Exclusion of Patent Infringing iPhones Delayed Is Justice Denied

By James Edwards
December 27, 2018

“Apple’s cavalier conduct toward other people’s intellectual property should run into a red, white and blue brick wall at the American border… keeping iPhone imports that infringe Qualcomm’s patents out of the United States.”

The International Trade Commission appears to be looking for a way to “split the baby” in the Qualcomm-Apple case.

As the ITC nears its decision on whether to impose a limited exclusion order and a cease-and-desist order against certain patent-infringing Apple devices, the commission may consider a remedy that doesn’t remedy the patent infringement and end the harm.

In its notice to review in part a final initial determination finding, the ITC asks, among other things:

Explain whether delaying implementation of a limited exclusion order or cease-and-desist order for a fixed period of time (e.g., six months or one year) would effectively balance enforcement of Qualcomm’s patent rights against the adverse consequences alleged by the parties with respect to industry competition, monopolization, the alleged exit of Apple’s chipset supplier from the market for 5G technology, and other concerns. If not, explain whether any other “carve-out” or limitation in a remedial order can accomplish this objective.

This disturbing question indicates that the commission could end up awarding Qualcomm the remedy sought but delaying its taking effect.  That would render the remedy no remedy at all.

Delaying implementation of a remedy would amount to injustice.  Here, justice delayed is indeed justice denied.

Delayed exclusion and cease-and-desist orders would amount to worse than a hollow victory for the inventor firm.  Such an ill-advised outcome would reward a proven patent infringer and signal to it and other implementers-IP infringers that it’s open season for importing products with patent-infringing components.

Both the law and the facts here favor Qualcomm.  This case should be a slam-dunk for Qualcomm.

The law, Section 337 of the Tariff Act (19 U.S.C. 1337), charges the ITC with keeping intellectual property-infringing goods from entering the United States.  Section 337 presumes an exclusion remedy when violation of IP is shown.  The commission’s available remedies against an “unfair act” (i.e., importing and selling a product that contains patent-infringing components) are exclusion orders and cease-and-desist orders. That’s it.

Unlike a federal court, the ITC cannot award monetary damages.  Were this a case in an Article III venue, it would warrant both injunctive relief and damages — perhaps even punitive damages.

There is clear precedent for an exclusion order and cease-and-desist order here.  In every previous smartphone case, the ITC has always blocked importation upon a finding of an import’s patent infringement.  This distinguished record of near-automatic exclusion orders by the ITC demonstrates the commission’s proper respect for property rights in one’s IP.

The facts, too, are straightforward.  The global leader in semiconductors has already proven to the ITC that a number of models of iPhones infringe its intellectual property related to Qualcomm’s patented baseband processing technology (U.S. Patent No. 9,535,490).  This invention saves power in the communication between an application process and the smartphone’s modem.

Apple manufactures its infringing devices in China and exports them to the United States.  Thus, the ITC has jurisdiction over keeping the devices out of the United States.

In the matter before the ITC, essentially called into question are Apple’s character and mischaracterizations.  As to character, Apple has not exactly responded consistently when courts in China and Germany recently issued injunctions against Apple for patent infringement by various iPhone models that infringe Qualcomm patents.  Apple has said it will stop selling the phones in Germany, but has snubbed the court order in China (the larger market), continuing to sell the infringing mobile devices.

Apple has long behaved badly with regard to things like laws and principles.  This is unfortunate, because Apple has aggregated others’ IP in truly creative ways. The iPhone changed the game in the consumer cell phone market, namely because of the “user experience” aspects of its customer-facing devices coupled with sleek designs.

Remember the old TV commercials featuring the cool Apple guy and the nerdy PC guy?  Apple brought that coolness element, along with consumer-friendly platforms for using its devices — iTunes, the App Store — again, aggregating others’ creations — recorded music, mobile apps.

Like the kid who grows too big for his britches and become a bully, Apple suffers from not being held accountable, not being taught good manners and not being instilled with respect for other people’s property. Apple has gotten away with much of its misconduct because it’s a darling of Silicon Valley with an iconic founder. Apple’s aggressive posture has long since gone from cute to cunning to coercive and manipulative.

