Don't expect a Chinese iPhone injunction anytime soon in the Qualcomm v Apple fight 16 Oct 17
A series of Beijing lawsuits first reported by Bloomberg on Friday are just the latest salvos in the increasingly bitter global patent war between Qualcomm and Apple. Announcing the new suits to the press, Qualcomm declared explicitly that it will seek an injunction in China to stop the manufacture and sale of iPhones.
The three cases have been filed to the Beijing IP Court. A Qualcomm spokesperson said the patents are related to power management and touch screen technologies, and made clear that they are not standard essential patents (SEPs). Apple emphasised that the rights are peripheral to the core of the dispute between the two companies, saying in a statement: “In our many years of ongoing negotiations with Qualcomm, these patents have never been discussed.” But by asserting patents not subject to a fair, reasonable and non-discriminatory (FRAND) licensing pledge, Qualcomm is likely to be counting on an easier path to injunctive relief - its stated goal.
Bloomberg’s coverage warns that with OEMs in China rushing to produce enough new iPhone models for the holiday season “disruptions [in the supply chain] would likely be costly” for Apple. But the Chinese practitioners I have spoken to don’t anticipate a court order stopping iPhone sales or, crucially, manufacture and export – at least not anytime soon.
The success rate for obtaining a preliminary injunction in China is low, according to an article on Chinese patent assertion published in issue 84 of IAM. “In most cases a preliminary injunction is properly denied because there is no provable immediate harm and the defendant has not had a reasonable chance to defend its case,” explained author Erick Robinson.The difficulty of obtaining a preliminary injunction in Chinese patent cases was also discussed by Philips’ head of IP in China, Daniel Yan, and Ant Financial chief IP counsel Benjamin Bai at IPBC Asia last year. In this case specifically, said another practitioner I spoke with, it’s hard to imagine the Beijing court issuing an order that could be so disruptive to the iPhone supply chain as a preliminary matter.
What's more, if Qualcomm is aiming for a relatively speedy trial and then an injunction, the Beijing IP Court would be a strange choice of venue. Litigators based in the Chinese capital tell me that the court’s docket is very full, and that patent cases there are subject to significant delays. If a quick result is your aim, you’d likely file elsewhere, they stated.
Moreover, there is already an Apple-Qualcomm case before the Beijing IP Court, and the lack of ruling there suggests the judges are in no hurry to weigh in one way or the other. In January, Apple filed two complaints: one accuses Qualcomm of Anti-Monopoly Law violations, asking 1 billion RMB in damages, and the other asks the court to rule on whether Qualcomm’s licensing practices are lawful. “If they really wanted to, the court could probably have decided on one of those cases by now”, said China-based lawyer, who thinks the court will drag its feet waiting for a settlement.
There is a complex set of Chinese interests at stake in the Qualcomm-Apple dispute, a factor IP professionals say really does matter at the end of the day in China’s system. Many people take the view that industry interests in the country line up more on Apple’s side, given how much revenue Qualcomm earns from China's mobile sector (Apple is not the only smartphone maker that has stopped paying royalties to Qualcomm recently; some sources speculate that Huawei may be another). On the other hand, Robinson (Qualcomm’s former director of patents in Asia) has laid out a list of reasons why he thinks taking the fight to China could backfire for Apple.
In many such cases, Chinese courts try to encourage a settlement. While plaintiffs have a high winning rate in the Beijing IP Court, part of the reason for this is that few cases actually end in a verdict. Beijing judges now have more levers which they can use to apply pressure to both sides. So while the suits may not impact consumers anytime soon, they could help to push the parties toward settlement, along with parallel actions in the US and elsewhere.
If these new Beijing complaints result in a surprise injunction it will be very important news. But as my colleague Richard Lloyd points out, if they compel a settlement, that will mark a major shift as well.
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