Seven Apple Apps Faced a Ban on Sales and Rising Prices Faced Tax Qualcomm

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 Seven Apple Apps Faced a Ban on Sales and Rising Prices Faced Tax Qualcomm


On the evening of October 10, Qualcomm announced that the Fuzhou Intermediate Peoples Court granted Qualcomm two interim injunctions in two lawsuits against four Chinese subsidiaries of Apple, demanding that Apple immediately stop infringing on Qualcomms two patents, including importing, selling and promising to sell unauthorized products in China. Related products include the iPhone? 6S, the iPhone? 6S? Plus, the iPhone? 7, the iPhone? 7? Plus, the iPhone? 8, the iPhone? 8? Plus and the iPhone? X. The patent war between Apple and Qualcomm burned into China. The vast number of domestic Apple users are facing the situation of seven iPhone phones being banned.

On December 11, the reporter learned from people close to the Fuzhou Intermediate Peoples Court that the ruling will be executed immediately after the service of the ruling, and its effect will last until the date of the judgments entry into force in this case. If it refuses to accept the ruling, Apple may apply to Fuzhou Intermediate Peoples Court for reconsideration once within 10 days from the date of receipt of the ruling. The execution of the ruling shall not be suspended during the period of reconsideration.

On December 11, Apple China told reporters that it had applied to the court for reconsideration on Monday, the first step in appealing the preliminary injunction.

Currently, Qualcomm said that according to two interim injunctions granted by the court, seven of Apples mobile phones are facing a ban. Apple said that Chinese consumers could still buy all models of the iPhone. But in the eyes of lawyers, Apple is in a bad situation.

In response to the patent war between Apple and Qualcomm, there was an industry opinion yesterday that the patent disputes between the two giants mainly focused on the old version of iOS? 11 system, which has not yet affected Apples sales. On the morning of December 11, a reporter from the Beijing News visited the Apple store in Wangfujing and found that many of the above models were still on sale in the store. The prototypes on display have been updated to the latest version, while the new ones sold to customers are the old version, including the iOS? 11 system, which is rumored to be in dispute.

Apple has applied for reconsideration of its seven mobile phones facing a ban

On December 10, Qualcomm announced that the Fuzhou Intermediate Peoples Court granted Qualcomm two interim injunctions against four Chinese subsidiaries of Apple, demanding that Apple immediately stop infringing on Qualcomms two patents, including importing, selling and promising to sell unauthorized products in China.

It is understood that the relevant products involved in the ban include seven mobile phones, namely, the iPhone? 6S? Plus, the iPhone? 7, the iPhone? 7? Plus, the iPhone? 8, the iPhone? 8? Plus and the iPhone? X.

The Beijing News reporter learned from people familiar with the matter that the infringement of Qualcomms patent by Apple was a card metaphor of activity in computing devices with the patent number ZL201310491586.1. This patented technology is to use multiple cards to represent different Apps during GUI (Graphical? User? Interface) interaction, and to perform handover and exit of mobile Apps by sliding gestures to manipulate cards.

According to the information on the official website of the Patent Reexamination Board of the State Intellectual Property Office, on May 4 this year, the Reexamination Board tried the case of the request for invalidation of the patent for invention, but did not make a judgment in court.

In addition, people familiar with the matter disclosed that Qualcomm believed that Apples new mobile phone would bring further losses to the market, so it asked Fuzhou Intermediate Peoples Court to support the behavior preservation proposed by Qualcomm.

As for Qualcomms sales ban, on December 11, Apple China told reporters that it had applied to the court for reconsideration on Monday, the first step in appealing the preliminary ban.

A statement from Apple to reporters said, Another desperate move by Qualcomm to ban our products is that its violations are being investigated by regulators around the world. Chinese consumers can still buy all models of? IPhone? Products. Qualcomm is proposing three patents they have never proposed before, including one that has expired. We will seek all legal avenues through the courts.

Qualcomm said, We value our relationship with our customers very much and are not inclined to seek support from the courts through litigation, but we also firmly believe in the need to protect intellectual property rights. Apple has been benefiting from our intellectual property rights, but refuses to pay us for it. These court decisions are a further recognition of Qualcomms broad patent portfolio strength.

Up to press release, Fuzhou Intermediate Peoples Court and China Judgment Documents Network have not published the judgment, but according to information provided to reporters by people close to Qualcomm, the injunction of Fuzhou Intermediate Peoples Court will be executed immediately after the verdict is served. The effect of the injunction is up to the date when the judgment of the case comes into effect. The injunction applies to the mainland of China.

In addition, the people familiar with the matter said that Apple could apply to Fuzhou Intermediate Peoples Court for reconsideration within 10 days of receiving the ruling, but the execution of the ban would not be suspended during the reconsideration period.

The ban still involves the sale of the iPhone, which the agency says has limited impact.

