Apple Pushes Out Software Update to Avoid China iPhone Ban
By Tripp Mickle in San Francisco and Yoko Kubota in Beijing
Apple Inc. sought this week to avoid a ban on the sale of older
iPhones in China by releasing a software update that some
intellectual property lawyers said could enable the company to keep
selling those products in the world's largest smartphone
The move by Apple came in response to a preliminary injunction
from a Chinese court that ordered the company to stop selling
iPhones while it studies Apple's suspected infringement of two
software patents held by chip maker Qualcomm Inc. The two American
giants in the smartphone industry are locked in a bruising legal
battle over technology licensing.
Despite the late November injunction, Apple continued to sell
older iPhones, saying it was in compliance without elaborating
further. It then filed a motion asking the court to reconsider its
decision. The sales ban is a provisional measure while the court
considers a final verdict on Qualcomm's patent-infringement
Many lawyers who studied the court's decision believe Apple
initially defied the ban, challenging China's judicial authority.
The lawyers warned that could hurt the company's business standing
and brand reputation in a market that accounts for a fifth of
Apple's total sales. Qualcomm, meanwhile, said Apple was playing
down the preliminary injunction and flouting the legal system. It
has asked the court to force Apple to comply with the ban.
Apple says its Monday software update addressed the patents in
question. The new version of iOS 12 changes how an app disappears
from an iPhone display when a user swipes the screen upward--one of
the features contested by the two companies. Apple mentioned the
new feature in notes explaining the update on phones using a
Chinese-language setting, though not in an English-language
The changes could bring the company into compliance with the
court and ease pressure on the company, some lawyers said. Douglas
Clark, an attorney based in Hong Kong, said such software updates
are commonly used in instances of high-tech patent infringements.
It could be effective in this case because the preliminary
injunction only blocks Apple from selling phones that violate the
patents--not all iPhones, he said.
Qualcomm plans to test the new software and challenge it in
court if it believes the patents are still being infringed upon, a
company official said. The company is also seeking an order
covering the newest iPhone models, the XS, XS Max and XR.
If Apple has "not properly patched the phones, they would be
playing with fire" and could face fines or other penalties for
being in contempt of court, said Mr. Clark, who has served as
outside counsel for Qualcomm before but isn't presently doing so.
"That's where the risk is," he said.
So far, Apple has avoided a sales disruption in China and hasn't
faced a major backlash from the public or media. Local media
reports have been measured in tone, focusing on the developments of
the case and introducing views from legal experts.
Though Apple doesn't break down sales by models, RBC Capital
Markets estimates the older models affected by the ruling account
for about 40% of sales in China, equaling about $12 billion in
revenue. The order applied to iPhone X, 8, 7, 6 and 6s models.
The court's review of Apple's request for reconsideration of the
preliminary injunction could be completed in the coming weeks,
legal experts said. The judge could take about three to six months
to reach a final decision in the case, said Dragon Wang, a
Beijing-based intellectual property lawyer at Dunlap Bennett &
The court in Fujian province overseeing the Apple-Qualcomm case
previously issued preliminary injunctions against two American
companies in favor of Chinese plaintiffs over the past year. Micron
Technology Inc., a chip company, and Veeco Instruments Inc., a tool
maker, lost cases brought by Chinese firms.
Both of those American companies stopped selling their products
in China, said Mark Cohen of the UC Berkeley School of Law, a
former senior counsel in China for the U.S. Patent and Trade
Office. A "political narrative is not beyond the realm of
possibility," he said.
The U.S. and China remain engaged in a battle over trade and
technology, with both countries imposing tariffs on the other.
Apple is considered one of the most vulnerable U.S. companies to
the rising tensions because of its sizable China business and
dependency on the market for the assembly of iPhones, iPads and
in Beijing contributed to this article.
Write to Tripp Mickle at Tripp.Mickle@wsj.com and Yoko Kubota at
(END) Dow Jones Newswires
December 19, 2018 05:44 ET (10:44 GMT)
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