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Apple pull some 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.

FILE PHOTO: the Man makes use of the iphone while waiting for his plane at the airport of Munich, Germany August 3, 2017. Photo taken on 3 August 2017. REUTERS/Michaela Rehle/File Photo

Qualcomm’s win in Germany, comes weeks after it secured a court order to ban the sale of some models of the iPhone in China. Apple, who is contesting both rulings, has continued its iPhones 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. Still, it is a small, but clear victory in a complex legal battle that will spin into overdrive in the coming months, as antitrust regulators and Apple are both 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 the chip supplier of the large stable of technological innovations without proper compensation.

While a sales ban in China could hurt Apple’s bottom line, it is unlikely that the two patent skirmishes will sway the outcome of the broader struggle, where Qualcomm has suffered a series of setbacks against the U.S. antitrust regulators.

The shares of Apple were 2.3 percent at $157.12 in late trading, weighing on the broader market.

Qualcomm shares were down 0.2 percent at $56.69.

Qualcomm is not the pursuit of software patents in the Chinese case in other jurisdictions, and suffered an early loss during the pursuit of a U.S. sales ban on the AMERICAN version of the hardware patent at issue in Germany.

OLDER PHONES PULLED

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

“Two respected courts in two different jurisdictions just in the past two weeks have now confirmed that the value of Qualcomm’s patents and stated that Apple is an offender, order a ban on iPhones in the important markets of Germany and China,” Don Rosenberg, Qualcomm’s general counsel, said in a statement.

For each of the two Apple entities, the orders will, Qualcomm needs to post a bond of about 668.4 million euros, or $765.9 million, before he can start the procedure for the enforcement of the order, a motion Qualcomm said that it would run out “within a few days.”

The smartphone maker said that it was an appeal against the decision, but the order goes into effect as soon as Qualcomm messages of the bond.

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 Germnany 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.

When 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.

Qualcomm said the judge granted her request to “recall and destruction of all the accused devices of all retailers in Germany.”

RISKS

But forward with the enforcement presents a number of risks for Qualcomm. In an earlier proceedings before the U.S. International Trade Commission, the US regulators are looking at a more comprehensive set of technical instructions about the question or Qorvo chips and Apple-based phones infringed Qualcomm’s patents.

That US regulators are on the side of Apple, and Qorvo. If there is a higher courts in Germany are doing the same as Apple’s appeal, Qualcomm could be forced to forfeit the bond if the decision is final.

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 U.S. and China.

In the United States, Qualcomm asked for a ban on the import of iPhones with chips from Intel Corp. Trade regulators found Apple had infringed on Qualcomm patents, but so far refused to put a ban on phones with Intel chips because regulators feared it would hurt competition in the chip marketplace.

“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,” Steven Rodgers, Intel’s general counsel, said in a statement after the ruling in Germany.

In Germany, the court ruled that phones with a chip Apple-supplier Qorvo violate 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.

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.

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“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.

In China, Apple is still the pursuit of a so-called request for reconsideration of the court that the licence forbids.

Apple said her phone has remained on sale and she thought that he has complied with the Chinese court’s order, but it also made changes to the iPhone software, in the wake of the ruling. Qualcomm believes that Apple is violating the Chinese court, despite the new software and the need to stop the sale of phones.

Reporting by Joern Poltz in Munich, Stephen Nellis in San Francisco and Jan Wolfe in Washington; Writing by Emma Thomasson; Editing by Tassilo Hummel, Bernadette Baum and Nick Zieminski

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