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Qualcomm Inc loses first round of patent fight against Apple, says Bloomberg

The ITC has to balance between protecting markets and what's best for the economy
Qualcomm building
Qualcomm loses the first round of patent fight with Apple.

Qualcomm Inc (NASDAQ:QCOM) lost the first round of its patent fight with Apple Inc (NASDAQ:AAPL) when an International Trade commission judge ruled on Friday that its iPhones should not be banned from the US even though they infringe a patent owned by Qualcomm, a report by Bloomberg said.

It would be against the public interest to issue an import ban, Judge Thomas Pender said, even as he found that Apple infringed one of three Qualcomm patents in the case. The judge’s findings are subject to review by the full commission, which has the final say.

Qualcomm is seeking an import ban of Apple’s iPhones that have chips made by Intel Corp. This is the first of two cases brought by Qualcomm before the trade agency in Washington. It was hoping the threat of being shut out of the US market will push Apple into agreeing to pay license fees, according to Bloomberg.

READ: Qualcomm accuses Apple of sharing trade secrets with Intel in a plot to replace its chips

The recommendation of no import ban is a boon for Apple, which had argued it would not be in the public’s interest to have phones with Intel chips kept from the US market. While the judge’s full findings won’t be public until both sides get a chance to redact confidential information, America’s role in developing the next generation of mobile communications was a key issue in the case.

The commission’s job is to protect markets from unfair trade practices and has to balance patent rights with what’s best for the economy. It is scheduled to make a final decision by January. A different trade judge is scheduled to release her findings in a second case that same month, and the public’s interest is a prime issue in that case as well.

Apple has phased out its use of Qualcomm chips during the dispute and the latest phones don’t use any of the San Diego-based chipmaker’s products. In urging the agency not to block its phones with Intel chips, Apple contends that the competition between the two dominant chipmakers is crucial to propel development of the next generation of communications, known as 5G.

Apple contends Qualcomm charges too much for its patents on fundamental telecommunications technology and has directed its suppliers to stop paying royalties until a better deal can be reached. The unpaid fees could total $2.5 billion to $4.5 billion, according to an analysis by Matt Larson of Bloomberg Intelligence.

Pender retired from the agency August 31, and the case was temporarily assigned to a different judge. He instead decided to come back to finish issuing his findings in this case, the Bloomberg report said.

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July 10 2018
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