As to mischaracterizations, this is where the commission seems befuddled. Apple and Intel have confused and misled the public and the ITC, beginning with the administrative law judge who failed to recommend a remedy.  The ALJ’s unprecedented error and the ITC’s question quoted above, in weighing public interest factors, are based upon a propaganda ploy.

Apple claims Intel would exit the broadband market were the ITC to exclude the patent-infringing iPhones.  It is implied that Intel is a leader in 5G wireless technology and this supposed exit would be detrimental to the public interest. In this fictitious narrative, Intel is supposedly critical to U.S. leadership in 5G technology.

However, 5G is a multifaceted technological system. It entails research and development of the underlying science and technology, the infrastructure, mobile semiconductor chips including those that are standard-setting, and various devices.

A host of players in telecommunications, wireless, computers, software, hardware, and units in industrial sectors from automobiles and appliances to consumer electronics and utilities now claim to be big deals in 5G.  Most of them aren’t.  Most are implementers and aggregators.  Not unimportant, necessarily, but not central.

A few companies in a few, critical areas of developing next-generation wireless communications can legitimately claim to be leaders.  Fewer still deserve the mantle of global leader in 5G.

In R&D and semiconductors, Qualcomm, Huawei and Samsung make up the list of global leaders.  In infrastructure, it’s Huawei, Ericsson and Nokia.  As for leaders in 5G-capable devices, such as smartphones, Huawei, LG, Samsung and ZTE head the rest.

It is vital to understand that device companies, from the leaders of the pack to the back of the pack, implement the other segment leaders’ technologies.  They aggregate others’ technologies — sometimes in “cool” ways, to be sure — but implementation and aggregation of others’ components occur long after the investment, experimentation, invention and other aspects of heavy lifting have been accomplished.

That is, Qualcomm’s patent licensing-based R&D program has earned this company a coveted spot at the pinnacle of the most important end of wireless technology.  The leaders of implementation and aggregation may have products and brands that are familiar to consumers around the world.  But brand recognition of that sort tends to mask the essential things inside the cool devices that make them work so well.

Huawei has the benefit of being a Chinese national champion for 5G dominance.  Its role in Chinese industrial policy and favoritism by the Chinese Communist Party effectively mean Huawei doesn’t have to worry about profits, shareholders and other free-market constraints.

In contrast, Qualcomm has made R&D its road to competitive success.  The American firm’s R&D has led to state-of-the-art technology that has set the standard in 3G and 4G, and has put Qualcomm well on the way to setting the global technological standard where it counts in 5G.  This preeminence informed the Committee for Investment in the United States’s recommendation against a hostile takeover of Qualcomm that would surely have decimated its R&D, its core technological dominance and its putting the United States, rather than China, in good position to lead the world to 5G wireless communications.

These facts put Apple’s and Intel’s claims to the ITC into clearer perspective.  A PR campaign asserting otherwise doesn’t make Intel’s chips and R&D vital to 5G technology.  Banners at subway stations and sloganeering don’t cause Intel to mean a hill of beans to core 5G technology in a way that would alarm CFIUS.

In devices such as the iPhone, Apple and Intel merely operate on the technological connectivity platform Qualcomm created. In short, what Intel does well doesn’t compete meaningfully with Qualcomm where American 5G leadership is concerned.

For the matter before the ITC, the impact of a delayed exclusion order injures Qualcomm’s competitiveness by allowing the patent infringer to continue importing and selling infringing devices. Each sale directly deprives Qualcomm of rightful royalties, which fund the company’s R&D program.  This would have a similar adverse effect as the averted hostile takeover bid would have had on Qualcomm’s R&D.  It is Qualcomm’s ability to continue robust R&D that is of primary importance to the public interest of the United States.

Justice demands immediate effect in barring entry of patent-infringing iPhones.  Hopefully, the ITC will not blemish its record of respect for IP rights.

Apple’s cavalier conduct toward other people’s intellectual property should run into a red, white and blue brick wall at the American border, courtesy of the ITC, in the form of immediately effective exclusion and cease-and-desist orders, keeping iPhone imports that infringe Qualcomm’s patents out of the United States.

