Qualcomm Said to Seek U.S. Import Ban for iPhones

Incensed over Apple’s decision to stop paying it billions of dollars in licensing fees for smartphone chips,  Qualcomm plans to retaliate by asking a U.S. trade agency to ban the imports of iPhones, according to Bloomberg citing a person familiar with the company’s strategy.

Qualcomm is preparing to ask the International Trade Commission to stop the iPhone, which is built in Asia, from entering the country, threatening to block Apple’s iconic product from the American market in advance of its anticipated new model this fall, according to the person, who asked not to be identified because the discussions are private.

The ITC is a quasi-judicial agency in Washington that has the power to block the import of goods into the U.S. and processes cases more quickly than federal district courts,  the venue in which the companies are accusing each other of lying, making threats and trying to create an illegal monopoly.

The escalating legal dispute revolves around patents Qualcomm holds that let it to charge a percentage of the price of every modern high-speed data-capable smartphone, regardless of whether the devices use its chips. Apple argues the system is unfair and Qualcomm has used licensing leverage to illegally help its semiconductor unit.

That spat worsened late last month when Apple cut off technology license payments to Qualcomm. The blow to the chipmaker’s most profitable business spurred the company to intensify the fight to improve its negotiating position. Qualcomm hasn’t offered fair terms as required under rules governing the licensing of patents, Apple CEO Tim Cook said when asked about the possibility the chipmaker could try to halt iPhone sales anywhere in the world.

Qualcomm has already shown the price of its fall out with Apple. It cut its revenue outlook this quarter by $500 million citing the likelihood of not receiving licensing fees from Apple. If that carries on for the rest of the year, almost one-third of its lucrative licensing revenue, most of which is profit, will disappear.