Apple Hit With iPhone Sales Ban in China, Qualcomm Says -- 2nd Update

By Tripp Mickle 

A Chinese court ordered Apple Inc. to stop selling older iPhone models in the country after finding the tech giant infringed on two patents held by Qualcomm Inc., the chip supplier said Monday.

The Nov. 30 decision by a Chinese intellectual-property court is the first in the world's largest smartphone market that seeks to curtail iPhone sales.

The preliminary injunction is the latest turn in a long-running legal dispute between Apple and Qualcomm. The San Diego chip company has brought more than a dozen cases against Apple over patent infringement in China.

Qualcomm said the Fuzhou Intermediate People's Court in China found Apple had infringed on two nonstandard essential patents: one related to photo editing and another to swiping on a touch-screen device.

The import and sales ban didn't appear to include Apple's newest devices -- the XS, XS Max and XR -- because those weren't on the market when the patent case was filed.

It wasn't immediately clear when any such ban would take effect. Four models affected by the ban -- the iPhone 7, 7 Plus, 8 and 8 Plus -- were still on sale through Apple's website in China as of Monday. Apple has stopped directly selling some other models affected, including the 6s, 6s Plus and X.

Apple plans to appeal the decision and all iPhone models would remain available in China, a spokesman said.

"Qualcomm's effort to ban our products is another desperate move by a company whose illegal practices are under investigation by regulators around the world," the spokesman said.

Qualcomm is battling an antitrust lawsuit brought by the Federal Trade Commission in San Jose, Calif., and also appealing an $853 million fine by South Korea's Fair Trade Commission over alleged antitrust violations. In August, it settled an antitrust dispute with Taiwan's Fair Trade Commission.

The ruling comes as China and the U.S. have been locked in a monthslong trade battle. The U.S. has imposed tariffs on more than $200 billion in Chinese goods, alleging unfair trade practices and intellectual-property theft. China has retaliated with tariffs of its own on U.S. goods.

A new rift between the countries opened this month after Huawei Technologies Co.'s finance chief was arrested in Canada on behalf of U.S. authorities. She is accused of lying to banks about Huawei's ties to a company that did business in Iran, in violation of U.S. sanctions.

The decision by the Chinese court was made before the arrest of the Huawei executive. The companies said they didn't learn of the decision until last week.

Apple and Qualcomm have been engaged in a bitter and wide-ranging legal battle for nearly two years. The dispute began in January 2017, when Apple filed a lawsuit over Qualcomm's practice of collecting royalties on the entire sales price of an iPhone up to $400.

Qualcomm says it charges a percentage of an entire device because its patents, essential to implementing cellular-communication standards, relate to cellular devices as a whole, not just its chips.

The chip maker, which has counted on licensing revenue from Apple for a significant chunk of its earnings, has responded by suing Apple for infringing on Qualcomm patents in the U.S., China and Germany.

Write to Tripp Mickle at [e-mail]

(END) Dow Jones Newswires

December 10, 2018 10:16 ET (15:16 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.