On the morning of December 11, a reporter from the Beijing News visited the Apple store in Wangfujing and found that the stores were still selling the models of the iPhone? 7, 7? Plus, 8? Plus and so on. The system versions were iOS? 12.1.1.

Reporters asked staff to know that the demonstration of the prototype system has been updated to the latest version, and the new machine sold to customers is the old version of the system, including the rumored dispute in the iOS? 11 system. The iPhone? 8 is iOS? 11.4, and the iPhone? 7 is the previous version. Users can update to the latest version by themselves, but the update does not affect the use.

Staff also told reporters that at present, Direct stores no longer sell models such as the iPhone? 6S, the iPhone? 6S? Plus and the iPhone? X. Now the lowest is 7, authorized stores can see if there is, but there are no direct stores.

China Merchants Securities Research reported that the mainland is an important market for the iPhone, but the proportion of affected models is limited. Apple can evade related patents by upgrading its system. Even if the ban ignores iOS upgrades and is strictly enforced, the impact on global sales of the iPhone will be limited to 3.59% - 6.73%.

Apple also said in a statement today: Currently, Chinese consumers can still buy all models of the iPhone. We will seek all legal options through the courts.

However, this ruling may have long-term implications. For this patent case with Apple, Mizuho analyst Vijay Rakesh also said that Qualcomm could use this precedent to enforce similar bans in other regions.

Not the final ruling, lawyer: Apples application for reconsideration will not stop the ruling.

The Beijing News reporter noted that in a statement issued by Qualcomm, new products such as Apples new iPhone? XS released this year were not included in the list. Li Junhui, a special researcher at the Intellectual Property Research Center of China University of Political Science and Law, told reporters that Qualcomm sued Apple for patent infringement in Fuzhou Intermediate Court in November 2017, when the iPhone? X was Apples latest mobile phone, so several new models of the iPhone released in 2018 would not be included in the lawsuit at that time.

Does the interim injunction granted by Fuzhou Intermediate Peoples Court to Qualcomm in its lawsuit mean that many models of Apple are banned from selling in the Chinese market? Li Junhui said that the interim injunction in the lawsuit corresponds to a ruling. According to Article 108 of the Civil Procedure Law, if the parties refuse to accept the ruling of preservation or prior enforcement, they may apply for reconsideration once, and the execution of the ruling will not stop during the period of reconsideration. Simply put, Apple can reconsider the application for prohibition, but it generally does not stop executing during the reconsideration period, which can be understood as effective once it has been made. If the ban has been enacted, it would be illegal for Apple to import, sell and promise to sell mobile phones in China.

According to Li Junhui, Apples claim that Chinese consumers can buy all models of? IPhone? Products should be inaccurate, unless its request for review of the temporary ban has been supported by the court, or these products have not constituted infringement.

Regarding the ruling of Fuzhou Intermediate Court banning the sale of some models of the iPhone, lawyer Han Miao of Beijing Kangda Law Firm told reporters that according to Article 108 of the Civil Procedure Law of the Peoples Republic of China, Apples review of the ruling application will not stop the execution of the ruling.

You Yunting, a senior partner of Shanghai Dabang Law Firm, told reporters that if the court had heard the injunction application, Apple would have had the opportunity to defend it, but the court did not consider it to be valid. Therefore, the execution of the injunction application was generally not stopped during the reconsideration period, but there was no hearing on the injunction application. Although the action preservation ruling was written to take effect immediately, it was in the spirit of letting it go. On the principle that the counterpart has the opportunity to defend, the court will not execute the decision of act preservation immediately during the period of reconsideration.

You Yunting believes that the statement of injunction in litigation itself is not normative. The Civil Procedure Law calls it the preservation of acts of litigation. If an application is filed before a case is prosecuted, it is called the preservation of acts before litigation. Therefore, we should use the act of preservation, rather than the injunction in litigation.

He said that if the court finds that the actual trial situation does not match the scope of the claim for the protection of the application, or that the patent right is invalid, or that there is no very urgent need for action preservation, it is possible to adjust the action preservation ruling already made in the litigation process.

You Yunting pointed out that for Apple, the company has the right to review after receiving the action preservation ruling, but if the reconsideration hearing can not overturn the ruling, it is expected that in the trial process and the final judgment of the case, it will be more difficult for Apple to overturn the existing results.

Apple Qualcomms Game

Apple uses Intel to balance Qualcomm, and Qualcomms performance is greatly affected.

Qualcomm has benefited a lot from its patent monopoly position in the field of telecommunications. Mobile phone manufacturers, large and small, can hardly avoid Qualcomms patent stick. For years before, Apple had been working with Qualcomm. Why did the two sides suddenly turn against each other? Some analysts believe that this is related to the sharp rise in the price of Apples iPhone this year and Qualcomms patent fee collection model.

Apple believes that smartphone manufacturers only use Qualcomms patents on communication modules, but pay a patent fee to Qualcomm according to the price of the whole machine. This model is called Qualcomm Tax.

