Apple Appeals Qualcomm Injunction that Bans Some iPhone Sales in China

December 10, 2018

By Chloe Aiello

Apple filed an appeal on Monday to overturn a court-ordered ban on the import and sale of some iPhones in China.

Chipmaker Qualcomm requested an injunction against Apple ($AAPL), alleging patent violations on a particular feature that allows users to adjust the size and appearance of photos, and another that manages applications with a touchscreen. Two preliminary injunctions were granted earlier on Monday by the Fuzhou Intermediate People's Court in China. The injunctions did not apply to Apple's newest phone models.

Axios chief technology correspondent Ina Fried said the injunction was likely a next-best scenario for Qualcomm ($QCOM).

"Qualcomm was seeking an import ban that would have prevented iPhones from coming into the U.S. That would have been a huge deal. They didn't get that or they haven't gotten that yet, this is probably in the sort of next-best-thing camp, where at least they've gotten a court somewhere to say we are going to issue an injunction," Fried told Cheddar.

Apple stocks tumbled after news of the injunction, but recovered to close up slightly at $169.60 per share.

Wedbush analyst Dan Ives called Qualcomm's actions a "gut punch" to Apple investors in a note on Monday.

"It continues to feel like every day the sun will come out and there will be another bad data point for Apple since the company reported its quarter in early November it’s been a string of bad news around iPhone demand, transparency in the food chain, supplier cuts, China tariff worries with the stock down significantly and losing its gains for the year," Ives wrote.

But Fried said the move wasn't so much a tactic to hurt share pricing but rather "the most effective legal strategy."

Qualcomm and Apple have been locked in legal battles for years on issues like patent infringement, breach of contract, and more. Fried said Apple will most likely tweak its software and continue selling iPhones, but this type of injunction is just disruptive enough to get both parties talking.

"I don't expect to see iPhones stop being sold in China, but it does certainly get their attention and is the kind of thing that maybe starts to make companies go how can we work this out," Fried said.

Apple did not immediately respond to Cheddar's request for comment.

For full interview click here.