Qualcomm accuses Apple of money-grabbing, confirms chip supply will continue despite lawsu...

Posted:
in General Discussion edited January 2017
Amid a withering barrage of lawsuits from Apple, Qualcomm during a quarterly conference call on Wednesday reaffirmed it believes the basis of the Cupertino tech giant's legal complaints improperly conflate a commercial dispute with regulatory issues.


Slide from Apple's U.S. litigation against Qualcomm.


Speaking to investors during a call with analysts, Qualcomm CEO Steve Mollenkopf said Apple's lawsuits, lodged in U.S. and Chinese courts, are less about finding justice than they are getting the best deal on parts, reports CNet.

"Apple's complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property," Mollenkopf said, in line with Qualcomm's public statement on the matter issued last week. "They want to pay less for the fair value that Qualcomm has established in the marketplace for our technology, even though Apple has generated billions in profits from using that technology."

Qualcomm president Derek Aberle, who previously headed up the company's licensing department, echoed the sentiment, saying, "At the end of the day, they essentially want to pay less for the technology they're using. It's pretty simple."

Apple last week filed suit against Qualcomm, asserting the firm's IP licensing strategy involves monopolistic practices, price gouging, extortion and more. Specifically, Apple alleges Qualcomm abuses its "monopoly power" of the mobile wireless chip market to flout FRAND (fair, reasonable and nondiscriminatory) patent commitments and charge customers exorbitant royalty rates on standard-essential patents.

The U.S. suit also claims Qualcomm only sells chipsets to buyers who have first agreed to license its SEPs, a practice Apple refers to as "double-dipping."

Triggering the suit, Apple says, is nearly $1 billion in unpaid licensing rebates. According to Apple, Qualcomm withheld payment after the company cooperated with a Korea Fair Trade Commission probe into the chipmaker's business practices. The KFTC ultimately leveled an $854 million fine against Qualcomm for what it calls an "unfair business model." The U.S. FTC accuses Qualcomm of much the same in a separate lawsuit lodged last week.

During the call, Aderle accused Apple of making "false and misleading" statements to regulatory agencies and "regularly driving regulatory attacks on Qualcomm's business around the world."

Adding to the pile, Apple filed two more suits in China earlier today asserting similar allegations as the stateside suit. In one, the company seeks 1 billion yuan ($145.3 million) in damages based on Chinese iPhone sales, while the other pertains to unfair SEP licensing practices.

During today's investor call, Qualcomm executive vice president and general counsel Don Rosenberg took exception to the multiple concurrent complaints.

"We don't believe we have monopoly power in the chip market or any other market," Rosenberg said, according to TechCrunch. "We have never prevented Apple or anybody else from buying from competitive chipmakers."

Despite increasing legal pressure, Qualcomm said it will honor Apple's existing chip orders, confirming a Monday report. More specifically, the executives explained Apple's chip supply comes from contract manufacturers who license Qualcomm IP, meaning the chipmaker is technically upholding those agreements.

Ironically, contract manufacturers are at the crux of Apple's U.S. lawsuit. According to the legal filing, Qualcomm negotiates secret licensing agreements with smaller CMs instead of larger companies like Apple that use the wireless chips. With comparatively less bargaining power, these CMs are forced to pay "exorbitant" royalties on non-FRAND terms, which are then passed along to bigger firms.

In any case, Mollenkopf does not view the recent spate of lawsuits as a threat to Qualcomm's business.

"We have a long history of successfully defending our licensing and practices business model, which have been tested around the globe," he said, according to CNet. "We are very excited about the future and many opportunities directly in front of us. I am confident we will address and get through the legal challenges underway as we have done many times in the past."
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Comments

  • Reply 1 of 32
    wood1208wood1208 Posts: 2,026member
    This is tricky. Apple needs Qualcomm for 3G/4G modem chip so it will bee interesting how this law suit and future chip supply from Qualcom plays out. Story might change when 5G starts rolling out and older wireless tech is no longer needed.
  • Reply 2 of 32
    ksecksec Posts: 1,567member
    wood1208 said:
    This is tricky. Apple needs Qualcomm for 3G/4G modem chip so it will bee interesting how this law suit and future chip supply from Qualcom plays out. Story might change when 5G starts rolling out and older wireless tech is no longer needed.
    They dont really "need". They could make one themselves or get it from Intel. The problem here is the patents involved, and how much they are paying for it.
    One of the reason why you dont see Cheap Chinese Manufacture getting official launch of their phones in US or EU is simply patents issues.  

