Prof. Henkel on Qualcomm’s and Apple’s patent litigation

Prof. Henkel comments on the ongoing patent litigation between Qualcomm and Apple before the Munich District Court. The injunction granted against several iPhone models raises fundamental questions about the German patent system.

On December 20th, the Munich District Court banned Apple from selling iPhones of the 7, 8 and X models. Qualcomm implemented this ban on January 3rd; Apple recently resold these models after technical changes.

This case raises fundamental questions. When is an injunction justified in patent infringement cases? What license requirements may a patent holder make? The answers to these questions determine how well a patent system achieves its goal of promoting innovation.

What is remarkable about the dispute between Qualcomm and Apple is that the infringement of a single patent prohibited the sale of a product that uses a huge number of patented inventions.

By the injunction, Qualcomm blocks not only the sales of the alleged infringer, but also numerous suppliers and licensors of additional patents. From an economic point of view, it seems questionable to allow the owner of a single patent to do so. The injunction gives the patentee bargaining power that is out of proportion to the value added of the patented invention to the overall product.

The injunction is primarily a means of exerting pressure in a dispute over license fees.

A central aspect of Qualcomm’s licensing claims is the calculation method. The company charges license fees for its mobile phone patents which correspond to the costs of the device in percentage terms and can amount to up to 5 percent. The company thus profits from the fact that devices with higher quality equipment are more expensive.

From an economic point of view, it would be appropriate if license fees for patents corresponded to the value added of the respective invention. This will not increase proportionally to the total product value if the value is increased by high-quality components and marketing measures.

The patent system is designed to encourage innovation and thus benefit consumers. In the case of complex products such as smartphones, it is detrimental to this objective if patent holders are able to make excessive license demands and enforce them by means of injunctions. Both points are levers with which the design of the patent system can be improved.


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The post Prof. Henkel on Qualcomm’s and Apple’s patent litigation appeared first on Technical University of Munich – School of Management.

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