In recent years, Apples mobile phone products have risen sharply, and according to Qualcomms patent fee model, the revenue from the price increase has been cut off by Qualcomm.

Since the launch of the iPhone? 4 in 2011, Apple has been using Qualcomms baseband, but since the launch of the iPhone? 7, Apple has been competing with Qualcomm by introducing Intels baseband. Intel has become the only baseband supplier of the iPhone XS/XR series released by Apple this year, but Intels baseband is not as good as Qualcomms, which has greatly affected the communication quality of the new models.

The reason why Apple insists on refusing to pay patent fees is that in the view of Apple and others, Qualcomm Tax is unreasonable. Smartphone manufacturers only use Qualcomms patents on communication modules, but they have to pay the patent fees to Qualcomm according to the price of the whole machine, which has been criticized by the manufacturers.

The unreasonable tax of Qualcomm has attracted the attention of many governments. In 2015, the Development and Reform Commission of China imposed a fine of 8% on the sales of Qualcomm in China in 2013, totaling 6.088 billion yuan. Since then, Qualcomm has revised it to charge a patent licensing fee at 65% of the net wholesale price for mobile phones used and sold in China.

Since January 2017, Apple has accused Qualcomm of charging too much for its chips, while the latter refused to refund Apples $1 billion patent fee. In April of the same year, Apple officially announced that it would stop paying patent fees to Qualcomm, a move that aroused strong dissatisfaction from Qualcomm, which began to raise legal sticks to appeal to Apple and its OEMs. Tang Rosenberg, general counsel of Qualcomm, said that Qualcomm has now filed more than 20 lawsuits in different jurisdictions in China.

Qualcomm said it was Apple that violated Qualcomms agreement and deliberately failed to make full use of its modem chip in the iPhone 7 product.

Unlike other countries, he said, China would issue a preliminary injunction rather than wait for a full permanent injunction trial. But as I said before, they also have a parallel process. The Patent Office will review the validity of the patent. So far, we have been very successful.

Qualcomms business performance declined significantly as Apple and other manufacturers stopped paying patent fees. According to Qualcomms fourth quarter and full-year earnings, Qualcomms fourth quarter revenue was $5.8 billion, down 2% from $5.9 billion in the same period last year; its net loss was $500 million, and its net profit was $1.2 billion in the same period last year. In October, Qualcomm said at a court hearing in California that Apple owed Qualcomm $7 billion in patent fees.

Steve Morenkopf, chief executive of Qualcomm, acknowledged at the earnings conference that Apples request to contract manufacturers to stop paying royalties and its decision to use Intels modem on its latest products had a significant impact on the companys financial performance.

Qualcomm has also criticized Intel, Apples new ally. In September, Qualcomm accused Apple of stealing the secrets of its chip manufacturing, and provided the information to Intel to help Intel optimize the baseband chips of the iPhone and ultimately achieve the goal of getting rid of Qualcomms control.

Can Apple bypass Qualcomm by strengthening self-research instead of outsourcing?

For Apple, since the acquisition of chip design company PA Semi, it has been a consistent practice for core components to seek self-research instead of outsourcing, which is particularly prominent on CPU processors, and has been upgrading performance along a self-defined path. In 2014, Apple began hiring engineers; in 2016, Apple began using Intel chips on its new iPhone.

This self-research appeal has accelerated over the past two or three years. AirPods, a wireless headset released in conjunction with the iPhone? 7, uses Apples own Bluetooth chip. Not only that, Apple quickly established its own graphics processor division and stopped licensing from Imagination in the UK.

In 2017, Apple dug up Esin Terzioglu, vice president of Qualcomm, who had worked at Qualcomm for more than eight years and was responsible for the technology roadmap. Patrick Moorhead, a technology-focused analyst, once said that if Apple wants to have the best experience, it must control all the chips. Modem is one of the more expensive and energy-consuming chipsets in the iPhone.

Qualcomms approach is to integrate modem chips directly into its system-level chips, which has the advantage of more efficient operation, and integration is the key technology of Qualcomm leading the industry. When Apple uses it, because it uses its own processor, it must be equipped with independent cellular chips. The purpose of introducing Esin? Terzioglu is to reduce consumption by integrating.

However, a third-party analyst told reporters that in order to meet the needs of a variety of different operators, baseband chips must constantly expand their own technology patent pool, which is already very difficult for many chip manufacturers, let alone mobile phone manufacturers. In fact, Invida had previously renounced the market under competitive pressure, and Millet had hoped to balance Qualcomm through Invida.

New Beijing News reporter Ma Jinglu Yifu Gu Zhijuan Liang Chen Intern Chen Shiyi

Mapping of New Beijing Newspaper/Xu Xiao

Source: Qiao Junyi_NBJ11279, responsible editor of Beijing News