    One of the good thing out of this lawsuit is it will finally reveal what the patents cost are. We have a pretty good guess of BOM cost, but no idea on the patents, especially wireless.
    jbdragonpatchythepirate
  • Reply 3 of 32
    This is just one more example of a frivolous lawsuit. I don't know if this is a proposed bill, or just a suggestion from a legislator, but it says (paraphrasing) Frivolous lawsuits need to have financial consequences when they are found to be baseless. Of course this is baseless, but if it's tried in Texas - where patent trolls more often win than not - anything could happen.
  • Reply 4 of 32
    If they got all of their modems from Intel, wouldn't Intel be paying for the patents they must also license from Qualcomm? I'd guess that if this was true, Intel's chips would be costlier as a result of the licensing fees they pay to Q. Zero sum game.
    edited January 2017
  • Reply 5 of 32
    larryalarrya Posts: 552member
    This is just one more example of a frivolous lawsuit. I don't know if this is a proposed bill, or just a suggestion from a legislator, but it says (paraphrasing) Frivolous lawsuits need to have financial consequences when they are found to be baseless. Of course this is baseless, but if it's tried in Texas - where patent trolls more often win than not - anything could happen.
    Kind of hard to call a lawsuit that has a chance of winning, frivolous.  
    nyctravisjbdragonpatchythepirate
  • Reply 6 of 32
    larryalarrya Posts: 552member

    If they got all of their modems from Intel, wouldn't Intel be paying for the patents they must also license from Qualcomm? I'd guess that if this was true, Intel's chips would be costlier as a result of the licensing fees they pay to Q. Zero sum game.
    The article says they extort larger fees from smaller companies. Intel could theoretically get a better rate. 
  • Reply 7 of 32
    Getting everything from Intel isn't a solution at this point.  You'll notice that Apple products that use the Intel Wireless chips are only sold to some of wireless providers.  Intel doesn't have the IP to cover all the legacy (non 4G) equipment; Qualcomm owns it.

    Also, the wireless chips from Intel and Qualcomm aren't created equal.  The providers that can use the Intel chip still get better performance from the Qualcomm chip.  Intel is getting better though...

    If I remember correctly, if you buy the device directly from Apple you get the Qualcomm chip because it's not set up on a network yet and needs to support all the providers.

    I support Apple in the Apple vs. Qualcomm battle but the situation is complicated.  Qualcomm really does have a monopoly in many situations, which limited how hard Apple could negotiate (past tense mostly) .  They're only doing what they're doing now because they're getting support from regulators around the world (who are supporting their homegrown manufacturers).  If Qualcomm were cut Apple off, they would be sued for (triple?) damages.  Apple is in a position of strength (at the moment) against the IP troll (Qualcomm).

    Intel is in a good position moving forward.  If Intel somehow got the IP they need from Qualcomm at FRAND rates, no one would want to deal with Qualcomm directly.  If that doesn't happen, then after the next generation of wireless comes out Qualcomm's legacy IP becomes irrelevant and Intel still wins.

    This is really about how much Qualcomm can milk/blackmail from the industry before they become irrelevant.
    brian greenjbdragon
  • Reply 8 of 32
    davidwdavidw Posts: 977member
    This is just one more example of a frivolous lawsuit. I don't know if this is a proposed bill, or just a suggestion from a legislator, but it says (paraphrasing) Frivolous lawsuits need to have financial consequences when they are found to be baseless. Of course this is baseless, but if it's tried in Texas - where patent trolls more often win than not - anything could happen.

    How can it be a frivolous lawsuit when China already found Qualcomm guilty and fined them nearly $1B for SEP licensing violations, S. Korea found them guilty and fined then nearly $1B for SEP licensing violations, Europe is investigating them for SEP licensing violations and US FTC is investigating them for SEP licensing violations. 

