(Bloomberg) – Apple Inc. (NASDAQ :). and Qualcomm (NASDAQ 🙂 Inc. finally agree on something: the importance of 5G mobile phone technology for the United States
The protagonists of a comprehensive and bitter legal battle before the US International Trade Commission claim that the actions of others are harmful The nation is leading in fifth generation wireless technology. The agency is scheduled to release key decisions on Tuesday in the protracted fight against patent fees ̵
A decision by the Trade Commission Apple could undermine Qualcomm's attempt to defend its business model and continue to charge billions of dollars in technology license fees. If Qualcomm rules, Apple may have limitations on its ability to import and sell some versions of the iPhone, the main source of its revenue.
The 5G law – which is not yet on the market – is not only faster speeds, but the ability to do things with connected devices that are not currently possible, from remote control via robots to self-propelled cars talking to each other. But the fear in Washington that China will gain global leadership in 5G is being accused of both Apple and Qualcomm for trying to win the epic legal battle against technology that currently supports all smartphones.
"The entire telecom and wireless industry has been made to sing the 5G song," said Will Stofega, a mobile industry analyst at IDC, when asked about the conflict between two of the world's largest technology companies. "There is a kind of alarmist tendency that China can face in the actual implementation."
Their choice of 5G focusing their arguments is on point. President Donald Trump's administration has already intervened in Qualcomm's affairs by banning a hostile takeover of Broadcom (NASDAQ 🙂 Inc. in a feature that cited the importance of the San Diego chip maker for the new phone technology.
At the same time, US politicians and regulatory agencies have also focused on limiting the influence of China's Huawei Technologies Co. Apple and Qualcomm have each claimed that a loss on ITC for them would help Huawei get an advantage in 5G.
"Reduced US research and development in the baseband chipset market is affecting competitive conditions in a sector that has national security implications," Democratic senators Ron Wyden and Jeff Merkley of Oregon and other lawmakers said in a letter to the agency in support of the apples position. A dozen other politicians, both Republican and Democratic, also weighed against an import ban.
The Trade Agency has the power to block the import of products that violate US patent rights. In the first of two cases filed by Qualcomm, a trade judge said Apple violated a patent for a power-saving feature, but cited the 5G race by recommending prohibiting iPhones. The Commission is scheduled to release its final decision on Tuesday. On the same day, in another case, a judge is expected to report her findings with other Qualcomm patents filed against Apple.
It is rare for the Agency to refuse to impose an import ban if an infringement is found, however in special cases it has been agreed to delay the execution of such orders. The last time it decided against any prohibition was in 1984 when it appeared that blockage of hospital bed intended for burn victims would harm patients who might not be able to get the equipment.
Any import ban would then go to the Trump administration for consideration and could be overturned for public interest. In 2013, the Obama administration vetoed an import ban on older iPhones, won by Samsung Electronics (KS 🙂 Co., citing concerns about blocking the use of basic technology in mobile devices.
At the heart of the overall argument between Apple and Qualcomm is a small chip called a modem. The Smartphone component helps to convert radio signals to voice and data. Qualcomm's chips have led the way in past transitions to 3G services and successors in the phones and services we use today.
Apple claims that giving Qualcomm's claim to have iPhone banned would damage the competition. Apple's current supplier, Intel Corp (NASDAQ :). Will have trouble continuing to innovate in this area if revenue from US sales was banned, Apple claims.
"Without current 4G sales to Apple, Intel lacks a viable way ahead of competing to get 5G baseband chipset sales," Apple told the agency. "Intel is now the only US baseband chipset manufacturer still facing Qualcomm's anti-competitive practices."
Qualcomm says it's nonsense. There is plenty of competition, it says, mainly from overseas companies and that Apple allows to use the patented inventions without paying off, damaging it and US management in 5G.
"Qualcomm is the global leader in 5G development and standard setting, with Huawei being a close second," Qualcomm said. "Although Apple intends to urge the Commission to hold another runner in a two-lane race, Apple really urges the Commission to bend the US leader in a field full of foreign participants."
All phones that will debut on nascent 5G systems this year will be based on Qualcomm chips the company has said. Samsung, the world's largest phone manufacturer, launches a version of its flagship Galaxy line using Qualcomm components.
Intel, Samsung, Taiwan MediaTek Inc., Huawei and others have all announced their own plans to bring 5G compatible modems to the market, but most do not come before 2020, after which Qualcomm says it comes in its second version .
Analysts have expressed concern that the struggle with Qualcomm could delay Apple's access to the 5G market. The company holds off until at least 2020 before offering an iPhone that can connect to 5G services, according to people who are familiar with their plans.
While both sides are using 5G before the trading agency, the case is really a royalty debate that has become quite common among businesses in the mobile energy sector. The ITC cases are a commitment from Qualcomm to put pressure on Apple to renew an expiration license agreement.
Qualcomm not only makes chips but has patents on the basic technology that underlies all mobile devices. This means that it is paid whether or not a device contains a Qualcomm chip. The dispute with Apple is over how much Qualcomm will get in royalties from the iPhone.
Patents in the two ITC cases do not relate to industry standards. Qualcomm says it should show how its research makes its phones not only work but works better. It also avoids the kind of legal dispute that struck Samsung in 2013.
Apple says the power-saving feature is for "15 extra minutes of battery life" and it has been able to design around the patent. Apple asked that if an import ban were introduced, it would take time to complete the rollout of the software change and to redesign the review by US officials.
The enmity between the two behemoth companies spans the globe. Apple filed a lawsuit against Qualcomm and instructed its component suppliers to stop paying the chip maker, which has cost it billions of dollars in revenue. Qualcomm has won court orders in China and Germany, limiting iPhone sales in these countries.
In the United States, the Trade Agency is only one of the sites that settles disputes between the two companies. A test was held in January in the Federal Trade Commission's antitrust lawsuit against Qualcomm over its licensing practices, which are based mainly on royalty struggle with Apple. The two sides are awaiting a federal judge's decision in that case.
A federal jury in San Diego on March 15 told Apple to pay Qualcomm $ 31 million for only three of the thousands of patents owned by the chip maker – including the first ITC case – while a Qualcomm lawsuit against the contractors has begun in same courthouse next month.