Qualcomm responds to Apple lawsuit, says iPhone maker behind 'regulatory attacks'

AppleInsider

Responding to some of the harsh claims in Apple's more than $1 billion lawsuit, chipmaker Qualcomm has issued a statement of its own saying the allegations are "baseless" and accusing Apple of provoking "regulatory attacks" in the U.S. and South Korea.

Graphic from Apple lawsuit detailing Qualcomm's alleged nefarious licensing practices.

"While we are still in the process of reviewing the complaint in detail, it is quite clear that Apple's claims are baseless," Qualcomm executive VP and general counsel Don Rosenberg said in a press release. "Apple has intentionally mischaracterized our agreements and negotiations, as well as the enormity and value of the technology we have invented, contributed and shared with all mobile device makers through our licensing program."

Apple has been "actively encouraging" investigations by the likes of the U.S. Federal Trade Commission and the Korean Fair Trade Commission, Rosenberg suggested, "by misrepresenting facts and withholding information." In late December, the KFTC concluded its investigation by issuing the company a $853 million fine, accusing it not only of bundling chip orders and licensing deals but being too restrictive with licensing in general, while simultaneously avoiding payments for patents held by others.

"We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple's practices and a robust examination of the merits," Rosenberg concluded.

On filing its lawsuit on Friday, Apple accused Qualcomm of exploiting its "monopoly power" to dodge FRAND (fair, reasonable and nondiscriminatory) patent commitments, for instance charging "extortion-level" rates for standards-essential patents. Above all, it suggested that Qualcomm withheld rebates as retaliation for it cooperating with enforcement agencies, and even tried to get Apple to lie to the KFTC in exchange for releasing money.

Both Apple and the FTC have claimed that Qualcomm forced Apple into an exclusive chip supply deal between 2011 and 2016, making that the condition of rebates.

The iPhone 7, released last September, is Apple's first iPhone model to use two LTE modem suppliers, the second being Intel.

9secondkox2

THIS is their response? 

Qualcomm is in deep doodoo. 

Apple gave factual data on where Qualcomm went wrong-withholding a specific amount of money owed-out of spite. 

Qualcomm then spins a web to connect all their woes to Apple. 

When that hat is the best they can do, you already know who stands where. 

Its going to to end poorly for Qualcomm. 

wood1208

Where there is smoke there is fire. apple would not sue unless there is a clear breach of contract or their intellectual property.

brakken

FTC find Qualcomm in error. Apple sues Qualcomm for money owed. Apple gets attacked and slandered. Business as usual.

radarthekat

wood1208 said:

Where there is smoke there is fire. apple would not sue unless there is a clear breach of contract or their intellectual property.

This is exactly what I was going to comment. Word for word.

janiceandrusty

It sounds like a great novel, but reported n the news earlier is Apple is throttling the speeds on Apple phones featuring Qualcomm Chips. In addition to that, I happen to know several people that switched to Verizon because the iPhone 7 with intel chips performed poorly; and would drop calls in areas iPhone 6S didn't. This sounds like a better product which is likely protected by patented ideas or design. Qualcomm can justify it's price it's a better performing product just like a car manufacturer can charge more for a design that is faster. What we know for a fact is that Apple wants $1,000,000,000.00. Could they actually be forecasting a $1B loss in company value or sales..? We all know that Apple doesn't release products with a lower price point. When my iPhone 6 Plus (with a Quallcomm chip) started wigging out, and turning off when it had a 30% charge, I just decided to get a new battery because Qualcomm chips are better when talking to my friends.

entropys

I suspect there won't be many Qualcomm chips in future Apple products.

bdkennedy1002

When Apple sues someone, it's a big deal. Bye Qualcomm.

gmgravytrain

brakken said:

FTC find Qualcomm in error. Apple sues Qualcomm for money owed. Apple gets attacked and slandered. Business as usual.

They're going to turn Apple into the bad guy, the wealthy bully picking on poor, little Qualcomm who's just trying to survive. It's a lot easier for everyone to hate Apple than to hate Qualcomm. I'm willing to bet there will be dozens of internet articles disparaging Apple's lawsuit. They'll say Apple already has enough money and should let Qualcomm slide. What I don't understand is it should be easy enough to prove if Apple was being cheated if there were written contracts. Wouldn't those terms be in the contract if rebates were guaranteed? I guess it isn't as clear-cut as it seems to me. I just get the feeling Apple is going to end up being seen as the baddie preying on the innocent. Qualcomm will probably be praised for standing up to Apple.

gmgravytrain

bdkennedy said:

When Apple sues someone, it's a big deal. Bye Qualcomm.