    Apple lawsuit in China is based on China already finding Qualcomm guilty of licensing violations. Nothing frivolous about that one. Apple lawsuit in the US is not for licensing violations. Not yet. The FTC has not come out with their findings yet. The US lawsuit is for Qualcomm not paying the nearly $1B they owe Apple in rebates. Qualcomm withheld the rebates in retaliation for Apple cooperating with China, S. Korea, Europe and the US, with their investigation of Qualcomm SEP licensing violations. Nothing frivolous about that. 

    And by the way, East Texas courts usually favors the patent holder. In this case it's Qualcomm. Apple is not the one suing for patent infringement. Thus they can't be considered a patent troll, by any definition. Therefore, that's another thing you know nothing about. 
    jbdragonStrangeDaysfracbadmonkjony0darelrex
  • Reply 9 of 32
    Qualcomm CEO Steve Mollenkopf: "Apple's complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property."

    No, it's not, as I'm sure Mollenkopf knows very well. When Qualcomm (like many other companies, including Apple) allowed certain of their patents to be included in a telecom standard that is now unavoidable by any company that makes working mobile phones at all, they specifically agreed to a per-device, FRAND-contract-stipulated fee for those patents. This suit is about how Qualcomm has been charging much more than that fee, charging different amounts to different phone makers and for different phones, and in general trampling all over the terms of the contract they willingly entered.

    This is hardly "frivolous" (Thinkman); it cuts to the very core of how telecom standards can function without everyone in the business being held hostage by any one company that doesn't care what it signed. It is also not a "zero sum game" (Thinkman); if Apple buys these chips from Intel, then Intel can simply send the FRAND-contract-stipulated royalty to Qualcomm, and Qualcomm can scream for more, but not receive more. That is perfectly legal under the terms to which Qualcomm agreed.
    jbdragonStrangeDayspatchythepirate
  • Reply 10 of 32
    gatorguygatorguy Posts: 21,283member
    darelrex said:
    Qualcomm CEO Steve Mollenkopf: "Apple's complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property."

    No, it's not, as I'm sure Mollenkopf knows very well. When Qualcomm (like many other companies, including Apple) allowed certain of their patents to be included in a telecom standard that is now unavoidable by any company that makes working mobile phones at all, they specifically agreed to a per-device, FRAND-contract-stipulated fee for those patents. This suit is about how Qualcomm has been charging much more than that fee, charging different amounts to different phone makers and for different phones, and in general trampling all over the terms of the contract they willingly entered.

    This is hardly "frivolous" (Thinkman); it cuts to the very core of how telecom standards can function without everyone in the business being held hostage by any one company that doesn't care what it signed. It is also not a "zero sum game" (Thinkman); if Apple buys these chips from Intel, then Intel can simply send the FRAND-contract-stipulated royalty to Qualcomm, and Qualcomm can scream for more, but not receive more. That is perfectly legal under the terms to which Qualcomm agreed.
    Have you read the agreement they entered into with IEEE as a condition of including their patents in the 3G/4G standards? Do you know the IEEE position regarding patent royalties? I suspect not. I have and they don't make the all the kinds of stipulations and restrictions you may presume they do even if it might be good if they did, or at least good if you are a buyer of the rights and not a seller. There's that issue with "fair"

    It was only February of 2015 when they finally got around to better defining what they considered to be "fair" licensing terms, long after the patents were committed and the standards agreed on.

    IEEE members contributing to the standards pool:
    • must offer to license those patents to all applicants requesting licenses, and cannot pick and choose among licensees (ie, cannot exclude Apple even if they might like to for whatever reason)
    • may not seek, or threaten to seek, injunctions against potential licensees who are willing to negotiate for licenses (this is why they were allowed to file for an import ban, sometimes inaccurately called an injunction, at the ITC last month. Apple is presumably no longer willing to negotiate for a license, at least not outside court)
    • may insist that licensees offer them reciprocal licenses under their own patents (aka cross-licensing, and yeah I know some don't think that's fair but it's a common industry practice and not just in tech)
    • may arbitrate disputes over FRAND terms 
    • may charge a reasonable royalty that is based, among other things, on the value that the patented technology contributes to the smallest salable component of the overall product (there's that ill-defined smallest salable component thing again and coupled with an equally ill-defined value to the overall product)
    • should ensure that subsequent purchasers of these patents (example would be another modem maker) agree to abide by the same commitments.
    BTW, the IEEE cleared these terms thru the US DOJ before approving them. 