The Author

James Edwards

James Edwards consults on intellectual property, health care innovation, and regulatory and policy issues. Edwards advises companies, trade associations, and conservative organizations on patent policy and is Co-Director of the Inventor's Project. He participates in the Medical Device Manufacturers Association's Patent Working Group. Edwards mentors start-ups and early-stage companies, largely in the med tech space, and is involved in several IP-centric projects.

Edwards served as Legislative Director to Rep. Ed Bryant, R-Tenn., then a member of the U.S. House Judiciary Committee, and handled IP legislative matters. Edwards also worked on the staffs of Rep. John Duncan, R-Tenn., the U.S. Senate Judiciary Committee, and Sen. Strom Thurmond, R-S.C. In addition, he was an association executive at the Healthcare Leadership Council. Edwards earned a Ph.D. at the University of Tennessee, and bachelor's and master's degrees at the University of Georgia.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 14 Comments comments.

  1. Damien December 27, 2018 3:07 pm

    “As to character, Apple has not exactly responded consistently when courts in China and Germany recently issued injunctions against Apple for patent infringement by various iPhone models that infringe Qualcomm patents.”

    Funny… the China one being an ex-parte action that Apple had no say in, directly in contradiction to recently established guidelines. And the German one, the injunction issued simply because Apple was unable to make its case and so “defaulted” to Qualcomm;– limited actual investigation on the merits of infringement was done, since no evidence on how Apple uses the Qorvo chip was presented. (this, despite the fact that these evidences were used and available in a seperate ITC case against Qualcomm in Sept)

    See the joke? You talk about their responses to actions where Apple was either specifically not included or in actions where they were precluded by the Court from actually giving their defense. Haha… funny stuff guys.

  2. John December 28, 2018 11:16 am

    What an apologist pile. You are working overtime to find apple’s sins and comes up with bs (basically, wah, i think apple has gotten arrogant (it has), and wahh, they need to be brought down a peg because I said so (umm, no they dont).

    Of course you conveniently seem to ignore the center of the problem, that qualcom is abusing its patents (with nearly the entire industry lining up against its alleged abuses) and charging licensees a portion of the total value a of the phone, where the telecom part does not equate to the total value of the device. Flip phones existed with 3G and even 4G etc, but they do not command prices even an order of magnitude less than the smart phone tech apple added. The smartphone baseband tech is the same stuff as in the flip phone. The vast majority of the iPhone added value has NOTHING to do with that baseband, and is independent of that baseband system, yet qualcom wants to be paid for apple value added that is not theirs.

    Getting to the bottom of if qualcom is abusing the patent system and/or its market position is not an unreasonable thing for the courts to consider staying patent enforcement for when the two areas are so intertwined. Waving your hands about how much you dont like apple’s attitude doesnt change that reality.

    The photo for this article should be you grinding an axe.

  3. Masha December 28, 2018 11:34 am

    I would love to see a conflict of interest statement similar to what medical researchers do in revealing who is paying them.

  4. Josh Malone December 28, 2018 1:07 pm

    John – no one is forcing Intel, Apple, and the 3GP group to use Qualcomm technology. If they don’t like Qualcomm prices they should not use Qualcomm technology.

  5. John December 28, 2018 4:15 pm

    Says you Josh. Many assert that Qualcomm has fenced in 4G/LTE patent tech so that even if you get a chipset not made by them, they still come in like a bunch of trolls. That they went to intel chipsets and Qualcomm is still demanding payments lends some weight to that assertion. Precisely the point of the antitrust/patent abuse cases, the kind of thing they can discern, which make delaying an outcome very reasonable.

    Is it also reasonable not to delay. Sure. But the hysterics and one sided battering of apple because they’re arrogant, painted, at least to my eye, a different picture.

    Of course, your mileage may vary.

  6. Josh Malone December 28, 2018 7:20 pm

    John – it has nothing to do with who makes it. Qualcomm owns the rights to the power saving device they invented and claimed in patent 9,535,490. Evidently they discovered a new way to extend smartphone battery life before Intel, Apple, or anyone else. Accordingly, they (should) get to decide who can use their invention and how. By proffering legal arguments at the FTC that it is in the public interest to violate Qualcomm’s patent, Apple persists with their extremely successful campaign to destroy our patent system.

