Qualcomm Wants to Block iPhone X With Some Old Palm Patents

The Palm Pre was one of the earliest victims of Apple's (NASDAQ: AAPL) iPhone. Despite garnering a loyal niche of enthusiasts thanks to its clever interface and innovative operating system webOS, the Palm Pre never really made it very far following its 2009 launch. The following year, Palm was was sold to Hewlett-Packard for $1.2 billion, which gave it a misguided whirl before similarly throwing in the towel.

In killing the home button on the iPhone X in favor of gestures, iOS is borrowing some cues from webOS, which also leaned heavily on gestures and a card-based interface. This is now the basis of the latest volley in Apple's escalating legal battle with Qualcomm (NASDAQ: QCOM).

A trip down memory lane

Shortly after HP gave up on Palm and smartphones, it wanted to unload a bunch of the Palm intellectual property (IP) to recoup some cash. It found a buyer in Qualcomm, which in January 2014 acquired a broad set of approximately 2,400 granted patents and pending patent applications (about 1,400 were from the U.S. and 1,000 from other countries). The portfolio included Palm, IPAQ, and Bitfone IP.

No financial terms were disclosed for this transaction, although HP did subsequently report $288 million in quarterly net revenue for its "Corporate Investments" segment that it said was "primarily due to the sale of IP related to the Palm acquisition." This segment had generated just $24 million in revenue for the entire prior fiscal year.

It's likely that Jon Rubinstein had something to do with the deal. The former Apple executive was the CEO of Palm when HP acquired Palm. Rubinstein would later call the deal "a waste," since HP failed to execute any type of coherent strategy with Palm IP. Rubinstein joined Qualcomm's board of directors in May 2013, just months before it picked up Palm's pieces.

Raising the stakes

Apple fired back with a patent infringement countersuit last week, and Qualcomm added three new complaints to support its request with the International Trade Commission ban the import of iPhone X, according to CNET. The new additions revolve around 16 more patents, including the aforementioned Palm patents. Qualcomm points to recent articles from The Verge (probably this one) and TechCrunch (probably this one) that note the similarities in iOS 11 to the Pre's multitasking interface, according to the report.

It sounds pretty absurd for Qualcomm to try to bring up an old patent in its effort to block iPhone X imports. The real goal of moves like this is to raise the stakes by whatever means necessary, but it's still probably better than being attacked in court with an "old pager patent."

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Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Qualcomm and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.