    The ITU which also handles standards necessary for wireless communications on our smartphones has not yet issued any clarity on what constitutes FRaND and based on their application form prefers to stay hands-off. Negotiations for a license are specifically mentioned as being between the licensor and licensee. If you are really interested you can access their forms and patent license terms here:
    http://www.itu.int/en/ITU-T/ipr/Pages/default.aspx
    edited January 2017
  • Reply 11 of 32
    davidwdavidw Posts: 977member

    Getting everything from Intel isn't a solution at this point.  You'll notice that Apple products that use the Intel Wireless chips are only sold to some of wireless providers.  Intel doesn't have the IP to cover all the legacy (non 4G) equipment; Qualcomm owns it.

    Also, the wireless chips from Intel and Qualcomm aren't created equal.  The providers that can use the Intel chip still get better performance from the Qualcomm chip.  Intel is getting better though...

    If I remember correctly, if you buy the device directly from Apple you get the Qualcomm chip because it's not set up on a network yet and needs to support all the providers.

    I support Apple in the Apple vs. Qualcomm battle but the situation is complicated.  Qualcomm really does have a monopoly in many situations, which limited how hard Apple could negotiate (past tense mostly) .  They're only doing what they're doing now because they're getting support from regulators around the world (who are supporting their homegrown manufacturers).  If Qualcomm were cut Apple off, they would be sued for (triple?) damages.  Apple is in a position of strength (at the moment) against the IP troll (Qualcomm).

    Intel is in a good position moving forward.  If Intel somehow got the IP they need from Qualcomm at FRAND rates, no one would want to deal with Qualcomm directly.  If that doesn't happen, then after the next generation of wireless comes out Qualcomm's legacy IP becomes irrelevant and Intel still wins.

    This is really about how much Qualcomm can milk/blackmail from the industry before they become irrelevant.

    Since the patents in question here are SEP, the monopoly Qualcomm has on those patents was granted to them by the various FTC's Worldwide. So Qualcomm has very limited power with their monopoly, as they must license out those SEP's under FRAND. And by "must", it means to everyone that wants to use it, that is willing to negotiate a licensing deal under FRAND. Qualcomm can not withhold their SEP licensing by not willing to negotiate a FRAND license. Qualcomm can not charge Intel more for those SEP's licenses, just because Intel will be supplying Apple with chips. That would not be negotiating under FRAND. Therefore, Qualcomm would be stupid to stop supplying chips for Apple. Apple only needs what the SEP covers. Anyone could step up, be wiling to negotiate a FRAND license with Qualcomm and start making chips, using Qualcomm SEP's, for Apple. Because Qualcomm patents are SEP's, they can not hold or even threaten to hold, anyone in the industry hostage, with the monopoly they have, because they have to agree to the industry standard organization's terms when accepting the offer to have their patens as standards for the industry.  


    edited January 2017
  • Reply 12 of 32
    gatorguygatorguy Posts: 21,283member
    davidw said:

    Getting everything from Intel isn't a solution at this point.  You'll notice that Apple products that use the Intel Wireless chips are only sold to some of wireless providers.  Intel doesn't have the IP to cover all the legacy (non 4G) equipment; Qualcomm owns it.

    Also, the wireless chips from Intel and Qualcomm aren't created equal.  The providers that can use the Intel chip still get better performance from the Qualcomm chip.  Intel is getting better though...

    If I remember correctly, if you buy the device directly from Apple you get the Qualcomm chip because it's not set up on a network yet and needs to support all the providers.

    I support Apple in the Apple vs. Qualcomm battle but the situation is complicated.  Qualcomm really does have a monopoly in many situations, which limited how hard Apple could negotiate (past tense mostly) .  They're only doing what they're doing now because they're getting support from regulators around the world (who are supporting their homegrown manufacturers).  If Qualcomm were cut Apple off, they would be sued for (triple?) damages.  Apple is in a position of strength (at the moment) against the IP troll (Qualcomm).