    It is really important to recognize that a patent is supposed to be an exclusive right to the invention. Apple and Intel have no rights to use it, not for the first 20 years. If that is not what we want as a society, we should tell Congress to change the laws. Instead we have encouraged big corporations like Apple to twist and undermine the laws.

  7. john December 28, 2018 10:26 pm

    So thanks for remaking my point. The power saving has squat to do with all the other tonnes of innovation apple put atop of that, and qualcomm is pretty greedy wanting a piece of that. Maybe they’re entitled, maybe they are anticompetitive patent abusers.

    A perfectly reasonable thing for a court to hold off and wait for the result of that outcome in the ongoing trial.

    Please spare me the intro to patents. I’m well versed.

    Again, your bemoaning that the court is holding off on enforcement when there is an ongoing case determining patent abuse/anticompetitive behavior by qualcomm for which an entire industry is against them, is perhaps more unreasonable than what you make out the courts to be themselves.

    It’s perfectly reasonable. Just as it would also be perfectly reasonable if they did as you like and force the injunction. Going either way is well within the realm or reasonableness when the antitrust/patent issues are as intertwined as they are here.

  8. Ternary December 29, 2018 12:29 pm

    john@7 By now it is pretty clear what infringers and their supporters consider to be “patent abuse” and that is virtually any assertion of patent rights.

    Qualcomm is a tough company to deal with, no doubt. But so is Apple. This struggle against Qualcomm by Apple goes back to the first generation of iPhones where Apple wanted, no needed, no must connect to CDMA. No choice really. And the fact is that key inventions in CDMA were done and owned by Qualcomm. Qualcomm very well understood the importance of almost every type of supporting technology in cellphones, ranging from baseband technology, cell management, to power management to almost every type of sensor on a phone. Look it up John. What are you saying? They may own it, but they are not allowed to assert it?

    So, Qualcomm truly developed and “owns” much of the technology in phones, almost right from the start of digital cellphones. Jacobs, Gilhousen, Viterbi? Not only that, they cleverly leverage their entire IP portfolio as a profitable business model. Many, many companies do not like it. I understand that. But all in all these companies do not or cannot circumvent Qualcomm patents, so they use the oldest trick in the book: shout patent/monopoly abuse.

    Josh Malone invented an effective and clever way to fill balloons with water. He got a patent for it and started a company. It should have been easy for him to stop infringers of his valuable patent who were stealing his technology from him. Ask him how reasonable the system is to legal patent owners as compared to willful infringers.

  9. mike December 29, 2018 1:19 pm

    John, I don’t think Josh remade any of your point. Your mention that “The power saving has squat to do with all the other tonnes of innovation apple put atop of that” says nothing, simply because “all the other tonnes of innovation apple put atop of that” has squat to do with Qualcomm’s exclusive right to Qualcomm’s invention.

    Sure, Apple may have invented a frosted light bulb, but if their invention(s) sit(s) on top of Qualcomm’s invention of the light bulb, then Apple’s use of their frosted light bulb must kowtow to Qualcomm’s light bulb and any exclusive rights belonging to Qualcomm contained therein.

  10. John December 29, 2018 5:51 pm

    Um no mike, it has everything to do with qualcomm’s alleged abuse. They collect on the value of the whole product, and not just on the contribution of the feature being used/licensed. That’s the claim.

    Again, let me make this simple. The qualcomm feature in question is available on a flip phone. A flip phone is an order of magnitude simpler and cheaper than an iphone. All the extra features above a flip phone available on the iphone, in essence, are being taxed by the qualcomm license, when those features are completely independent of the licensed feature. At least, that is apple’s (and many other companies lining up to assert qualcomm’s abuse) contention. If you cannot understand that assertion, i cannot help you.

    Further, you are prosecuting the merits of that, and that is not what this article is about. Perhaps qualcomm is right, perhaps they are wrong. The point being, is it reasonable for a judge to hold off on injunctive relief when a current case is deciding on if they are abusing their patents and are violating anti-competition laws. This article throws a hissyfit asserting it is not reasonable. That is false. Very simply false.

