban on Apple’s lucrative iPhones over a patent infringement accusations after similar efforts in the United States and China.

In Germany, Qualcomm is looking to a ban on some iPhones with chips from Intel Corp. The court ruled that phones contain a chip Apple-supplier Qorvo Inc infringed one of Qualcomm’s patents around the so-called envelope tracking, a feature that helps the mobile phones battery power during sending and receiving of wireless signals.

“The competition authorities around the world have repeatedly found Qualcomm licensing practices illegal, but Qualcomm continues to achieve the same result by means of a campaign of patent lawsuits. These lawsuits have been largely unsuccessful, and at best would reduce innovation and increase prices,” Steven Rodgers, Intel’s general counsel, said in a statement.

Mike Baker, Qorvo’s chief intellectual property counsel, said in a statement that the U.S. trade regulators ruled that Qorvo the chips are not in conflict with the AMERICAN version of Qualcomm’s patent and that the chip’s inventor was not allowed to testify in the German to hear.

“We believe that our envelope tracking chip does not infringe on the patent in suit, and the court would have come to a different conclusion if it had considered all the evidence,” Baker said.

Qualcomm was not immediately available for comment.

Qualcomm sued by Apple in the court in Munich in July last year seeking an injunction to halt some of the iPhone sales in Germany, as well as a damages.

U.S. regulators found Apple infringed Qualcomm patents, but have so far recommended against the ban of some iPhone sales, but a Chinese court for a sales ban on some iPhones earlier this month. Apple said the phones will remain on sale and that it believes that it has complied with the Chinese court’s order, but it also made changes to the iPhone software, in the wake of the ruling.

Reporting by Joern Poltz in Munich and Stephen Nellis in San Francisco; Writing by Emma Thomasson; Editing by Tassilo Hummel and Bernadette Baum

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