Apple Will Tweak Chinese iPhones to Comply With Qualcomm Ruling

(Bloomberg) -- Apple Inc. will push a software update to Chinese iPhone users early next week, aiming to modify functions that a local court found had infringed on a pair of key Qualcomm Inc. patents.

The U.S. company said it was taking that step to ensure it complies fully with the ruling, which resulted in sales injunctions against six older versions of Apple’s most important device. The iPhone maker said the planned update would address features covered by patents, which involve adjusting photographs and managing apps via a touchscreen.

The Chinese court’s ruling handed an initial victory to Qualcomm, which is locked in a worldwide dispute with Apple over the licensing fees it charges for the use of technology that underpins all modern phone systems. The iPhone maker argues the San Diego-based company abuses its position as the biggest supplier of smartphone chips, while Qualcomm counters that Apple is using its intellectual property without paying for it.

“Based on the iPhone models we offer today in China, we believe we are in compliance,” Apple said in a messaged statement. “To address any possible concern about our compliance with the order, early next week we will deliver a software update for iPhone users in China addressing the minor functionality of the two patents at issue in the case.”

The ruling from a local court -- which came as Washington and Beijing embark on sensitive trade negotiations -- pivots the battle over patent fees to the world’s largest mobile arena. In a filing obtained by Bloomberg, Apple argues that a Chinese ban will force it to settle its bruising battle with Qualcomm -- an outcome that may harm the country’s smartphone industry by hiking licensing fees. The iPhone maker has appealed the decision.

It’s unclear what the envisioned software modifications will entail. But Apple’s response underscores the importance of a Chinese market that generates about a fifth of its revenue, at a time demand for Apple’s signature device is slowing.

While iPhones remain on store shelves pending a decision on Apple’s appeal, a negative outcome could affect its sales in the world’s biggest market for smartphones and benefit local rivals like Huawei Technologies Co. and Xiaomi Corp.

©2018 Bloomberg L.P.