Apple to pull some iPhones in Germany as Qualcomm extends global wins | Hacker News Reader

Apple to pull some iPhones in Germany as Qualcomm extends global wins

reuters.com

165 pointswyldfire78 comments

Yikes.

There's a story from Reuters with more detail and more balanced coverage than this press release from Qualcomm: https://www.reuters.com/article/us-apple-qualcomm-court/germ...

Apparently, there have been rulings in the US that Apple and Qorvo (supplier of the modem chip in question) hadn't violated this same hardware patent, based on a detailed technical analysis. So there's a chance that this ruling could be overturned on similar grounds in Germany, hence the bond that Qualcomm has to pay against possible damages.

For anyone curious who isn't likely to need to avoid knowing infringement, I think this is the patent in question: https://patents.google.com/patent/EP2724461B1/en

Thanks, we've updated the link from https://www.qualcomm.com/news/releases/2018/12/20/qualcomm-g....

Interesting notes: Qualcomm has to place 668.4 million € (or maybe double that!) in bond to enforce the injunction (technically there's two separate cases, each with this bond amount, I haven't quite figured out if they actually need to pay both to be effective), which is to ensure money is available to pay damages to Apple if higher courts reverse the decision.

Also, Qualcomm made claims about how the Apple devices work based on their own reverse engineering efforts. Apple claimed those are wrong, but declined to provide enough evidence substantiating that (saying that their supplier had a higher interest in keeping the details secret, so they couldn't reveal them to the court), which is why they lost.

The strange thing is that the gentleman who designed the chip in question was not called as a witness despite being present at the trial so he could offer his own testimony.

>Mr. Mike Kay spent almost 12 hours waiting [outside the court] on November 8, for an opportunity to testify in a Qualcomm v. Apple patent infringement trial

Mike Kay is a Qorvo employee and designed the envelope tracker chip used in some iPhones models that Qualcomm alleges infringe on its European patent EP2724461 ("low-voltage power-efficient envelope tracker").

http://www.fosspatents.com/2018/11/hoping-to-defend-iphone-a...

Fosspatents and Florian Mueller.. Where do I remember these? In past he was paid by big corporations for his "Consultancy" services.

I was reading his posts back in the day, did anyone ever perform any analysis if his predictions were right?

I think the general consternation about Mueller started when he predicted that, as a matter of law, Oracle would ultimately be the victor in it's case against Google over Java.

Which did eventually come to pass, in a Federal appeals court ruling in March of this year that overturned the findings of the jury in the previous trial.

He was paid by Oracle when he made that "prediction".

When someone works as a hired gun, all their good works are tainted as well. So who cares.

Interesting. So one could identify areas of a product that a company needs to keep secret, and sue for patent infringement saying your reverse engineering shows they are infringing.

It would appear so... but in this case it will cost you about six hundred billion dollars if you're just trying your luck.

I suspect Qualcomm genuinely believe they have a case. But I wouldn't bet against Apple being genuinely innocent.

I think you meant millions...

Fijian dollars.

That’s if you want an injunction though which is a stronger remedy. They could just collect afterwards like most patent suit awards.

Interesting to see they went for an injuction (and were granted one), considering Qualcomm doesn't directly make a competing product. Does anybody know why the courts would do this, instead of allowing the sale, but requring Apple to pay a cut of every future phone sold + infrigemenr damages? Surely based on other devices using this Qualcomm tech, it would be possible to determine how much the patent when licensed is worth? (edit: I know there's no love lost between Apple and Qualcomm, but this seems like another way patents can be weaponised way beyond the scope of protecting innovation)

Unlike in the United States, an injunction is the standard remedy in a patent infringement action in Germany. The idea is that Apple (the enjoined party) could subsequently negotiate a royalty with Qualcomm if it wished to have the injunction lifted.

The United States has moved away from this approach on public interest grounds (i.e., that it would not make sense to prevent the public from buying certain Apple products if those sales aren't preventing Qualcomm from selling its own competing products).

> it would not make sense to prevent the public from buying certain Apple products if those sales aren't preventing Qualcomm from selling its own competing products

I'm not sure if I understand you correctly. Wouldn't, by the same reasoning, the whole patent system be useless? If Q has a patent and A sells a competing product that infringes on that patent, it doesn't make sense to stop A from selling that product because Q can still sell their product? Isn't that exactly what a patent is about: stopping competition (who might not have had to do all the R&D, since you published your patent with information on how to perform the feat) from selling competing products?

I think the idea is that if the court decides that Qualcomm isn't enduring any immediate financial harm, then there's no need for an immediate remedy (like an injunction).

Instead, they'd just let the civil court case proceed, and either it'll be settled out of court (with Apple paying Qualcomm some amount of money to cover existing sales, plus agreeing to a licensing deal for future sales) or they duke it out in court, where (if Qualcomm prevails) Apple is forced by the court to pay some sort of judgment.

