Tuesday, June 20, 2017

Apple rejects Qualcomm's allegation of throttling iPhones, says "study" is "methodologically unsound"

Under a May 30 court order, Apple has a couple of deadlines today (June 20) in its antitrust/patent litigation in the Southern District of California, and when double-checking on the deadline, I just noticed that Apple made one filing one day in advance--a motion to dismiss Qualcomm's unfair competition counterclaim based on the allegation that Apple hobbled, throttled or whatever one may call it its iPhones that come with Qualcomm chip in an effort to make Intel's chips appear equally performant (this post continues below the document):

17-06-19 Apple Motion to Dismiss Qualcomm Cc by Florian Mueller on Scribd

As I wrote ten weeks ago, the legal relevance of this to the dispute is very doubtful at best (it certainly has no bearing whatsoever on the question of fair, reasonable and non-discriminatory licensing terms), so to me it looks like more of a PR maneuver. I can't even imagine that it would influence consumers' purchase decisions (if Qualcomm' objective is to promote its brand, a new stadium naming rights deal might work while court filings won't). Also, my research methods are limited to obtaining and analyzing publicly-filed court documents, and I can go further than that only in a few cases where program code is made available (depending on the platform and programming language), but I don't have access to a wireless performance test lab. Still, I wanted to point out that Apple (a) strongly refutes Qualcomm's "hobbling" allegation and (b) is trying to get that part thrown out at the earliest possible stage.

These are the passages in which Apple contradicts on the factual level:

"With the iPhone 7, Apple procured baseband processor chipsets not only from Qualcomm but also from its competitor Intel. But after the iPhone 7's release, a methodologically unsound 'study' questioned whether Apple had succeeded in its effort to standardize performance across all iPhones. In a public response, Apple truthfully stated that it had conducted its own studies, which showed consistent performance under relevant parameters." (emphasis added)

"Apple disputes the factual allegations in Qualcomm's counterclaim [...]">

"Qualcomm alleges that third parties found that Qualcomm chipsets outperformed Intel's under unverified conditions and methodologies; [...]" (emphasis added)

"Qualcomm relies on two so-called third-party studies for its claim that Apple's statement was false, but provides no factual allegations concerning the conditions under which these tests were performed or otherwise demonstrating their reliability or trustworthiness. [...] As an initial matter, it is apparent from the face of the Bloomberg article Qualcomm cites that the methodology of these 'studies' is questionable. The article states that 'measuring phone data speeds is difficult because performance can be influenced by weather and other factors beyond the control of wireless providers and phone makers.'" (emphasis added)

Apple consistently puts the word "study" (or its plural) in quotes...

Apple states at the very beginning of this motion that Qualcomm's claim against Apple is just meant to avoid competition from Intel:

"The claim, although nominally directed at Apple, blatantly targets Qualcomm's chief competitor in the market for premium LTE baseband chipsets, Intel, who dared to try and compete with Qualcomm."

That last subclause is reminiscent of the most brilliant passage in all those Samsung filings in its dispute with Apple, where Samsung, in its answer to Apple's first complaint back in 2010, ironically conceded not having ceased to compete with Apple. Without the irony, that portrayal of Qualcomm's motivation is reiterated later in the filing:

"At bottom, Qualcomm's counterclaim is an abuse of the UCL designed to limit competition from Intel and discourage Apple and other handset manufacturers from doing business with Qualcomm's competitors."

But Apple isn't asking the court to conduct performance tests and throw out Qualcomm's claim on that basis. Instead, Apple argues that

  • if anyone could claim to have "relied" on Apple's own representation of the performance situation (i.e., Apple saying that there are no discernible differences in performance between the different iPhone models), that would be someone who made a purchase decision on that basis, which Qualcomm obviously didn't (in the Northern District of California, a group of L.A. taxi companies failed with a claim against Uber regarding safety standards, and failed in court because the taxi drivers weren't going to do Uber rides themselves);

  • none of the conduct that Qualcomm described as wrongful is actually against the law (for example, Apple can conduct its own studies and talk about the results, and it's free to make design decisions and to choose business partners); and

  • Qualcomm has not alleged an "incipient violation of the antitrust laws, a violation of their policy, or spirit, or any other threat to competition."

The hurdle for a dismissal (especially a dismissal with prejudice, which is requested here) is high, but what I've read about the L.A. Taxi v. Uber case suggests that this motion may very well succeed. For the San Diego court, Apple's motion to dismiss may be an opportunity to dispose of something that is legally unrelated to what will actually decide the case but would make a lot of noise. In the alternative, it could be that just because of the PR impact of this the parties would fight extremely hard over the testimony and evidence admitted in this context. I view the "throttling" part as a mix of a sideshow and a potential quagmire.

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