    Intel is in a good position moving forward.  If Intel somehow got the IP they need from Qualcomm at FRAND rates, no one would want to deal with Qualcomm directly.  If that doesn't happen, then after the next generation of wireless comes out Qualcomm's legacy IP becomes irrelevant and Intel still wins.

    This is really about how much Qualcomm can milk/blackmail from the industry before they become irrelevant.

    Since the patents in question here are SEP, the monopoly Qualcomm has on those patents was granted to them by the various FTC's Worldwide. So Qualcomm has very limited power with their monopoly, as they must license out those SEP's under FRAND. And by "must", it means to everyone that wants to use it, that is willing to negotiate a licensing deal under FRAND. Qualcomm can not withhold their SEP licensing by not willing to negotiate a FRAND license. Qualcomm can not charge Intel more for those SEP's licenses, just because Intel will be supplying Apple with chips. That would not be negotiating under FRAND. Therefore, Qualcomm would be stupid to stop supplying chips for Apple. Apple only needs what the SEP covers. Anyone could step up, be wiling to negotiate a FRAND license with Qualcomm and start making chips, using Qualcomm SEP's, for Apple. Because Qualcomm patents are SEP's, they can not hold or even threaten to hold, anyone in the industry hostage, with the monopoly they have, because they have to agree to the industry standard organization's terms when accepting the offer to have their patens as standards for the industry.  


    Read my post just above yours.
  • Reply 13 of 32
    gatorguy said:
    darelrex said:
    Qualcomm CEO Steve Mollenkopf: "Apple's complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property."

    No, it's not, as I'm sure Mollenkopf knows very well. When Qualcomm (like many other companies, including Apple) allowed certain of their patents to be included in a telecom standard that is now unavoidable by any company that makes working mobile phones at all, they specifically agreed to a per-device, FRAND-contract-stipulated fee for those patents. This suit is about how Qualcomm has been charging much more than that fee, charging different amounts to different phone makers and for different phones, and in general trampling all over the terms of the contract they willingly entered.

    This is hardly "frivolous" (Thinkman); it cuts to the very core of how telecom standards can function without everyone in the business being held hostage by any one company that doesn't care what it signed. It is also not a "zero sum game" (Thinkman); if Apple buys these chips from Intel, then Intel can simply send the FRAND-contract-stipulated royalty to Qualcomm, and Qualcomm can scream for more, but not receive more. That is perfectly legal under the terms to which Qualcomm agreed.
    Have you read the agreement they entered into with IEEE as a condition of including their patents in the 3G/4G standards? Do you know the IEEE position regarding patent royalties? I suspect not. I have and they don't make the all the kinds of stipulations and restrictions you may presume they do even if it might be good if they did, or at least good if you are a buyer of the rights and not a seller. There's that issue with "fair"

    It was only February of 2015 when they finally got around to better defining what they considered to be "fair" licensing terms, long after the patents were committed and the standards agreed on.

    IEEE members contributing to the standards pool:
    • must offer to license those patents to all applicants requesting licenses, and cannot pick and choose among licensees (ie, cannot exclude Apple even if they might like to for whatever reason)
    • may not seek, or threaten to seek, injunctions against potential licensees who are willing to negotiate for licenses (this is why they were allowed to file for an import ban, sometimes inaccurately called an injunction, at the ITC last month. Apple is presumably no longer willing to negotiate for a license, at least not outside court)
    • may insist that licensees offer them reciprocal licenses under their own patents (aka cross-licensing, and yeah I know some don't think that's fair but it's a common industry practice and not just in tech)
    • may arbitrate disputes over FRAND terms 
    • may charge a reasonable royalty that is based, among other things, on the value that the patented technology contributes to the smallest salable component of the overall product (there's that ill-defined smallest salable component thing again and coupled with an equally ill-defined value to the overall product)
    • should ensure that subsequent purchasers of these patents (example would be another modem maker) agree to abide by the same commitments.
    BTW, the IEEE cleared these terms thru the US DOJ before approving them. 

