Qualcomm's Import Ban Plea for Apple iPhone Faces Dismissal

In a mixed verdict for QUALCOMM Incorporated QCOM, a U.S. International Trade Commission judge accepted that Apple Inc. AAPL-manufactured iPhones infringed one of the former’s patents, but refused to ban the import of the mobiles in the country. The judgment, however, seemed to have no marked impact on the companies as shares of both traded relatively flat.

The judge acknowledged that iPhones infringed a Qualcomm patent related to power management technology. However, the judge refused to accept Qualcomm’s petition to seek a ban on the import of these phones into the United States, citing broader public interests. Although the verdict is set to be reviewed by other judges, there is no denying the fact that it is a moral victory of sorts for Apple. The company, in its official statement, thanked the judiciary for thwarting efforts to damage competition and encouraging innovation.

On the other hand, Qualcomm observed that the verdict was a bit of oxymoron as although the judge accepted that Apple infringed its patents, it was allowed to continue with the sale of the products across the domestic market. The company further lamented that the judge did not exercise any other means to stop the technology infringement without affecting public interests.

Qualcomm had initiated a patent infringement case in International Trade Commission against Apple in July 2017. It recently alleged that Apple has stolen its trade secrets related to chip-making software for the benefit of a third-party service provider. The fresh charges against the iPhone maker will likely make the legal battle murkier and further embroil the patent dispute into a long-drawn judicial process.  

Qualcomm has accused Apple of misusing its secret software access to share information about its chips to Intel Corporation INTC engineers. This would supposedly aid Intel to develop competitive modem chips for use in several iPhone models, thereby enabling Apple to entirely get rid of Qualcomm products from its portfolio with which it was entangled in a patent dispute.

To support its allegations, Qualcomm claimed that its modems required a combination of chips and software to allow phones to receive wireless data, owing to which it gave Apple access to its source code and software development tools to help it modify the software for iPhone compatibility. However, instead of honoring its commitment, Apple allegedly shared this confidential information with Intel.    

Qualcomm further added in its recent filing that Apple passed on the information about its ‘log files’ to Intel to help it gain critical technical knowhow. The log files typically contained rows of data generated by computer hardware or software in order to help engineers analyze any technical problems to optimize the performance of a chip.

With such classified information, Intel chips were reportedly able to significantly improve performance and replaced Qualcomm's modem chips first in iPhone 7 launched in 2016. The recent launches of iPhone XS, XS Max and XR are believed to be solely based on Intel's XMM 7560 4G modem.

Over the years, Qualcomm has actively pursued its patent infringement cases. Another company against which it filed patent infringement litigation is Broadcom Inc. AVGO.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Broadcom Limited (AVGO) : Free Stock Analysis Report
 
Intel Corporation (INTC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research