ITC mulls whether to ban iPhone 7 in the U.S.

iPhone 7
Image: Apple

In the latest in a long series of Qualcomm-Apple patent showdowns, the International Trade Commission (ITC) has decided to go ahead with an investigation that could result in the iPhone 7 being banned in the United States.

The regulator has agreed to examine whether Apple is infringing on as many as six Qualcomm patents, following up on Qualcomm’s allegations that the CE giant “has engaged in unfair trade practices” by importing and selling iPhones and iPads that use LTE modems not supplied by Qualcomm’s affiliates, in violation of their licensing agreements. That’s a reference to Intel-based devices, including the iPhone 7; Qualcomm alleges that while the Intel baseband processors themselves don’t violate its patents, the way Apple has implemented them does.

"Apple can purchase and utilize any LTE modem it chooses so long as it does not infringe Qualcomm's asserted patents," Qualcomm argued last month, when it made the request for an investigation.

The chipmaker wants an exclusion order that would bar importation of the iPhone 7 and other affected devices, and a cease-and-desist order to ban further sales and marketing of them in the United States.

That outcome is seen by some as a nuclear option: Last month, as the ITC weighed whether to take up the case, a lobbying group representing Google, eBay, Amazon, Microsoft, Netflix, Intel, Samsung and others filed a brief with the Commission arguing that banning Apple products would encourage anti-competitive behavior, cause supply issues and harm consumers. Android devices would gain a clear advantage in the domestic market if new iPhones were no longer available.

For its part, Apple said last month in a statement to Reuters that Qualcomm makes a single chip in the iPhone but "for years [has] been demanding a percentage of the total cost of [Apple] products—effectively taxing Apple's innovation.” And CEO Tim Cook has addressed the issue in the past: "I don't believe anyone is going to decide to enjoin the iPhone based on [chip implementations]," Cook said during the company’s May earnings call. "I think that there's plenty of case law around that subject, but we shall see.”

This is not the only dust-up embroiling the two. In addition to the complaint filed with the ITC, Qualcomm has filed suit against Apple in the U.S. District Court for the Southern District of California on the issue, and seeks damages and injunctive relief for iPhones imported into or sold in Germany. Apple meanwhile is suing Qualcomm in a complaint filed in January, for charging unfair royalties and refusing to pay quarterly rebates. They are also in legal battles in other jurisdictions over anticompetitive practices, other patent infringements and the practices of Apple’s contract manufacturers.

While those play out, the ITC will set a target date for completing its investigation within the next 45 days, with an initial determination likely to be made in 2018.

The vendor was predictably positive about the turn of events this week: “Qualcomm is pleased with the ITC's decision to investigate Apple’s unfair trade practices and the unauthorized importation of products using Qualcomm’s patents,” said Don Rosenberg, executive vice president and general counsel of Qualcomm, in a media statement. “We look forward to the ITC’s expeditious investigation of Apple’s ongoing infringement of our intellectual property and the accelerated relief that the Commission can provide.”