Apple adds to Qualcomm legal battles with new UK lawsuit
Apple on Thursday filed a fresh lawsuit against Qualcomm in the U.K., further escalating the legal row between the two tech firms over patent royalties and chip deals.
The new case mentions a claim on patents and registered designs, but court documents don't offer any further details, Bloomberg reported. This includes which patents are involved, or even Apple's argument.
In the U.S., however, Apple is suing Qualcomm for withholding $1 billion in payments, allegedly because of "retaliation for responding truthfully to law enforcement agencies." The latter company was hit with an $853 million fine in South Korea for restrictive licensing practices, and forcing clients to buy chips at the same time as signing patent deals.
The second point is the focus of a U.S. Federal Trade Commission investigation, launched days prior to the Apple lawsuit. Qualcomm is said to have made lower patent royalties contingent on an exclusive chip deal between 2011 and 2016 -- indeed, the iPhone 7 is the first iPhone in years to use a modem from another source, namely Intel. Qualcomm, however, is still in the Apple supply chain.
In addition to wireless chips, Qualcomm is best known for producing the Snapdragon processors used in many Android phones. While chips are where most of the company's revenues come from, over half of its actual profits stem from patent licenses, since it controls some key technologies.
Apple CEO Tim Cook has referred to the U.S. lawsuit as a "last resort," and accused Qualcomm of "charging royalties for technologies that they have nothing to do with." The case also charges Qualcomm with exploiting a monopolistic position to impose high rates on standards-essential patents.
The CEO of Qualcomm, Steve Mollenkopf, has insisted that Apple wants to "pay less for the fair value that Qualcomm has established in the marketplace," despite reaping billions of dollars every quarter.
The new case mentions a claim on patents and registered designs, but court documents don't offer any further details, Bloomberg reported. This includes which patents are involved, or even Apple's argument.
In the U.S., however, Apple is suing Qualcomm for withholding $1 billion in payments, allegedly because of "retaliation for responding truthfully to law enforcement agencies." The latter company was hit with an $853 million fine in South Korea for restrictive licensing practices, and forcing clients to buy chips at the same time as signing patent deals.
The second point is the focus of a U.S. Federal Trade Commission investigation, launched days prior to the Apple lawsuit. Qualcomm is said to have made lower patent royalties contingent on an exclusive chip deal between 2011 and 2016 -- indeed, the iPhone 7 is the first iPhone in years to use a modem from another source, namely Intel. Qualcomm, however, is still in the Apple supply chain.
In addition to wireless chips, Qualcomm is best known for producing the Snapdragon processors used in many Android phones. While chips are where most of the company's revenues come from, over half of its actual profits stem from patent licenses, since it controls some key technologies.
Apple CEO Tim Cook has referred to the U.S. lawsuit as a "last resort," and accused Qualcomm of "charging royalties for technologies that they have nothing to do with." The case also charges Qualcomm with exploiting a monopolistic position to impose high rates on standards-essential patents.
The CEO of Qualcomm, Steve Mollenkopf, has insisted that Apple wants to "pay less for the fair value that Qualcomm has established in the marketplace," despite reaping billions of dollars every quarter.
Comments
Qualcomm is more than welcome to build their own phone from the ground up and see how well that works for them.
If QCOM were to cave, they might have retained Apple's business although I find it highly doubtful with what Intel is planning to bring to the market. Still it would be worth a try. Instead, QCOM stands to lose big time. It isn't only Apple they stand to lose as a customer. Samsung's business will also be lost.
You can't ramp it up because the customer is successful.
Every Qualcomm licensee gets the same deal AFAIK.That Apple gets a rebate too is the the only part that might not be seen as fair and an area where Qualcomm would be wise to cover their butts as much as possible with how they describe it. Now whether Qualcomm's overall monitizing strategies should be acceptable practice is a different argument, and one they've been losing lately.
Either way, Apple's suit appears to be due to Qualcomm denying promised Payments, which is another matter completely
Whether or not the companies fall out over this, Qualcomm will still be able to bid and win orders if they have the quality and capacity to deliver. Much like no1 enemy Samsung is still a major supplier to Apple.
In Apples victory over Samsung in Court Apple was awarded a percentage of total product sales for damages for non essential patents. The Supreme Court struck that down as a adequate measure of damages.
Qualcomm likely could get in trouble over its rebate program as well if every customer doesn't get a rebate.
Yes, Qualcomm can ask to paid royalties based on the entire value of the consumer products. But it can't refuse to license its SEPs (or engage in some of the other practices it allegedly engaged in) if the license seeker doesn't want to pay royalties based on the entire value of the consumer products. In other words, it can't effectively say... We want a percentage of the products' entire value, take it or leave it. That (and many other things, such as refusing to license to competitors and requiring that license seekers cross license their own patents with no (offsetting) compensation) is what Qualcomm is being accused of doing and that would be a FRAND violation.
Apple was automatically and without any other option awarded 100% of all profits Samsung realized from sales of Galaxy handsets that were deemed infringing on certain design patents. That was the issue, and what SCOTUS sent back to the Federal Court for another go at it. The previous court was misinterpreting the law and now is tasked with re-establishing damages for those design patent infringements. If Apple now gets a percentage of the profits from those same handsets in a second go it will likely pass muster. So yes percentages are fine. It's the automatic 100% that wasn't.
I think we've discussed this before, but you're right that there (at least in the U.S.) aren't laws setting out what would and wouldn't be FRAND terms. What terms are considered to be FRAND compliant gets determined by common industry practices and related court decisions. As we discussed in another thread, the Federal Circuit has been pretty clear in saying that basing patent royalties on the entire value of the (multi-component) consumer product is - with some exceptions which we discussed but which wouldn't apply here - not proper. One consequence of those rulings is that, when it comes to SEPs, basing royalties on the entire value of the consumer products is not FRAND compliant.
Individual parties are of course still free to agree to such bases in licensing agreements. In some cases it might make more sense from the license seeker's perspective to base the royalties they pay on the entire value of the products. If that's agreeable to the SEP holder, then they can agree along those lines. But a SEP holder can't require a license seeker to agree to those terms, that would be a FRAND violation - not because there are statutes that say so, but because of court decisions which establish common law principles.