Apple-Qualcomm legal battle hinges on 5G, national security

Bloomberg

Apple Inc must persuade a US trade judge that iPhones containing Intel Corp chips should be allowed into the country, even if they infringe a Qualcomm Inc patent.
That’s the challenge facing the world’s largest publicly-traded company, laid out in a US International Trade Commission hearing in Washington, part of a long-running
legal battle between Apple and Qualcomm.
Staff lawyers with the ITC recommended that Judge Thomas Pender rule that Apple violated one of three Qualcomm patents — for a battery-saving feature. However, the staff also said potential future Intel-based iPhones that have next-generation technology known as 5G should be allowed into the country to not cede ground to China.
Lawyers for the two tech giants squared off in one of some four dozen legal cases pending worldwide, all of them linked to a licensing dispute over the technology that allows mobile devices to communicate. A victory for either side in this case could help tilt negotiating power in the others. Pender said he thought the companies were “crazy” for letting it get to this point. He will issue his findings in September and a final ruling isn’t expected until early next year.
The ITC has the authority to block products from entering the country that infringe US patents, though it also has to consider the broader impact on the economy and the public. Staff lawyer Lisa Murray said that iPhones with Qualcomm chips — which Apple already sells — could replace those with Intel chips in the market. A bigger question, she said, was how a ban would affect the US’s race to stay ahead of China in 5G and whether that would be in the nation’s best interest.
“If Intel is taken out of the 5G race, this would slow the pace of US innovation,” Murray said. She recommended that future iPhones with 5G be exempt from any import ban, saying that “Apple and Intel would have continued incentive to invest in 5G.”
Pender said he tends to agree with the staff lawyers, who act as third parties in these cases. Qualcomm has said the chipmaker was forced to take action when Apple ordered its suppliers to stop paying their licensing fees, which bring in the bulk of its profit; Apple wants to cut its costs as the global smartphone market slows.
Pender is scheduled to hear testimony next week, including from Intel executives. The commission aims to complete the investigation in January, just before a trial in an antitrust case filed by the US Federal Trade Commission in California begins. “It’s very likely there will be a violation found,” Pender said. “Whether or not the public interest will be sufficient to outweigh that, I can’t predict that. I don’t see a result here being perfect for anyone.”
While denying it infringed any of Qualcomm’s patents, Apple lawyer William Lee, of law firm WilmerHale, focussed his opening arguments on the issue of public interest.
“If Intel is barred from selling to Apple in the US market, there is a good chance they’ll exit,’’ Lee told the judge.