    The ITU which also handles standards necessary for wireless communications on our smartphones has not yet issued any clarity on what constitutes FRaND and based on their application form prefers to stay hands-off. Negotiations for a license are specifically mentioned as being between the licensor and licensee. If you are really interested you can access their forms and patent license terms here:
    http://www.itu.int/en/ITU-T/ipr/Pages/default.aspx

    I have some very simple questions for you, based on your points above:

    - Do you agree with China and SK fining Qualcomm?
    - Do you think Apple will win or lose their case against Qualcomm?
    - Do you think Qualcomm with win or lose against the FTC?
  • Reply 14 of 32
    gatorguygatorguy Posts: 21,283member
    gatorguy said:
    darelrex said:
    Qualcomm CEO Steve Mollenkopf: "Apple's complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property."

    No, it's not, as I'm sure Mollenkopf knows very well. When Qualcomm (like many other companies, including Apple) allowed certain of their patents to be included in a telecom standard that is now unavoidable by any company that makes working mobile phones at all, they specifically agreed to a per-device, FRAND-contract-stipulated fee for those patents. This suit is about how Qualcomm has been charging much more than that fee, charging different amounts to different phone makers and for different phones, and in general trampling all over the terms of the contract they willingly entered.

    This is hardly "frivolous" (Thinkman); it cuts to the very core of how telecom standards can function without everyone in the business being held hostage by any one company that doesn't care what it signed. It is also not a "zero sum game" (Thinkman); if Apple buys these chips from Intel, then Intel can simply send the FRAND-contract-stipulated royalty to Qualcomm, and Qualcomm can scream for more, but not receive more. That is perfectly legal under the terms to which Qualcomm agreed.
    Have you read the agreement they entered into with IEEE as a condition of including their patents in the 3G/4G standards? Do you know the IEEE position regarding patent royalties? I suspect not. I have and they don't make the all the kinds of stipulations and restrictions you may presume they do even if it might be good if they did, or at least good if you are a buyer of the rights and not a seller. There's that issue with "fair"

    It was only February of 2015 when they finally got around to better defining what they considered to be "fair" licensing terms, long after the patents were committed and the standards agreed on.

    IEEE members contributing to the standards pool:
    • must offer to license those patents to all applicants requesting licenses, and cannot pick and choose among licensees (ie, cannot exclude Apple even if they might like to for whatever reason)
    • may not seek, or threaten to seek, injunctions against potential licensees who are willing to negotiate for licenses (this is why they were allowed to file for an import ban, sometimes inaccurately called an injunction, at the ITC last month. Apple is presumably no longer willing to negotiate for a license, at least not outside court)
    • may insist that licensees offer them reciprocal licenses under their own patents (aka cross-licensing, and yeah I know some don't think that's fair but it's a common industry practice and not just in tech)
    • may arbitrate disputes over FRAND terms 
    • may charge a reasonable royalty that is based, among other things, on the value that the patented technology contributes to the smallest salable component of the overall product (there's that ill-defined smallest salable component thing again and coupled with an equally ill-defined value to the overall product)
    • should ensure that subsequent purchasers of these patents (example would be another modem maker) agree to abide by the same commitments.
    BTW, the IEEE cleared these terms thru the US DOJ before approving them. 

    The ITU which also handles standards necessary for wireless communications on our smartphones has not yet issued any clarity on what constitutes FRaND and based on their application form prefers to stay hands-off. Negotiations for a license are specifically mentioned as being between the licensor and licensee. If you are really interested you can access their forms and patent license terms here:
    http://www.itu.int/en/ITU-T/ipr/Pages/default.aspx

    I have some very simple questions for you, based on your points above:

    - Do you agree with China and SK fining Qualcomm?
    - Do you think Apple will win or lose their case against Qualcomm?
    - Do you think Qualcomm with win or lose against the FTC?
    1. Based on what I've read yes I do
    2. 50/50 chance IMHO
    3. Neither win nor lose. They'll settle, tho may agree to some fine in doing so. That's what they did in China.
    edited January 2017
  • Reply 15 of 32
    gatorguygatorguy Posts: 21,283member
    From Qualcomms' earnings call, where they reportedly spent a great deal of time discussing Apple's lawsuits and rationale for them:

    “They (Apple) want to pay less for the fair value that Qualcomm has established in the marketplace for our technology, even though Apple has generated billions in profits from using that technology.” While the value of Qualcomm’s patents have “tangibly and meaningfully increased over time,” it has never raised its royalty rates, Mollenkopf added"

    It appears that Qualcomm's PR is going to push the story that this boils down to Apple squeezing yet another supplier in order to increase their own profits, and that it's a business dispute that should be settled under contract law in any event.
    edited January 2017
  • Reply 16 of 32
    gatorguy said:
    gatorguy said:
    darelrex said:
    Qualcomm CEO Steve Mollenkopf: "Apple's complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property."

