International Trade Commission Judge MaryJoan McNamara said today that she is recommending a ban on import of some iPhones. Judge McNamara found that Apple does indeed infringe on a Qualcomm patent – though the other two patents that were part of the case, Apple was not violating.
Judge McNamara’s findings are still subject to review by the ITC, which can block imports of products that infringe US patents.
This is one of two cases that Qualcomm has brought before the ITC, and the other case is due to have a decision later today. It is seeking import bans on iPhones, to give it some leverage on technology licensing negotiations. The two companies have been disputing royalties that Qualcomm says it is owed by Apple, for over a year now. Qualcomm claims that it is owed billions, while Apple is disputing that the chipmaker’s patents aren’t worth that much.
The Judge, today, found that Apple did infringe on a patent related to power-saving. This is found in iPhones that use Intel chipsets. Apple doesn’t use Qualcomm’s chipsets, likely because of the amount of royalties Apple would need to pay on top of buying the chipsets from Qualcomm. In recent years, it moved over to Intel to provide modems for its iPhones, after the dispute with Qualcomm began.
Apple has been arguing that Qualcomm is trying to shut out its only US-based competitor (Intel) out of the mobile market. Apple, as expected, also argues that doing so would hinder the development of 5G, and competition in the mobile space. Apple argues that even if a patent violation was found, that no import ban should be put in place. Meanwhile, Qualcomm argues the opposite. Essentially stating that if it is unable to enforce its patents, it lessens the value of its innovation, and gives competitors a change to gain more market share. The competitor in particular that Qualcomm is referring to is Huawei.
The FTC, in the past, has accused Qualcomm of using its patents and royalties to force competitors out of the space. Currently, Qualcomm makes the majority of chipsets used in mobile devices. Qualcomm has just under 50-percent of the market, though that is partly because Apple doesn’t use its chipsets and sells millions of iPhones. Other competitors like MediaTek, Samsung Exynos and Huawei have much smaller market shares. The biggest reason why Qualcomm had such a strangle-hold on the market in the early years of smartphones, was due to its CDMA patents. CDMA is a network technology that Verizon and Sprint use for its 3G network, and only a couple of other networks around the world used.
Qualcomm will sell components to its partners like Samsung, LG and HTC. But on top of selling them that component, they also charge a royalty fee for using the technology associated with that component. So it’s essentially double-dipping. Imagine paying for the Snapdragon 855 chipset to put into your smartphone, then you have to pay royalties for using technology included in that chipset too. That is one reason why Snapdragon-powered smartphones are more expensive, and why Apple is taking Qualcomm to court over royalties.