    It is completely reasonable for the judge to hold off awaiting to see the results of the patent abuse/anticompetition case. It also would be reasonable for the judge to not wait for those results. Either outcome is WELL within the purview of a judge under such circumstance, regardless of all the slanted handwaving of this article. You and the author are free to disagree, personally I dont care. Im pointing out another view, mainly, that this article is slanted, full of histrionics, and incorrect in asserting that such an outcome is somehow unreasonable.

  11. Josh Malone December 29, 2018 9:33 pm

    It is not abusive or anti-competitive to ask the authorities to expel an intruder from one’s property.

    Apple can make and sell all the flip phones and smartphones they like using the power saving technology from 2013.

    They should not be permitted to use the 2014 technology that belongs to Qualcomm without Qualcomm’s permission.

    This is not so complicated, at least it shouldn’t be. Enforcing a valid is not abusive nor anti-competitive. It is merely exercising a fundamental right under the law, notwithstanding the refusal to apply the law by the ALJ in this case.

    I do think your suggestion to reserve adjudication of patent disputes for an Article III court has merit, although it makes the ITC irrelevant.

  12. mike December 29, 2018 9:48 pm

    John, you said:

    “If you cannot understand that assertion [i.e. Apple’s contention that ‘all the extra features above a flip phone available on the iphone, in essence, are being taxed by the qualcomm license, when those features are completely independent of the licensed feature’], i cannot help you.

    Further, you are prosecuting the merits of that, and that is not what this article is about.”

    Pray tell me where in my comment I am “prosecuting the merits of that” (whatever “that” is).

    My comment was directed to one thing: your mention that “The power saving has squat to do with all the other tonnes of innovation apple put atop of that”. I pointed out (correctly) that “all the other tonnes of innovation apple put atop of that” has squat to do with Qualcomm’s exclusive right to Qualcomm’s invention.

    So, let *me* make this simple: does Qualcomm not have an exclusive right to their invention?

    Whether or not Qualcomm is collecting on the value of the whole product is an interesting question, yes, but that is a separate matter from Qualcomm having an exclusive right to their invention. And sure, the bounds of Qualcomm’s invention in terms of collection very well might need to be limited from being associated with Apple’s whole product, but again, that speaks nothing to Qualcomm’s exclusive right.

    If Apple et al have a problem with Qualcomm’s light bulb, perhaps they should invent and include another source of light in their products rather than include a frosted light bulb and call “foul” on Qualcomm’s patented light bulb.

    If we wanted to discuss abuse, I’m sure one could easily claim that Apple has their hands plenty dirty, especially in efficient infringement against small inventors, but chasing that rabbit is for another day.

    My simple point stands alone on its merits.

  13. John December 30, 2018 6:45 pm

    Lol, youre a riot. You’re not arguing on the merits, except you are. I love that you dont see it, and I keep rubbing your nose in it.

    It’s not only an interesting issue, it is the issue being decided on if it is patent abuse.

    Please keep holding your breath and stomping your foot, and puhleez keep explaining how foundational it is. Dance Mike, DANCE!

    As for expelling intruders Josh, it makes sense to call a cop when a troll quotes you $1 to cross a bridge to only have them demand $1 for every bridge you ever crossed before then.

  14. mike December 30, 2018 8:48 pm

    John,

    This will be the last pearl I will throw in your general vicinity.

    You said “You’re not arguing on the merits, except you are. I love that you dont see it, and I keep rubbing your nose in it.” You also said “it [i.e., whether or not Qualcomm is collecting on the value of the whole product] is the issue being decided on if it is patent abuse.”

    Okay. That’s nice. No where in my comments did I address any of the article’s content or position, or state a position on whether or not Qualcomm is committing some form of abuse.

    I will quote myself:
    “My comment was directed to one thing: your mention that ‘The power saving has squat to do with all the other tonnes of innovation apple put atop of that’. I pointed out (correctly) that ‘all the other tonnes of innovation apple put atop of that’ has squat to do with Qualcomm’s exclusive right to Qualcomm’s invention.”

    I will rub my nose in that fact all day.

    The real riot is you thinking I’m arguing a position not argued.

    Happy New Year everyone!