Apple draws level with Qualcomm after Germany win

A German court has dismissed Qualcomm’s efforts to block iPhone sales in the country as ‘groundless’ as Apple hit back in the on-going global patent dispute.

According to Reuters, the regional court in the city of Mannheim threw out the case stating the patent in question was not violated by Apple’s installation of Qualcomm chips in its smartphones. Qualcomm has already said it will appeal the decision, as the pair trade blows in various courts throughout across the world.

This case focuses on the use of Intel-chips in certain Apple devices, with Qualcomm suggesting one of its patents had been infringed. The patent in question relates to power management.

Back in September, Qualcomm effectively accused Apple of corporate espionage, questioning how the gulf in performance when measuring its own chips against Intel’s could have been bridged so quickly. However, this argument clearly wasn’t enough to convince the Mannheim judge of wrong-doing.

Having already secured an order to block the sale of certain iPhones through a ruling in Munich, as well as a similar decision in China, Apple needed a win to halt the Qualcomm momentum. The pair have been trading blows over patents and royalties for years now, though the on-going case in the US could prove to be the most significant battle of the dispute.

The chipmaker is currently facing a FTC antitrust investigation, which has escalated to trial, currently being heard in the US District Court in San Jose, California. As you can imagine, Apple, Intel and various others have been playing the part of very proactive cheerleaders, urging on the FTC from the side-lines.

This trial has now concluded for the sixth day, with the FTC calling various witnesses from tech companies such as Apple, Samsung and Ericsson, as well as IP experts from consultancies and universities. The aim is to prove Qualcomm is effectively a monopoly, abusing this prominent position through excessive royalty payments and unreasonable licensing agreements for years.

With the FTC now taking a seat, the next couple of days will see the Qualcomm lawyers preach their case. Here, the team will aim to prove the royalty payments are justified, such is leadership position Qualcomm has worked up in the segment, and the licensing arrangement is the most beneficial and simplistic way to do business. The Qualcomm lawyers are certainly well practised in the art of arguing against antitrust accusations, so it will be interesting to see which way this trial heads.

While the win in Germany is certainly a positive for Apple, which has been on the losing side of a few of the recent skirmishes, the FTC trial is the big one for both parties.

Qualcomm pays $1.5bn to ban some iPhone sales in Germany

Qualcomm has elected to post $1.5 billion as a security bond to enable the enforcement of remedies ordered by the Munich District Court blocking the sale of iPhone 7 and iPhone 8 models in Germany.

The ban comes as the latest chapter of the long-running Qualcomm-Apple legal saga, with the chipmaker finding success in its copyright infringement claim in Germany. On December 20 the District Court of Munich decided Apple had in fact infringed Qualcomm’s technology for power savings in the older models and ordered the company to halt all sales in Germany.

Although the ruling was make a couple of weeks ago, the bond itself makes the ban official, allowing the court to pay Apple for any damages incurred should it be able to successfully appeal against the ruling. Apple has already stated it will appeal the ban and will also stop selling the devices at its 15 retail locations across the country.

But this doesn’t seem to be good enough for Qualcomm.

“Apple was ordered to cease the sale, offer for sale and importation for sale of all infringing iPhones in Germany,” Qualcomm said in a statement. “The Court also ordered Apple to recall infringing iPhones from third party resellers in Germany.”

This is one of the elements of interpretation in the case. Apple will continue to ship devices to third-parties to sell, only ceasing sales at its own retail locations. Qualcomm lawyers read the ruling differently however, suggesting this is a blanket ban on all iPhone 7 and iPhone 8 devices across the country, third-party retailers included.

For Apple, this is just a bad end to a bad week. Having just reduced its guidance for what traditionally is its strongest quarter in the year, a sales ban in a large, developed market is not ideal. Some suggest it has nothing to worry about considering these are older models, though cash conscious consumers are more alert to bargains than ever before and the iLeader seemingly pushed the pricing boat too far with the ridiculously priced iPhone X.

For Qualcomm, assuming it can fight to have the ruling upheld, this is a massive win. Precedent is a very powerful concept in the legal world and this might well be an order which it can use as evidence for additional ruling in other markets. The legal battle between the two has certainly been a long one, but this ruling has handed the Qualcomm team a bit of additional incentive.

Looking at the wider patent dispute, a similar case has been heard in China, were Apple has been told to stop importing the infringing models while Qualcomm is also pushing the case in the US. Qualcomm has the better of the early exchanges, though it will be the US ruling which will dictate the winner of this battle ultimately.

Intel triggered into joining Qualcomm Apple spat

Qualcomm has accused Intel of cheating at modems with Apple’s help, but Intel’s weak public riposte is unlikely to sway much opinion in its favour.

Judging by the general quality of their press releases all three of the companies involved in this spat refuse to issue a single public utterance until every syllable has been pored over by battalions of lawyers. As a consequence, when they decide to slag each other off via the media the result falls pretty far short of Wildean in its wit.

To be fair to Qualcomm, its latest allegations weren’t strictly public, although you have to wonder what the source of the court filing leak that resulted in the rest of the world knowing about it was. Essentially Qualcomm is questioning how Apple was able to replace its modems with Intel ones in the latest iPhones and figured it must have given Intel trade secrets to ensure its modems were up to the job.

