Headlines have been blaring about a ban on iPhone sales in a couple of countries. Most recently, on Thursday, a German court ruling appeared to halt sales of iPhones there, but that’s not what happened immediately.
What’s really going on?
Over the past two years, mobile phone titans Qualcomm and Apple h ave battled in courts worldwide. Apple got things started when it stopped paying royalties for using Qualcomm wireless modem chips in iPhones and iPads, accusing its long-time supplier of illegally abusing a monopoly position. Qualcomm hit back by filing patent and intellectual property infringement cases—plus suing to get paid.
Here are some answers about the real state of play:
Have iPhone sales been banned?
Courts in China and Germany ruled this month that Apple violated some of Qualcomm’s intellectual property and ordered some iPhone sales halted. The Chinese court decision focused on two software patents (about resizing photos and navigating apps) in iPhones made prior to the 2018 editions. Meanwhile, the German court focused on a hardware patent about saving power while transmitting wireless signals. The case focused on iPhones manufactured with chips from Intel (INTC) and Qorvo, also pre-2018 models.
So iPhone sales have stopped in China and Germany?
Not exactly. In China, Apple says it has tweaked its software to avoid the two patents while also appealing the decision. At the same time, it has continued to sell all iPhone models in China. Qualcomm (QCOM) says Apple is “legally obligated to immediately cease sales.” You can almost count on continued legal wrangling.
In Germany, Apple (AAPL) also said it would appeal. But Apple said it would stop selling its older iPhone 7 and 8 models in its own stores in Germany during the appeals process (though the devices will still be available from thousands of other retailers).
Will these rulings force a settlement?
Not yet, but it’s possible. Qualcomm officials including CEO Steve Mollenkopf have long hinted that a settlement was near. “We’re really on the doorstep,” the CEO said last month, for example.
Apple has denied the signals at every turn, saying no settlement talks were even active. But last week, Apple told a Chinese court that if iPhone sales in the country—its second-largest market after the United States—are in fact banned, it would have to resolve the case with Qualcomm. “Apple will be forced to settle with the Respondent, causing all mobile phone manufacturers to relapse into the previous unreasonable charging mode and pay high licensing fees, resulting in unrecoverable losses in the downstream market of mobile phones,” Apple told the court.
Are these two cases the most important?
Not by a long shot. Two other cases focusing on the core issues between Apple and Qualcomm will heat up starting next year. On Jan. 4, the Federal Trade Commission is scheduled to open a trial examining whether Qualcomm’s licensing practices violate antitrust rules, as Apple has alleged. Qualcomm lost an initial ruling ahead of the trial, but the most significant challenge to its entire business model will be hashed out over coming months. Then, in April, the trial for Apple and Qualcomm’s competing lawsuits in federal court in California is scheduled to begin. As long-time chip industry analyst Stacy Rasgon wrote after the Chinese and German decisions came out, “we may be approaching the end of the beginning but we still suspect we are not yet near the end.”
Is that it?
There’s one other important legal battleground. In September, an administrative judge for the U.S. International Trade Commission found that the iPhone violated one Qualcomm patent relating to energy saving, but that banning the import of all iPhones into the country would not be in the public interest. Last week, the ITC said it would review that decision. That final review is expected to be issued by Feb. 19.