The key might be whether it is competing. If A sells a product that does not compete with Q or Q's licensees then the damages can be allowed to pile up if A chooses to continue selling and hope that it wins on appeal. An injunction can still be issued if it prevents additional damages which might not be reparable by the final judgement or settlement. As the plaintiff I may even prefer this, if the defendent has big pockets.

IANAL but in the US there's a concept of punitive triple damages for products sold after the defendant had knowledge of the infringement. If the plaintiff can prove (through subpoenaed communications, whistleblower, etc.) that the defendant knew before their product launched then the judgement is tripled, otherwise the penalties increase for products sold after the first cease and decist letter or when the defendant is notified of the lawsuit.

Qualcomm presumably know Apple are intending to completely replace them soon then; I’m pretty sure this sort of action will prove to be very bad for Qualcomm - if you are willing to sue Apple no customer is safe!

Apple already 100% replaced them.

Every 2018 model has Intel modems.

I wonder how many would-be customers of the affected phones are now self-upselling to a younger, more expensive model. This could be surprisingly painless for Apple. Lure people into stores with relatively cheap offers, then declare them unavailable: if they did the same thing without Qualcommm's involvement, it would be an illegal sales tactic.

Apple is still selling them in Germany, the article looks like it's final, but it's not.

Seems to be super coincidental doesn’t it...

It's not, Qualcomm is suing Apple because Apple dropped them. They have nothing to lose now.

You can only replace them in hardware terms. Apple will still need to pay Qualcomm in 2G-5G patents fees, as well as all other patents Qualcomm holds, from Graphics, Power Management, DSP, etc etc. Of Course the reverse is also true that there is a high probability Qualcomm would have also infringe on certain Apple's patents.

Most customer already has a deal in place with Qualcomm or are using Qualcomm SoC. The only one who could try to have a go against Qualcomm would be Samsung and Huawei. Both seems to have a decent relationship with Qualcomm, for now.

The reason for this entire conflict is Qualcomm asking for a percentage royalty of the entire device.

When you use an Intel radio, sure Intel needs to license the 2G-5G patents, but those are FRAND, and no legal interpretation in the world would ever entitle Qualcomm to a percentage of an iPhone using an Intel radio.

A lot of people thinks it is the percentage that is the problem. It Is not. Ericsson, Nokia, ZTE, LG, Samsung, Huawei along with a few others all charges percentage of Phone for their Royalty ( Or at least it used to be ). I can guarantee you Apple would have no problem with Qualcomm if the percentage were only 0.1%.

And it is not like Intel has already paid any license fo 2G-5G patents to Qualcomm ( They haven't ), and Qualcomm recollect another set of license fees from Apple ( Or more accurately from Foxconn ).

This press release doesn't mention that Qualcomm had to raise 674 million euro in case it's infringement case here ends up losing, money that is forfeited to Apple.

Ah, good spot. They do allude to this:

> The injunction is effective as soon as Qualcomm posts the required bonds

Makes more sense, but still not sure what advantages this approach brings. I guess Apple could then come to some agreement with Qualcomm to lift the injunction, but it's still a brutal penalty unless Qualcomm has to license the patent at a reasonable price

I think the more interesting part is that Apple applied for a stay pending appeal and were denied. I'm probably going to need to read the reasons directly to figure out how Qualcomm managed to get that done.

As far as I understand it, this is a temporary injunction. These are granted by weighing the damage that would be done to the plaintiff without it against the damage that would be done to the defendant if it were wrongly granted for the duration of the actual proceedings.

Normally injunctive relief of this type is awarded in the event that there is irreperable harm, but Qualcomm could be compensated by a per-unit license fee + penalty damage award on sold infringing items. That's why I'm surprised. Still haven't had time to look at the reasons, though. Travelling for the holiday so I'm a bit behind.

I think that German courts are much quicker to to grant injunctions than e.g. the US.

First china.

https://news.ycombinator.com/item?id=18648042

Now Germany. Looks like the execs at qualcomm are going to have a nice christmas.

It's just leverage to get Apple to settle without waiting for next year's trial(s). Just like the Avago LBO was leverage to force Qualcomm to settle on Apple's terms.

Except for the fact that no current model Apple devices use their chip...

And the China ban is not actually about the chip in use but some software feature in older OSs

Actually suing Apple about the stuff they have a conflict over is lethal as they're doomed if they lose a trial over it and their position isn't that secure since they're already getting sued all over the place for their tactics around wireless patents.

This only relates to iPhone 7 and 8 models, not iPhone XR and XS.

Only because the X models did not exist when the motion was originally filed, not because they don’t infringe.

I think it is because the newer phones all use intel modems.

7plus, 7, 8, 8plus and X; according to the court's press release linked by detaro https://news.ycombinator.com/item?id=18729430

Does that mean no iphones can be sold in all of Germany effective immediately?

