Apple Inc. (AAPL): Taiwan and Trolls Gumming Up the Works

Apple Inc. (NASDAQ:AAPL), being the world’s largest tech company, can have days in the news where it gets a couple doses of good news along with bad news. And not just on the same day, but even within minutes or hours of each other. Earier this Friday morning we presented a couple of items that would spread some post-holiday good cheer around the Cupertino campus – so naturally, now we have a couple items that could be consrued as bad news – well, except for keeping Apple Inc. contractor attorneys paid.

Apple Inc. (NASDAQ:AAPL)

Apple Inc. (NASDAQ:AAPL) and the ‘other’ China

Apple Inc. (NASDAQ:AAPL) has made few bones about the idea of the importance of penetrating the China market, and achieving the holy grail of the sales agreement with China Mobile Ltd (ADR) (NYSE:CHL) for the iPhone is certainly a very large step toward achieving that deeper penetration. But in the process of opening up Apple Inc. iPhones to the world’s largest wireless service subscriber base in the world by far (more than 750 million), it seems that Apple Inc. has offended the sensibilities of the ‘other” China – the one that is democratic, non-communist and an island.

The Fair Trade Commission in the island nation of Taiwan has cited Apple Inc. (NASDAQ:AAPL) for about $675,000 for violations of the country’s fair trade laws in regards to what is called price fixing. In Taiwan, Apple Inc. reached distribution agreements with three telecom companies to sell the iPhone to subscribers. However, the FTC said that when those deals were signed, the telecoms have free reign to charge whatever they want for iPhones but instead Apple Inc. gave final review and approval for the pricing structures for each telecom before they were allowed to sell the devices.

If Apple Inc. (NASDAQ:AAPL) does not comply with the order to free the telecoms to set their own prices, then the sanction against Apple Inc. could jump to more than $1.6 million, or a whopping 0.00002 percent (give or take) of the company’s market capitalization.

What Apple Inc (NASDAQ:AAPL) is doing with these telecoms is no different than it does with every other telecom it works with – Apple Inc. puts forth suggested retail prices for the phones without a service agreement, and the telecoms work with Apple Inc. to determine a price point for the devices with a service agreement, figuring in the subsidies that the telecoms pay back to Apple Inc. as well as profits and overhead for having the agreements in place. However, the practice is apparently outside of the law in Taiwan, especially if the telecoms had already paid Apple Inc. for the distribution rights.

Trolling, trolling, trolling …

And of course, when Apple Inc. (NASDAQ:AAPL) si the largest tech company in the world, how can a week go by without the company having a legal target on its back by some company seeking a payday? The sport known as “patent trolling” has been more popularized the last couple of years, and in a federal court we have just seen the latest filing by a company that may qualify as one of these “patent trolls: – at the expense of Apple Inc.

In a very narrow claim by accounts, a company called Dragon Intellectual Property is suing Apple Inc. (NASDAQ:AAPL) for infringement of a patent the former claimed nearly 20 years ago. Dragon claims that the Apple Inc. iPod nano with FM radio functionality directly violates the technology included in the patent, and the company is suing for “reasonable royalties” for the continued use of the technology, though the actual dollar figure is not requested in the complaint. The patent involves a “simultaneous recording and playback apparatus,” according to the official patent abstract.

 

 


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