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Apple suspends some iPhone sales in Germany as Qualcomm ponies up

Apple will reportedly stop selling some older models of the phone at its German retail stores after losing a court battle.

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Tim Cook, CEO of Apple, talks at the European Parliament in Brussels.

Aris Oikonomou/Getty Images

Apple is pausing sales of some older iPhones in Germany during a patent fight with chipmaker Qualcomm.

On Dec. 20, the District Court of Munich found that Apple infringed Qualcomm's technology for power savings in smartphones and ruled that the iPhone maker must halt sales of the device in Germany, according to Qualcomm's release.

Apple said in a statement at the time that it plans to appeal the ruling, with the aim of delaying -- and eventually overturning -- the court's injunction against sales. Apple said, though, that during the appeals process, it wouldn't sell the older iPhone 7 and iPhone 8 at its 15 retail stores in Germany. 

On Thursday, Qualcomm made the sales ban official by posting 1.34 billion euros (about $1.5 billion) in bonds covering potential damages incurred by Apple should the judgment be overturned or amended on appeal.

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The recent iPhone XS models and iPhone XR will still be for sale, Apple said in December. And at the time, it said all iPhone models would still be available through its carriers and third-party retailers in 6,000 German locations.

Qualcomm on Thursday, though, said the ban extends to third-party resellers. "Apple was ordered to cease the sale, offer for sale and importation for sale of all infringing iPhones in Germany," the company said in a press release. "The court also ordered Apple to recall infringing iPhones from third party resellers in Germany."

Apple on Thursday reiterated its previous statement but didn't respond to questions about the impact on third party iPhone sellers. 

In December, Apple called Qualcomm's lawsuit "a desperate attempt to distract from the real issues between our companies. Their tactics, in the courts and in their everyday business, are harming innovation and harming consumers. Qualcomm insists on charging exorbitant fees based on work they didn't do, and they are being investigated by governments all around the world for their behavior."

The Qualcomm patent involved in the Munich ruling enables smartphones to use power more efficiently and can extend a phone's battery life.

"Two respected courts in two different jurisdictions just in the past two weeks have now confirmed the value of Qualcomm's patents and declared Apple an infringer, ordering a ban on iPhones in the important markets of Germany and China," Don Rosenberg, executive vice president and general counsel at Qualcomm, said in a release in December. 

The company also said Apple is liable for monetary damages in an amount to be determined later. 

Patent spat

The German ban comes after Qualcomm won preliminary injunctions in December in a Chinese court, which ordered four of Apple's Chinese subsidiaries to stop importing or selling iPhones due to patent infringement. The patents involved technology that lets iPhone users adjust and reformat the size and appearance of photographs, and manage applications using a touchscreen when viewing, navigating and dismissing applications, according to Qualcomm.

Apple reportedly plans to issue a software update in China to alter its technology so it no longer infringes Qualcomm patents. But the patent at issue in Germany relates to hardware and can't be easily tweaked. 

Qualcomm is the world's biggest provider of mobile chips and has created technology that's essential for connecting phones to cellular networks. The company derives a significant portion of its revenue from licensing those inventions to hundreds of device makers, with the fee based on the value of the phone, not the components.

Because Qualcomm owns patents related to 3G and 4G phones, as well as other features like software, any handset makers building a device that connects to the newer networks have to pay the company a licensing fee, even if they don't use Qualcomm's chips.

Apple and Qualcomm have been fighting over patents since January 2017, when Apple filed suit against Qualcomm for roughly $1 billion, saying the company didn't offer fair licensing terms for its technology. Apple wants to pay less to use Qualcomm technology in its devices. Qualcomm responded by suing Apple for patent infringement and seeking a ban on iPhone sales. The company maintains that no modern handset, including the iPhone, would've been possible without its cellular technologies.

In April, Qualcomm said it hoped to reach a settlement with Apple. The chipmaker lowered the cap on royalties it charges handset makers for using its technology in an effort to solve the dispute. But in September, Qualcomm accused Apple of stealing confidential information and trade secrets and providing that info to rival chipmaker Intel. And Apple reportedly has said it's not in talks with Qualcomm.

First published Dec. 20, 11:43 a.m. PT
Update 3:03 p.m. PT: Added Apple comment and other details.
Update Jan. 3 at 8:09 a.m. PT: Noted that Qualcomm posted bonds.
Update Jan. 3 at 8:54 a.m. PT: Adds additional information about third-party resellers.
Update Jan. 3 at 1:33 p.m. PT: Adds Apple reiterating its earlier statement. 

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