Published in Mobiles

Apple's loss to Qualcomm in Germany means iPhone destruction

by on27 December 2018

Deeper dive: Germany can even arrest executives

Last week’s ruling in a district court in Munich, Germany is about a hardware patent named tracking envelope and it affects the  iPhone 7, 8 and 8 Plus. This is a tough defeat for Apple as while it can issue an OS update and remove the features in software and fix the China ruling,  it cannot stop using Qualcomm hardware patents in German phones.

It looks like Apple is walking all over the decision of the Fuzhou Intermediate People’s Court in China's preliminary injunctions to immediately cease infringing two software patents affecting the iPhone 6S, iPhone 6S Plus, iPhone 7, iPhone 7 Plus, iPhone 8, iPhone 8 Plus and iPhone X. Apple hasn't stopped sales and distribution as it should have and it is even selling these phones in its China webstore and retail stores.

German permanent injunction

A week before the Christmas massive lazy period, a German court in Munich granted Qualcomm’s request for a permanent injunction, ordering Apple to cease sales, offer for sale and importation for sale in Germany of infringing iPhones. This court order was very clear as the court found that Apple is infringing Qualcomm’s intellectual property for power savings in smartphones and granted Qualcomm’s request for a permanent injunction, ordering Apple to cease the sale, offer for sale and importation for sale in Germany of infringing iPhones.

Germany's KabelEins TV station has a TV show called ACHTUNG KONTROLLE! (Attention control ) which showed how thorough is Germany custom about the oil filter patent infringement at the Frankfurt car show and another one about illegal dish copies. The journalists at the TV station stated that it is estimated that there is $30 billion Euro damage due to illegal product copies. There was another episode about the company infringing  Stihl pencils. 

This is a hardware feature and the patent specifically targets the envelope tracking Qualcomm patent that Apple doesn’t want to pay for. Per the court decision, Apple must pay Qualcomm damages that will be determined in a later time. You can only wonder if these custom officers with such a huge present might raid the big stores confiscating Apple products soon. 

And it's all about a piffling $13 per device

As we reported here, the whole legal mess started when Apple decided to withhold its licensing provision to Qualcomm. The article - where we explained that it is all about $13 a phone tells the story in some detail, and just bear this in mind when you are about to pay  €1.319 for an iPhone Xs 256 GB in Germany. Let’s be clear that $13 might seem minor but if you sell 46.9 million - according to the IDC Q3 18 report, Qualcomm could earn up to $609.7 million, assuming all sold iPhones cost $400 or more.

Qualcomm licensing wants 3.5 percent of the sales of the device with a $400 cap, and Apple is not forced to work with Qualcomm, it should just stop using its patents. Even if this happens in future devices, Apple still owes Qualcomm royalties.

Bear is mind that Apple is very protective of its patents and rarely licenses them to anyone. The rumor is that Samsung pays a lot to Apple, probably even more than the amount that Qualcomm requires for its licensing model as Samsung really wanted to continue using some Apple patents.

Let’s come back to the court decision again. The injunction orders Apple to cease the sale, offer for sale and importation for sale in Germany of infringing iPhones 7, 7 Plus, 8, and 8 Plus and it should be effective as soon as Qualcomm pays the bond.

Qualcomm should post some $1.5 billion or two times 668 Euro as Qualcomm sued Apple’s European Union entities as well as Apple Incorporated, two separate entities. This is expected according to Qualcomm’s top executives any day now, it was just affected by the holiday season. This amount is for bonds covering potential damages incurred by Apple should the judgment be overturned or amended on appeal. The fact that Qualcomm agreed to post the bonds means that it is quite sure that the ruling is unlikely to get overturned. At the end of the day Germany is a country that has incredible intellectual properties in multiple industries and it won't allow any company, no matter how big it is, to walk all over its judicial system.

Fines or criminal penalties possible, and destroying phones

After the bond is posted and Apple decides to not comply with any aspect of the judgment, for example the injunction, Qualcomm can initiate contempt proceedings and this process can move quickly.

Sanctions for violating the judgment might include fines or criminal penalties for company representatives. Yes, this can mean jail time for executives and, after the bond gets posted, Apple must do its best to recall devices from all third-party retailers.

The fact that Apple announced halting all sales of iPhone 7 and 8 at its web store and retail stores in Germany but had them available via 3400 distributors and carriers, is a violation. Apple has to stop any sales of these devices with third party distributors, etail and retail chains of telecoms. At press time, MediaMarket Germany's equivalent to BestBuy in the US, had iPhone 7, iPhone 8 and iPhone 8 Plus listed. 


Apple’s EU entities have to destroy any devices in their possession in Germany, including ones recalled from third parties. Not only that, Apple will be affected by lack of sales, it will also have to destroy the phones, and won’t be able to shift them to other unaffected countries.

This is far from over, and it this is definitely not the last chapter in the book. 

Last modified on 27 December 2018
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