Chinese court grants Qualcomm injunction, bans sale of iPhones with iOS 11

Qualcomm said that it won two injunctions from a Chinese Court barring Apple from selling several models of iPhone that were found to violate two patents held by Qualcomm.

It is unclear what the impact of the ruling will be. Apple maintains that the order pertains only to iPhones running the legacy iOS 11 — an assertion that  Qualcomm disputes — and said all iPhone models remain available for sale in China.

"The orders aren’t specific to the operating system installed on the phones," said Dan Rosenberg, Qualcomm's general counsel and executive vice president. "Apple made similar arguments in the trial on the merits, and the court went forward and issued these orders. If Apple is violating the orders, Qualcomm will seek enforcement of the orders through enforcement tribunals that are part of the Chinese court system.”

The ruling — issued by the Fuzhou Intermediate People’s Court in China — is the latest chapter in the ongoing feud between Apple and Qualcomm, the longtime supplier of the baseband modem used in iPhones. Since a dispute over licensing fees last year, the two companies have traded lawsuits in multiple jurisdictions, with billions of dollars potentially at stake. Apple chose to use a modem supplied by Intel in its latest iPhone models, the XS and XS Max.

In September, a U.S. International Trade Commission (ITC) judge found that iPhones violate a Qualcomm patent but declined to recommended a ban on iPhones in the U.S. A final determination by the ITC is expected early next year.

According to Jim McGregor, principal analyst with Tirias Research, the Fuzhou court ruling may force Apple to the bargaining table.

"With this being just the first of many court cases in China, Germany, and the U.S., this is likely to push Apple for a resolution as soon as possible even as it files an appeal," McGregor said in an email exchange with EE Times. "Apple has now lost with the ITC and a China court. If not, Apple faces both a significant financial and market share impact."

Romit Shah, managing director and senior analyst in global markets research at Nomura Instinet, agreed, saying the preliminary injunction by the Fuzhou court "paves a path toward settlement" between Apple and Qualcomm.

Shah added that China "tends to be politically motivated" and said the Fuzhou ruling against Apple — the largest U.S. company — could be seen as retaliation for the recent arrest of Huawei's chief financial officer in Canada at the request of the U.S.   

"China is set to decide on more than 20 patent disputes [between Apple and Qualcomm], and we don’t see why the rulings would be in favor of Apple," Shah wrote in a report.

The Qualcomm patents at issue enable consumers to adjust and reformat the size and appearance of photographs, and to manage applications using a touch screen when viewing, navigating and dismissing applications on their phones, Qualcomm said.

In a statement, Apple said that Qualcomm's efforts to ban iPhone sales in China is "another desperate move by a company whose illegal practices are under investigation by regulators around the world."

Apple also claimed that Qualcomm is asserting three patents against Apple that it never raised before, "including one which has already been invalidated."

Apple said it would pursue all legal options through Chinese courts. Shah said Apple would almost certainly filed with the Fuzhou court for reconsideration, but added that — unlike in the U.S. — injunctions in China typically remain in effect during the appeal process.

Shah also said that the ruling relates to the use of touch screen and camera firmware, which he believes have nothing to do with iOS versions. He estimated that roughly 15-20 million iPhone units would be impacted.