The latest 5G capable Apple iPhones continue to generate buzz and headlines around the world, but in Colombia, where a late model iPhone is something of a status symbol, the sales remain banned for now, due to lawsuits by wireless technology provider Ericsson, claiming patent infringement. With relevant court dates not on the docket until December, for now it looks like the best hope for Colombian Apple fanatics will be a trip to the US.
In January 2022, Ericsson filed at least 12 preliminary injunction requests against Apple before different judges in Colombia. All those actions were filed as ex parte proceedings, in which an alleged patent infringer needs to be stopped in order to prevent illegal action causing an actual harm to the patent owner. Two of them were filed before the Superintendence of Industry and Commerce (SIC). At the same time, Ericsson filed all the remaining known actions before conventional courts, also with general jurisdiction over patent infringement.
These lawsuits concern the license for patent “5225,” regarding 4G or LTE wireless technology, entered into agreements in the year 2008 with the corporation Apple, whose purpose consisted of a cross license, which included patents that were within telecommunications standards. Subsequently, and in light of its expiration, Ericsson asked Apple to negotiate new terms to authorize use of the patent, which only occurred in the year 2015, when a second license was signed, which recently ended. According to Ericsson, the importation, marketing, and use of Apple devices, which comply with 4G standards, are then in violation of the mentioned license, since such equipment is configured to handle 2G, 3G, and 4G SEPs (Standard Essential Patent) of the license.
Ericsson has also initiated numerous patent cases against Apple and its various subsidiaries, in the courts of Belgium, Brazil, Germany, the Netherlands and the United States. Ericsson has argued that it had to do so because negotiations between the parties to renew the license failed, and barely began taking place. According to Apple’s counsel, “Ericsson initiated many lawsuits against the Apple group in secret, so that Apple would not have knowledge of the litigation initiated by Ericsson”.
Apple’s counsel also maintained that “Ericsson did not provide evidence on the essential characteristics of its patents, and it appears that, in fact, Ericsson’s patents are not really essential to the 4G or 5G standards”.
Prohibition for iPhone 12, 13 and 14
Despite the fact that the 5G network has not yet been introduced in Colombia, Ericsson is demanding payment from Apple for using its proprietary technology. It demands a $5 charge for each iPhone, but Apple has so far declined to pay.
On July, Court 43 of the Circuit of Bogotá granted Ericsson’s request for an injunction and entered orders to Apple Colombia prohibiting the import, sale, commercialization and advertisement for all equipment using the allegedly infringed patent, which are all current devices using 4G or 5G technologies, including iPhone 12, 13, and iPhone 14, introduced in September. Apple briefly hinted that the iPhone 14 would finally be available in October; in a press release, Apple initially stated that iPhone 14 Plus would be available in Colombia on October 28. But the firm corrected the press release by removing this note.
When contacted, Adriana Huerta, head of corporate communications for Latin America at Apple, only stated that “for now, we do not have more information than what is available in our Apple press room in Colombia about the latest releases of our products.” Ericsson’s attorney in Colombia, Carlos Olarte, confirmed that the lawsuit goes ahead, and Apple still cannot market its iPhone 14 in Colombia. “Talks continue between Apple and Ericsson, and there is clearly a mutual desire to reach an agreement. Everyone is hopeful that a mutually satisfactory negotiation will be reached,” he ensured to Finance Colombia. No further details regarding the discussions were disclosed, as they are confidential.
Besides, a Colombian court denied Apple’s emergency request for relief, upholding the constitutionality of the sales and import ban.
Apple considers that this prohibition is “highly unnecessary since 5G technology is not operational in Colombia; not effective as the inclusion of features that support 5G technology does not necessarily imply the use of Ericsson’s patent rights; and nonproportional as it will cause a greater damage to the Colombian consumer particularly as the real infringement of the patent has not been demonstrated and in any case it would be occurring supposedly only while the parties reach a monetary agreement and in a very small section of a very complex device.”
In contrast to other countries like the United States or even the Dominican Republic, 5G networks are still not available for consumer use in Colombia.
Two important dates
Apple’s counsel also commented that Apple and Ericsson have previously agreed that active litigation between the parties in the US District Court in the Eastern District of Texas will be the action that will determine the FRAND (Fair, Reasonable, And Non-Discriminatory) terms for a license that will cover both parties’ portfolios of “patents declared essential to the standards,” including patents that Ericsson has asserted against Apple in Colombia. In other words, “both Ericsson and Apple have asked the judge to determine whether Apple’s and Ericsson’s offer is reasonable,” Olarte explained to Finance Colombia. “And depending on this determination, it will help to reach an agreement in Colombia. Essentially because the judge will tell them that either Ericsson’s price is reasonable, or Apple’s offer is reasonable, or that both proposals are reasonable. That may motivate the parties to reach an agreement.” This lawsuit in Texas will take place in December.
Another important date is set on the calendar: as Ericsson is also suing Apple in Germany, some hearings are expected in Mannheim over the coming weeks. The decision should also influence the parties in finding an agreement, Olarte pointed out. “For example, if they grant an injunction in favor of Ericsson, that would be one more country to add to the list where Apple is losing. And that could also motivate Apple to settle,” he told Finance Colombia.
According to Olarte, Apple’s annual sales in Colombia represent about 0.2% of the company’s global market. This raises the question whether it is really worth it for Apple to resist so fiercely. Why not accept Ericsson’s licensing terms straight away? “One could say that Apple should take into account the very small size of this market,” says Ericsson’s attorney. “But another analysis suggests that Apple has a reputation to defend. Apple does not like to be accused, or even less to be declared infringing in a country. And there’s also the real impact, beyond the small percentage. If you multiply 0.2% by Apple’s global sales, it comes out to a big number. That number hurts someone. Even Colombia being as small as it is, it’s a major irritation.” As an example, Apple declared that just the net sales of Ishop, one of the distributors of Apple Colombia within the Colombian territory, in 2017 were $2,642,637 USD. “It is also a message that Apple sends to other countries, where it is fighting similar lawsuits,” concluded Olarte, a statement that the company does not intend to give up so easily.