Apple, Intel Persuade U.S. Patent Office to Enter Qualcomm Fight

(Bloomberg) -- The U.S. Patent and Trademark Office has decided to wade into a global licensing battle between Apple Inc. and Qualcomm Inc., with billions of dollars at stake.

The Patent Trial and Appeal Board agreed to consider the validity of two Qualcomm patents, according to notices posted on its electronic docket Tuesday. Apple and ally Intel Corp. had claimed the patents didn’t cover new inventions and the board conducted a preliminary analysis to determine if Apple had a “reasonable likelihood” of winning its argument. The board will hear arguments from both sides and issue a final decision in about a year.

The review board announcements involve just the first of dozens of challenges filed by Apple and Intel at the review board against Qualcomm, and are just a few of the vast portfolio Qualcomm owns in the area of mobile telecommunications. The company is the biggest maker of mobile-phone chips and much of its technology supports all modern phone systems.

Apple and Intel, which makes the chips in the newest models of iPhones, have filed more than three dozen challenges at the agency. They are hoping to expose vulnerabilities in Qualcomm’s patent holdings.

Overview of Global Qualcomm-Apple Litigation: Bloomberg Intelligence

Apple has aggressively used the review board, a faster and less expensive way to challenge patents than federal courts, to fend off what it considers nuisance lawsuits from companies looking for a quick payday.

Apple and Qualcomm are locked in a worldwide dispute over licensing fees for use of Qualcomm’s technology. Apple has argued its former supplier unfairly leverages its position as the biggest supplier of chips for smartphones to force payment. Qualcomm has countered that Apple is using its intellectual property without paying for it, and the legal cases are aimed at forcing it to reduce licensing charges.

The U.S. Federal Trade Commission has agreed with Apple’s view of Qualcomm licensing practices, and a trial over the government’s antitrust case is in its second week in San Jose, California.

Qualcomm says Apple has refused to pay anything for more than a year and has cost the chipmaker billions of dollars in profit. Qualcomm charges a percentage of the selling price of each handset sold regardless of whether the device uses its chips. Apple contends that Qualcomm’s fee should be based on the price of the component, not the phone, a difference of hundreds of dollars per phone.

A German court on Dec. 20 banned sales of some iPhone models in that country, just 10 days after a Chinese court issued a similar ban in the Asian nation. Days after the Chinese judgment, Apple said the ban would force it to settle its licensing battle with Qualcomm, an outcome Apple said may end up harming America’s smartphone industry.

--With assistance from Ian King and Mark Gurman.

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net;Christopher Yasiejko in Wilmington, Delaware, at cyasiejko1@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman

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