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Designing Around a Monopoly: the Public Interest Dispute between Qualcomm and Apple Takes a New Turn

As we mentioned in December, the International Trade Commission issued a notice to review the Final Initial Determination and Recommended Determination issued by Administrative Law Judge Pender in Certain Mobile Electronic Devices and Radio Frequency and Process Components Thereof, 337-TA-1065 (“Certain Mobile Electronic Devices”), in which, despite finding that a valid patent was infringed and all jurisdictional requirements met, ALJ Pender had recommended that no exclusion order be issued against Apple because such an order would be contrary to the public interest.  See Certain Mobile Electronic Devices, Commission Notice, Doc. ID. 657154 (Dec. 12, 2018).  Agreeing with Apple, ALJ Pender had reasoned that an exclusion order banning the accused products—Apple phones with Intel-made processor chips—would effectively eliminate Intel from the U.S. smartphone market, thereby giving Qualcomm monopoly power in that lucrative market.  Judge Pender also found that eliminating Intel from the U.S. smartphone market would also harm the ability of the United States to develop emerging 5G technology, which in turn will harm U.S. national security and competitiveness.  Judge Pender concluded that such consequences were not in the public interest.

In its notice of review, the Commission asked Qualcomm and Apple to address what type of remedy should issue if the Commission were to uphold ALJ Pender’s infringement and validity findings.  It specifically sough input on “whether delaying implementation of a limited exclusion order or cease-and-desist order for a fixed period of time (e.g., six months or one year) would effectively balance enforcement of Qualcomm’s patent rights against the adverse consequences alleged by the parties with respect to industry competition, monopolization, the alleged exit of Apple’s chipset supplier from the market for 5G technology, and other concerns.”  “If not,” the Commission said, the parties were to “explain whether any other ‘carve-out’ or limitation in a remedial order can accomplish this objective.”  The Commission also asked the parties to brief “whether national security concerns may be taken into consideration for the purpose of evaluating the public interest and, if so, whether and how such national security concerns would be implicated if a limited exclusion order were to issue covering products that infringe [the claim at issue].”   And it asked whether a design around were possible and, if so, how long it would take to implement.

In its responsive submission, Apple argues that it has designed around the accused functionality and requests a six-month delay in the execution of the exclusion order (if the Commission upholds ALJ Pender’s infringement and validity findings) to seek review of the new design by U.S. Customs and Border Protection and also to sell its existing inventory.  Qualcomm counters that Apple’s redesign is itself evidence that Apple’s speculation about the harms an exclusion order would pose to the public interest were baseless.  And it argues that Apple has infringed its intellectual property for long enough, and that a six-month delay in the imposition of an exclusion order to allow Apple enough time to sell its inventory of infringing goods will only “encourage infringement and undermine faith in the U.S. IP system.”

The Commission is expected to issue its final determination by the end of the month.  That determination will likely have a wide-ranging impact, for the parties’ submissions do not simply reflect their immediate dispute over whether Apple has infringed any of Qualcomm’s valid patent claims and, if so, what the remedy for that infringement should be.  They also reflect a wider disagreement over the nature and scope of the Commission’s role in protecting U.S. companies from unfair competition on the one hand, and in protecting the U.S. economy itself on the other.  The Commission’s final determination will likely shape the conversation regarding these larger questions for some time to come.

That said, the 1065 investigation is only a piece of Qualcomm’s global patent infringement dispute with Apple.  In December, Qualcomm won a patent case against Apple in Munich and obtained an injunction against the sale of certain iPhone models, but it lost another case against Apple in Mannheim the following month.  Both parties have said they would appeal.  Qualcomm also secured the ban of certain iPhone models in China, but Apple has appealed that ruling too and, in an echo of recent developments in the U.S., has said that it has designed around the patented technology.

It remains to be seen how the Commission and the German and Chinese courts will ultimately decide the issues before them—whether Apple infringes any valid Qualcomm patent claims, if so, what the remedy should be, and whether Apple’s alleged design around effectively circumvents the patented technology.  But the ongoing worldwide dispute between the two technology giants provides valuable insight into the ever-changing landscape of intellectual property protection and patent enforcement here and abroad.  

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About this Author

Michael T. Renaud, IP Litigation Attorney, Mintz Levin Law Firm
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Michael’s practice is focused on patent litigation and also includes licensing, patents, copyrights, trademarks or trade secrets, and other intellectual property matters. His work in patent litigation primarily involves technologies such as electromechanical systems, digital cameras, embedded microprocessors, telecommunications and network software, cellular phones, and e-commerce, among others. Michael has also advised clients in regards to patent portfolios and IP diligence, and has counseled venture capital funds on their IP assets and patent value.

Michael rejoins Mintz Levin...

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James Wodarski IP Litigation Attorney Mintz Levin
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Jim is a seasoned trial lawyer who concentrates his practice on intellectual property litigation. He skillfully represents clients in federal district and appellate courts, including the US Court of Appeals for the Federal Circuit, as well as the International Trade Commission. He handles disputes involving smartphones, core processor circuits, digital imaging software, telecommunications devices, and LED lighting systems, and many other technologies. And he has more than two decades of experience with complex civil litigation, including insurance, securities, and First Amendment matters. He previously served as an assistant district attorney in Massachusetts.

James focuses his practice on patent disputes in the International Trade Commission (ITC), the US Court of Appeals for the Federal Circuit, and Federal District Courts. He has also appeared before the First and Second Circuit courts as part of his appellate work at the state and federal levels. A patent litigator with extensive experience, James has handled disputes involving a variety of technologies, including smartphones, core processor circuits, digital imaging software, telecommunications devices, and LED lighting systems.

A trial lawyer with 20 years of complex civil litigation experience, James has also represented clients in complex business litigation, white collar crime, insurance coverage, federal securities actions, trademark ownership of mass media and literary titles, complex insurance coverage, and the First Amendment.

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Associate

Sandra Badin focuses her patent practice on appeals before the Federal Circuit and high-priority motions in the federal district courts and the U.S. International Trade Commission.  She has represented clients in many different technology fields with patents covering radio frequency transceivers, graphics processing units, LCD displays, medical records processing systems, electronic point-of-sale systems, high-density plasma cutting torches, dental materials and processes, specialty fabrics, and financial and business methods.  Sandra crafts winning appellate briefs and...

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Matthew S. Galica, Mintz Levin, Technology Specialist, Software Development lawyer, Application architect, Attorney
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Matt focuses his intellectual property practice on patent litigation, strategic IP counseling, and patent valuation.  He has experience representing clients before the International Trade Commission (ITC), Federal district courts, and the Patent Trial and Appeal Board.  Matt’s practice covers complex technologies such as microprocessors, graphics processors, RF circuitry, LCD display systems, microelectromechanical systems, audio and video processing, VLSI design, consumer telecommunications systems, and DDR-compliant memory modules and DRAM.

Matt has held lead roles in multiple ITC...

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