German iPhone Ruling Strengthens Qualcomm's Hand

Apple was dealt another setback in its multi-jurisdiction legal war with longtime supplier Qualcomm, saying it would pull some iPhones from German stores while it appealed a ruling that some models violate a Qualcomm patent.

Apple said in a statement that iPhone 7 and iPhone 8 models would not be sold in its retail stores in Germany while it appeals the ruling, issued Thursday by a district court in Munich. The company said those iPhone models would continue to be available through carrier and third-party retailers in Germany and that its latest iPhone models would remain available in its German stores.

The Munich ruling is the second consecutive blow to Apple in its sprawling fight with its longtime baseband modem chip supplier, coming a little more than a week after a Chinese court barred Apple from selling there several models of the iPhone that were found to violate two Qualcomm patents.

Romit Shah, a managing director and senior analyst at Nomura Instinet, said in a report circulated Thursday that the recent rulings strengthen Qualcomm's position in negotiations with Apple. "We believe these two rulings likely push Apple closer to a resolution with Qualcomm," Shah said.

"Two respected courts in two different jurisdictions just in the past two weeks have now confirmed the value of Qualcomm's patents and declared Apple an infringer, order a ban on iPhones in the important markets of Germany and China," siad Don Rosenberg, Qualcomm's general counsel, in a press statement.

It is unclear what models of iPhone are covered by Thursday's injunction. Qualcomm said it covers all models of iPhones that contain "infringing functionalities."

According to Qualcomm, the Munich court also granted Qualcomm's request for an accounting of the details of all sales, including revenues and profits of the accused devices in Germany and a recall and destruction of all accused devices from all retailers in Germany.

Thursday's injunction is the latest chapter in the ongoing feud between Apple and Qualcomm, the longtime supplier of the baseband modem used in iPhones. What began as a dispute over licensing fees last year erupted into lawsuits in multiple jurisdictions, with billions of dollars potentially at stake.

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.

The ongoing dispute has hurt Qualcomm sales after Apple shut Qualcomm out of its latest iPhone models introduced in September, the XS and XS Max, choosing instead a baseband supplied by Intel. Qualcomm's chip sales are expected to be down 3% this year.