Qualcomm isn't going anywhere. It's a Wall Street favorite. Big investors will stick by the company and I wouldn't be surprised if the share price surges in response. It's more likely negative press will finger Apple for being in a lawsuit and cause Apple's share price to fall. It seems no matter what Apple gets into there will be the news media always saying Apple will suffer the most damage. It never fails.

aussiepaul

9secondkox2 said:

THIS is their response? 

Qualcomm is in deep doodoo. 

Apple gave factual data on where Qualcomm went wrong-withholding a specific amount of money owed-out of spite. 

Qualcomm then spins a web to connect all their woes to Apple. 

When that hat is the best they can do, you already know who stands where. 

Its going to to end poorly for Qualcomm. 

Agreed but why would Apple have agreed to the terms in the first place?  Why is this only surfacing now, 6 years later?  There's always more to these things than might first appear.  Not quite sure how anyone can reach any conclusions with the limited amount of information available three days into this going public.

davidw

janiceandrusty said:

It sounds like a great novel, but reported n the news earlier is Apple is throttling the speeds on Apple phones featuring Qualcomm Chips. In addition to that, I happen to know several people that switched to Verizon because the iPhone 7 with intel chips performed poorly; and would drop calls in areas iPhone 6S didn't. This sounds like a better product which is likely protected by patented ideas or design. Qualcomm can justify it's price it's a better performing product just like a car manufacturer can charge more for a design that is faster. What we know for a fact is that Apple wants $1,000,000,000.00. Could they actually be forecasting a $1B loss in company value or sales..? We all know that Apple doesn't release products with a lower price point. When my iPhone 6 Plus (with a Quallcomm chip) started wigging out, and turning off when it had a 30% charge, I just decided to get a new battery because Qualcomm chips are better when talking to my friends.

It's not a question of how much Qualcomm can charge for licenses to their better designed products, it is a matter that when their patents are SEP, what they charge must be FRAND to all that must use it because the patents are the industrial standards. So there is no such thing as being able to make a mobile phone, that its compatible with the equipment already in place, without licensing  Qualcomm SEP patents. There are rules that governs what Qualcomm can do with patents that are SEP because essentially, they have a monopoly with those patents.

From what info is available it seems Qualcomm abused their SEP patents by forcing venders to buy other Qualcomm licenses, if they want to use the ones that are SEP. That is what bungling is. It's like an auto dealer forcing you to buy a fuel pump when you need an alternator and the dealer is the only place that sells the alternator for the car. There are also other charges leveled against Qualcomm by the FTC pertaining to abuse of SEP patents.

 And it appears that the nearly $1B Apple is suing for is for the money Qualcomm owes them in rebates for buying Qualcomm products and paying for licenses. Qualcomm withheld paying Apple the rebates because Apple cooperated the KFTC (Korea FTC) which also investigated Qualcomm for SEP patent abuses in S.Korea and fined them nearly $1B. Qualcomm already paid China nearly $1B fine for patent licensing abuses and European countries are also investing. For you to even suggest that Apple is forecasting a $1B shortfall because of their $1B lawsuit against Qualcomm reveals how little you actually know on what is involve here. If any company is going to have a $1B shortfall, it's going to be Qualcomm. 40% of Qualcomm revenue comes from selling licenses and products to Apple and Samsung.



 More info here http://arstechnica.com/tech-policy/2017/01/apple-files-1-billion-lawsuit-against-qualcomm-over-patent-licensing/

bravadu

aussiepaul said:

9secondkox2 said:

THIS is their response? 

Qualcomm is in deep doodoo. 

Apple gave factual data on where Qualcomm went wrong-withholding a specific amount of money owed-out of spite. 

Qualcomm then spins a web to connect all their woes to Apple. 

When that hat is the best they can do, you already know who stands where. 

Its going to to end poorly for Qualcomm. 

Agreed but why would Apple have agreed to the terms in the first place?  Why is this only surfacing now, 6 years later?  There's always more to these things than might first appear.  Not quite sure how anyone can reach any conclusions with the limited amount of information available three days into this going public.

What's the alternative to not agreeing to the terms?  Not licensing the standards-essential patents and thus not making phones?  

Sounds like accepting unfair terms then working behind the scenes to overturn them as illegal and sue for big damages is a better solution.

evilution

Qualcomm were fined $850,000,000 by Korean regulators over patent licensing issues only last month.
It sounds like Qualcomm do what they want.

tommikele

wood1208 said:

Where there is smoke there is fire. apple would not sue unless there is a clear breach of contract or their intellectual property.

Yeah, right.

cali

bdkennedy said:

When Apple sues someone, it's a big deal. Bye Qualcomm.

