Apple, facing lawsuit, updates its software

SHANGHAI/SAN FRANCISCO - Apple Inc, which is facing a court ban on some of its iPhone models in China over alleged infringement of Qualcomm Inc patents, said in mid-December it would push software updates to users in a bid to fix potential problems.

Apple said it would carry out the software updates at the start of last week "to address any possible concern about our compliance with the order", the firm said in a statement to Reuters.

Earlier this month, Qualcomm said a Chinese court in Fuzhou, capital of East China's Fujian province, had ordered a ban on sales of some older iPhone models for violating two of its patents, though intellectual property lawyers said the ban would likely take time to enforce.

"Based on the iPhone models we offer today in China, we believe we are in compliance," Apple said, adding that it would "deliver a software update for iPhone users in China addressing the minor functions of the two patents at issue in the case".

In a statement, Qualcomm's general counsel Don Rosenberg said "Apple continues to disregard and violate the Fuzhou court's orders" despite the planned software changes.

"They are legally obliged to immediately cease sales, offers for sale and importation of the devices identified in the orders and to prove compliance in court," he said in the statement.

The case, brought by Qualcomm, is part of a global patent dispute between the two US companies that includes dozens of lawsuits. It creates uncertainty over Apple's future in one of its biggest markets at a time when concerns over waning demand for new iPhones are battering its shares.

Qualcomm has said the Fuzhou Intermediate People's Court in China found Apple infringed two patents held by the chipmaker and ordered an immediate ban on sales of older iPhone models, from the 6S through the X.

Apple has filed a request for reconsideration with the court.

Qualcomm and Apple disagree about whether the court order means iPhone sales must be halted.

The court's preliminary injunction orders an immediate block, though lawyers say Apple could take steps to stall.

Qualcomm Inc said it had applied with the Enforcement Tribunals, part of the Chinese court system, for a compulsory enforcement of the preliminary ban on sales of some iPhone models in China.

All iPhone models were available for purchase on Apple's China website on Dec 14.

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

Apple argues the injunction should be lifted as continuing to sell iPhones does not constitute "irreparable harm" to Qualcomm, a key consideration for a preliminary injunction, the copy of its reconsideration request dated Dec 10 shows.

"That's one of the reasons why in a very complicated patent litigation case the judge would be reluctant to grant a preliminary injunction," said Li Yiqiang, a patent lawyer at Faegre Baker Daniels.

Apple's reconsideration request also says any ban on iPhone sales would impact its Chinese suppliers and consumers as well as the tax revenue it pays to authorities.

The request adds the injunction could force Apple to settle with Qualcomm, but it was not clear whether this referred to the latest case or their broader legal dispute.

Qualcomm has paid a 300 million yuan ($43.54 million) bond to cover potential damages to Apple from a sales ban and Apple is willing to pay a "counter security" of double that to get the ban lifted, the copy of the reconsideration request shows.

Apple did not immediately respond to questions about the reconsideration request and Reuters was not independently able to confirm its authenticity.

Li said the case would ramp up pressure on Apple, especially if a ban was enforced.

"I think that Qualcomm and Apple, they always have those IP litigations to try to force the other side to make concessions. They try to get their inch somewhere. That's always the game."

Reuters - China Daily

(China Daily 12/27/2018 page17)