Apple Enlists Alice in Qualcomm Battle...
As investors (should) know, the current worldwide patent war between Qualcomm and Apple is perhaps the most important set of ongoing patent litigation there is. As Bloomberg notes in a overview article of the dispute, the stakes are high. Apple faces the possibility of injunctive relief against, most importantly in its key manufacturing site and second-most important sales market, China. For its part, Qualcomm needs to recover billions in lost revenue from Apple (up to $4.5bn, according to some estimates) while maintaining the industry perception that Qualcomm's vast patent portfolio is indispensable and of inordinate value.
While everyone expects settlement as the most likely resolution of this dispute, there is no doubt that incremental legal victories by one or both sides will help dictate the tone and tenor of any future settlement discussions. Some decisions, like those on injunctive relief in the various countries where it is being sought, are likely to have an outsized impact on negotiation strength for the victor. At the same time, there are under-the-radar issues and legal arguments that can also be impactful, especially where a line of attack has the potential -- if successful -- to put a broader swath of one of the litigant's patent portfolio at risk.
Considering how important eligibility questions have proven in the US over the past years, it was no surprise to see that Apple has decided to take a chance on knocking out a few asserted Qualcomm patents on eligibility (or Alice) grounds. In a FRCP 12(c) motion filed on May 30, 2018, Apple argues that two Qualcomm patents contain ineligible claims that "recite known aspects of the abstract idea of receiving user touch input." (Mot. at 1). In short, Apple is arguing that the two Qualcomm patents -- which claim different purported improvements to utilizing touchscreen technology on devices such as phones -- are patent ineligible.
A main thrust of Apple's argument is that the Qualcomm patents fail to do more than articulate "vague purported problems" (Mot. at 17), without offering anything other than conventional solutions for solving them. Recognizing the need to distinguish the recent CAFC Core Wireless decision, however, Apple takes pains to distinguish the patents found eligible there -- which were directed to improving application access on devices with small screens -- with the more generic, touch-based, functionality claimed in the Qualcomm patent. (Mot. at 20-21).
Ultimately, a victory by Apple on this motion will not bring Qualcomm to its knees. At the same time, a victory could help cement the impression that Qualcomm's portfolio is not impregnable -- and may in fact be populated by large numbers of infirm patents unable to withstand the crucible of litigation. Enlisting Alice to that end is a smart move by Apple, for a number of well-known reasons from cost efficiency to likelihood of achieving favorable results. Keeping in mind that a company as sophisticated as Qualcomm does not use its weakest patents in litigation, but ostensibly its strongest, an early eligibility blow successfully struck by Apple could be the litigation equivalent of an early knockdown in boxing. While not outcome determinative, early knockdowns often presage an eventual knockout. In the meantime, investors in Apple and Qualcomm will continue to watch these ongoing litigations intently.