Samsung is still around and they're the biggest thieves in the industry. 

maestro64

bdkennedy said:

When Apple sues someone, it's a big deal. Bye Qualcomm.

you can not make a Verizon phone without Qualcomm. Verizon and Qualcomm own all the CDMA IP that Verison requires to put a phone on their network.

ksec

maestro64 said:

bdkennedy said:

When Apple sues someone, it's a big deal. Bye Qualcomm.

you can not make a Verizon phone without Qualcomm. Verizon and Qualcomm own all the CDMA IP that Verison requires to put a phone on their network.

That is assuming CDMA will continue to exist. It is likely LTE will replace both CDMA and GSM in not too distant future. Having said that, you also cant make a LTE phone without Qualcomm. 

davidw

ksec said:

maestro64 said:

bdkennedy said:

When Apple sues someone, it's a big deal. Bye Qualcomm.

you can not make a Verizon phone without Qualcomm. Verizon and Qualcomm own all the CDMA IP that Verison requires to put a phone on their network.

That is assuming CDMA will continue to exist. It is likely LTE will replace both CDMA and GSM in not too distant future. Having said that, you also cant make a LTE phone without Qualcomm. 

But if the Qualcomm patents are SEP, any phone maker can make a phone using Qualcomm SEP's without being granted a license from Qualcomm, so long as the phone maker is willing to negotiate the SEP license under FRAND. Qualcomm can not stop a maker of phones from using any of their SEP's by not willing to negotiate a license under the terms of FRAND. So that said, you can't make a phone without Qualcomm SEP's, but you can still make one without a Qualcomm license for any of their SEP's, so long as you're willing to pay for a license under FRAND. 

In other words, Qualcomm will still be around, it just that if the various World FTC's finds that Qualcomm was abusing their SEP's, by not negotiating under FRAND, with Apple and Samsung, Qualcomm might see a big reduction in revenue going forward. Apple and Samsung makes up 40% of Qualcomm revenue. 

gatorguy

davidw said:

ksec said:

maestro64 said:

bdkennedy said:

When Apple sues someone, it's a big deal. Bye Qualcomm.

you can not make a Verizon phone without Qualcomm. Verizon and Qualcomm own all the CDMA IP that Verison requires to put a phone on their network.

That is assuming CDMA will continue to exist. It is likely LTE will replace both CDMA and GSM in not too distant future. Having said that, you also cant make a LTE phone without Qualcomm. 

But if the Qualcomm patents are SEP, any phone maker can make a phone using Qualcomm SEP's without being granted a license from Qualcomm, so long as the phone maker is willing to negotiate the SEP license under FRAND. Qualcomm can not stop a maker of phones from using any of their SEP's by not willing to negotiate a license under the terms of FRAND. So that said, you can't make a phone without Qualcomm SEP's, but you can still make one without a Qualcomm license for any of their SEP's, so long as you're willing to pay for a license under FRAND.

There's no FRAND agency where you can buy a license to all the needed IP at a set price. Unfortunately it does require working directly with some big contributors to any particular standard to get a license to use their property. That's why we read about licensing disagreements with Nokia, or LG or other companies who have chosen to add patents to standards. Note too that some companies claim particular patents apply to a standard but refuse to license them which itself is another problem. 

Herbivore2

gmgravytrain said:

bdkennedy said:

When Apple sues someone, it's a big deal. Bye Qualcomm.

Qualcomm isn't going anywhere. It's a Wall Street favorite. Big investors will stick by the company and I wouldn't be surprised if the share price surges in response. It's more likely negative press will finger Apple for being in a lawsuit and cause Apple's share price to fall. It seems no matter what Apple gets into there will be the news media always saying Apple will suffer 

Check the stock ticker. QCOM is down over 10% while Apple has been stable. 

Apple and Samsung make up over 40% of QCOM's revenue. The Korean and US lawsuits stand to change QCOM's revenue model substantially. 

Apple is fine. And if they've committed to Intel, it means that Intel has other more substantial advantages. And with Apple driving development in conjunction with Intel, Intel's modems will soon be outperforming QCOM ones. Apple is always willing to purchase the best components. They may be tough negotiators, but they are willing to purchase the highest performing components. 

If they went to an inferior modem from Intel, it means that Intel very likely has other very compelling technologies that Apple wants preferred access to. 

Intel is making a move to 10 nm soon and quite serious about it. It makes me wonder if Apple is planning on producing the A10X on Intel fabs. The iPad sells at much lower volume than the iPhone and may provide the best opportunity for Intel winning back Apple's business. Pure speculation on my part, but the delay in new iPad models seems to coincide with Intel's move to 10 nm. 

QCOM should have just stuck with modems. They would be far better off. Their licensing model is about to be squashed.