Intel’s General Counsel Steven Rodgers posted a riposte entitled ‘Qualcomm’s Rhetoric Pierced’, which promised all kinds of rebuttals, refutations and rebukes but instead delivered a disappointingly generic whinge that amounted to ‘how dare you?’ It started fairly promisingly with a round up of all the fines Qualcomm has been hit with over the past couple of years for violating competition laws.

But then it degenerated into a general purpose moan about how unfair the allegations are when everyone at Intel works really hard, actually. “We are proud of our engineers and employees who bring the world’s best technology solutions to market through hard work, sweat, risk-taking and great ideas,” pouted Rodgers. “Every day, we push the boundaries of computing and communication technologies. And, the proof is in the pudding: Last year, the U.S. Patent Office awarded more patents to Intel than to Qualcomm.”

The correct form of the proverb is ‘the proof of the pudding is in the eating’, but if Intel chooses to keep its patents inside some form of dessert, who are we to judge? “For the most part, we have chosen, and will continue to choose, to respond to Qualcomm’s statements in court, not in public,” said Rogers, showing the acute judgment that you would expect of a senior Lawyer. Qualcomm has yet to publicly respond.

Nokia set to make €3 per 5G smartphone in licensing boom

Nokia has announced it is set to make €3 per smartphone through the company’s 5G portfolio of standard essential patents (SEPs), as the commercial realities of the awaiting 5G era start to become clearer.

Perhaps this was a move to calm the nervously shifting investors who have been waiting for the windfall for some time now. Nokia’s management team have been promising 5G fortunes through equipment upgrades, though the new dawn is yet to emerge, while operators continuing to insist CAPEX will not increase during the euphoria will not help the situation. This announcement might be nothing more than a settler for investors, putting an attractive financial target on the 5G boomtime.

Over the course of 2017, the Nokia licensing business generating roughly €1.6 billion, which included a €300 million payment in non-recurring revenues. Growing the recurring revenues column in this business unit would certainly be a way to healthily improve profitability.

“Nokia innovation combined with our commitment to open standardization has helped build the networks of today and lay the foundations for 5G/NR,” said Ilkka Rahnasto, head of the Patent Business at Nokia. “This announcement is an important step in helping companies plan for the introduction of 5G/NR capable mobile phones, with the first commercial launches expected in 2019.”

The standardisation process of new technologies might not be the most exciting aspect of the development roadmap, but when Nokia makes these announcements are made the pain of rubbing shoulders with competitors and enduring the forensically detailed conversations start to pay off. Nokia expects to have a significant position in SEPs once the standards are finalized later in 2018, with the licensing rate for the 5G SEP portfolio capped at €3 per device.

While €3 device is attractive, some investors might wonder what all the fuss is about, it’s not an earth-shaking amount of cash after all, but the expanse of 5G takes licensing businesses onto a whole new frontier. With 5G set to penetrate almost every aspect of our lives, and IoT seeking to become a revolution of its own, the number of devices in the field which could make use of Nokia’s patents becomes quite extraordinary.

This promise seems to be more at enticing investors to sit back more comfortably, as there are few concrete promises. The €3 rate does not cover these devices, though it will depend on numerous conversations with the various licensees. What should be worth noting is that is likely to much more varied when you take into account some IoT devices might not cost €3 to manufacture.

Of course, Nokia isn’t the only company with skin in the game. Ericsson announced back in March it would charge $2.50 for SEPs in lower-end devices and up to $5 as you scale up the portfolios. Who actually has the upper hand in the licensing game is unknown for the moment, and will remain so until the ink is dry on the final standard.

The old master of the licensing game, Qualcomm, is another which will aim to continue to benefit from the 5G euphoria. This is a perfect example of what can be achieved through an effective licensing business, as Qualcomm has dominated standards setting in 3G and 4G wireless, with both handset manufacturers and telecommunications gear makers paying royalties to the firm. The majority of profits at the chipmaker have come as a result of this business unit for several years.

With Nokia joining Ericsson in announcing patent rates, Huawei is the final vendor of the this segment we are waiting on. Those of a paranoid persuasion will be fidgeting ahead of this announcement, hoping the Chinese giant will also officially state its sticking to fair, reasonable and non-discriminatory (FRAND) terms.

Endless design patent case orders Samsung to pay Apple $539 million

Apple accused Samsung of coping some design elements from the iPhone back in 2011 and the lawyers have been making hay ever since.

First Samsung was found guilty of at least some of the claims in 2012 and ordered to hand over $1 billion for Apple’s troubles. Samsung appealed the amount and that’s what has, for some reason, taken six years to thrash out. Samsung paid up $399 million for design patent infringements following one wave of appeals but apparently want some of that back. Instead it has been told to find an extra $140 million, which must be pretty gutting.

The following public statement has been attributed to Samsung: “Today’s decision flies in the face of a unanimous Supreme Court ruling in favour of Samsung on the scope of design patent damages. We will consider all options to obtain an outcome that does not hinder creativity.”

Apple, meanwhile has been quoted as saying “It is a fact that Samsung blatantly copied our design. We’re grateful to the jury for their service and pleased they agree that Samsung should pay for copying our products.”

Design patents are a difficult area. To what extent can you prove that one rectangular touchscreen devices copied another? One of the patents, for example, concerns how rounded the corners are. Is only Apple allowed rounded corners? It also shows the frequent futility of patent litigation between companies that conclude it’s cheaper to keep the matter in the courts indefinitely than pay any fines.