China ruling could ban some Apple iPhones sales amid Qualcomm fight

LONDON (Reuters) – Chip supplier Qualcomm Inc on Monday said it had won a preliminary order from a Chinese court banning the sale of several older Apple Inc iPhone models in China due to two patent violations around software features, though Apple said its phones remain available in the country.

The preliminary order from the Fuzhou Intermediate People’s Court, issued last week, affects the iPhone 6S through the iPhone X that were originally sold with older versions of Apple’s iOS operating system. It is not clear what the ruling means for phones with Apple’s newer operating system, and Apple said all iPhone models remain for sale in China. The trio of models released in September were not part of the case.

China, Hong Kong and Taiwan are Apple’s third-largest market, accounting for about one-fifth of Apple’s $265.6 billion (208.67 billion pounds) in sales in its most recent fiscal year.

The Chinese case is part of a global patent fight between Apple and Qualcomm that includes lawsuits filed in dozens of jurisdictions around the world. Qualcomm has also asked regulators in the United States to ban the importation of several iPhone models over patent concerns, but U.S. officials have so far declined to do so.

Qualcomm, the biggest supplier of chips for mobile phones, filed its case in China in late 2017, arguing that Apple infringed patents on features related to resizing photographs and managing apps on a touch screen.

Apple responded that “Qualcomm’s effort to ban our products is another desperate move by a company whose illegal practices are under investigation by regulators around the world.”

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Qualcomm general counsel Don Rosenberg said in a statement the Chinese court orders are effective now and applied to specific features, rather than to an operating system.

Rosenberg said the company would seek enforcement of the Chinese orders if it determines Apple phones have the features in question and that Qualcomm will challenge any assertion that its patents do not apply to Apple’s current iPhones.

The court that handed down the ruling in China’s Fujian province earlier this year banned the import of some of memory chip maker Micron Technology Inc’s chips into China.

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The provincial Chinese court, which is separate from the China’s specialized intellectual property courts in Beijing, is unusual in that one party can request a ban on its opponents’ products from the judge without giving the opponent a chance to present a defense. The target of the ban sometimes learns of it only when the judge issues the preliminary injunction ordering it.

Apple said Monday that it had filed a request for reconsideration with the court, the first step in appealing the ban. To stop the sale of phones, Qualcomm separately will have to file complaints in what is known as an enforcement tribunal, where Apple will also have a chance to appeal.

Apple shares were up about 1 percent at $169.50, recovering from an early drop when it became clear phones were still on sale. Qualcomm shares were up 2.3 percent to $57.25.

Yiqiang Li, a patent lawyer at Faegre Baker Daniels who is not involved in the case, said the Chinese injunction could put pressure on Apple to reach a global settlement with Qualcomm.

The specific iPhone models affected by the preliminary ruling in China are the iPhone 6S, iPhone 6S Plus, iPhone 7, iPhone 7 Plus, iPhone 8, iPhone 8 Plus and iPhone X.