From [1]:

> Apple says it will stop selling the iPhone 7 and iPhone 8 at its stores in Germany. But all iPhone models will be available at third-party retailers in the country.

[1] https://www.cnbc.com/2018/12/20/qualcomm-reportedly-wins-inj...

No, Qualcomm needs to post money for bonds so that if the ruling is overturned on appeal, they have funds locked away to compensate Apple.

NB: the case does not deal with all IPhones, so a segment of the product line will still be vendible.

Does not look like this is immediate: "The injunction is effective as soon as Qualcomm posts the required bonds which will be completed within a few days."

It seems strange to impose an injunction, but make Qualcomm pay bond for potential damages if this gets overturned. They're recognizing the potential for this be overturned, and that it's damaging to Apple. Why not reserve the injunction while the appeal makes its way through the system?

If Qualcomm continues to prevail, revenue Apple generated during the continued infringement would simply be factored into the final damages awarded to Qualcomm.

The other way seems unnecessarily complicated, but I'd love to hear the counter argument.

Maybe the court feels there's a good chance for the verdict to not be overturned, since the supposedly infringing products were designed before Apple switched to Intel modems.

Same story from CNBC: https://www.cnbc.com/2018/12/20/qualcomm-reportedly-wins-inj...

So Apple is going to start making their own cellular chips?

Possibly, eventually. For now (2018 models), they're using Intel modems, which is why the injunction only affects previous models and not 2018.

https://www.theverge.com/2018/7/25/17614930/apple-iphone-201...

that's not going to solve the problem. Qualcom is the largest wireless patent holder and Apple would still have to pay royalties.

They're working with Intel.

Although if they really wanted to clean this up they have the cash on hand to buy Qualcomm.

I doubt Apple would be able to complete that sale without antitrust laws kicking back hard. Qualcomm is an exclusive supplier to most of Apple’s phone competitors.

Great point, I wasn't thinking about that. Thanks!

That said, if they were especially clever they could engineer a buyout where a neutral party like Broadcom gets the company and Apple gets the patent portfolio—which would represent the overwhelming majority of Qualcomm's market value.

Is there a link to the judgement, or at the very least a link to anywhere but Apple and Qualcomm’s press release websites?

EDIT: Post updated to a better link, thanks mods!

Don't think the judgement is released yet. Here's the (obviously German) press release of the court: https://www.justiz.bayern.de/gerichte-und-behoerden/landgeri...

Well this seems important (google translated, so take with a grain of salt):

>Rather, for procedural reasons, the board had to base its decision on the fact that the chip works as the claimant asserts (see section "Background" in this press release). Therefore, in the opinion of the Chamber, no witnesses were allowed to be heard who had been brought by the defendant on the last date - without charge of the court - nor was the Chamber allowed to examine the schematics of the attacked chip.

It sounds like due to the law in Germany, they HAD to assume that Qualcomm was correct in their assessment of the situation. The court didn't actually find in fact that there was infringement.

They had to assume Qualcomm to be correct, because Apple refused to explain exactly how Qualcomm was wrong. If one side makes detailed accusations, the other side has to refute them in equal detail. (That's explained in II)

And Apple can’t tell how Qaulcomm is wrong because Apple just buys the chips and does not manufacture them. Beautiful, isn’t it?

It's not yet public apparently, but might eventually appear at either https://dejure.org/2018,42849 or https://dejure.org/2018,42797 or maybe both.

Qualcomm is blackmailing Apple it seems like.

What's a permanent injunction?

basically saying that Apple has to refrain from certain activities: in this case, selling certain iPhones in GER

$760M bond is mind blowing.

That’s big

Not selling outdated phones in Germany, and not selling only at their stores?

Apple will happily sell you a brand new Xr or Xs instead.

It's most certainly a lose for budget customers

Budget costumers don't buy Apple anyways.

I don't think Qualcomm will ultimately win in Germany, but in China? Most definitely. What better way for China to flex on the US than to stick it to one of the top 5 US companies? Think of it as a tit-for-tat when it comes to Huawei.

Both Qualcomm and Apple are US companies, so I don't get your point.

Sure, but Qualcomm doesn't have the "mindshare" that Apple does. If Qualcomm were bigger than Apple, they'd just use Apple to swipe at Qualcomm.

That's because Qualcomm and Apple aren't the intended targets. The US is the target.

Even in China, Apple is still selling all the models.

Ban US company's product from China help local producers even if it is an other US company who demand it.

> Stacy Rasgon, an analyst with research firm Bernstein, said in a note that Germnany was a small iPhone market for Apple, selling about 10 million units a year, with possibly only half of those being the older models affected by the court’s order.

Germnany? Nice one, Reuters. Try proofreading instead of totally relying on spell-check.

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