    No, it's not, as I'm sure Mollenkopf knows very well. When Qualcomm (like many other companies, including Apple) allowed certain of their patents to be included in a telecom standard that is now unavoidable by any company that makes working mobile phones at all, they specifically agreed to a per-device, FRAND-contract-stipulated fee for those patents. This suit is about how Qualcomm has been charging much more than that fee, charging different amounts to different phone makers and for different phones, and in general trampling all over the terms of the contract they willingly entered.

    This is hardly "frivolous" (Thinkman); it cuts to the very core of how telecom standards can function without everyone in the business being held hostage by any one company that doesn't care what it signed. It is also not a "zero sum game" (Thinkman); if Apple buys these chips from Intel, then Intel can simply send the FRAND-contract-stipulated royalty to Qualcomm, and Qualcomm can scream for more, but not receive more. That is perfectly legal under the terms to which Qualcomm agreed.
    Have you read the agreement they entered into with IEEE as a condition of including their patents in the 3G/4G standards? Do you know the IEEE position regarding patent royalties? I suspect not. I have and they don't make the all the kinds of stipulations and restrictions you may presume they do even if it might be good if they did, or at least good if you are a buyer of the rights and not a seller. There's that issue with "fair"

    It was only February of 2015 when they finally got around to better defining what they considered to be "fair" licensing terms, long after the patents were committed and the standards agreed on.

    IEEE members contributing to the standards pool:
    • must offer to license those patents to all applicants requesting licenses, and cannot pick and choose among licensees (ie, cannot exclude Apple even if they might like to for whatever reason)
    • may not seek, or threaten to seek, injunctions against potential licensees who are willing to negotiate for licenses (this is why they were allowed to file for an import ban, sometimes inaccurately called an injunction, at the ITC last month. Apple is presumably no longer willing to negotiate for a license, at least not outside court)
    • may insist that licensees offer them reciprocal licenses under their own patents (aka cross-licensing, and yeah I know some don't think that's fair but it's a common industry practice and not just in tech)
    • may arbitrate disputes over FRAND terms 
    • may charge a reasonable royalty that is based, among other things, on the value that the patented technology contributes to the smallest salable component of the overall product (there's that ill-defined smallest salable component thing again and coupled with an equally ill-defined value to the overall product)
    • should ensure that subsequent purchasers of these patents (example would be another modem maker) agree to abide by the same commitments.
    BTW, the IEEE cleared these terms thru the US DOJ before approving them. 

    The ITU which also handles standards necessary for wireless communications on our smartphones has not yet issued any clarity on what constitutes FRaND and based on their application form prefers to stay hands-off. Negotiations for a license are specifically mentioned as being between the licensor and licensee. If you are really interested you can access their forms and patent license terms here:
    http://www.itu.int/en/ITU-T/ipr/Pages/default.aspx

    I have some very simple questions for you, based on your points above:

    - Do you agree with China and SK fining Qualcomm?
    - Do you think Apple will win or lose their case against Qualcomm?
    - Do you think Qualcomm with win or lose against the FTC?
    1. Based on what I've read yes I do
    2. 50/50 chance IMHO
    3. Neither win nor lose. They'll settle, tho may agree to some fine in doing so. That's what they did in China.

    I have another question I forgot. There are 3 phones that all use the exact same cellular modem (the smallest salable part. A $200 Android phone, a $600 iPhone and a $4,000 Vertu.

    The Android phone pays $5 royalty. Should Apple Pay $15 and Vertu pay $100 because the same chip is being used in a higher priced phone?
  • Reply 17 of 32
    gatorguy said:
    From Qualcomms' earnings call, where they reportedly spent a great deal of time discussing Apple's lawsuits and rationale for them:

    “They (Apple) want to pay less for the fair value that Qualcomm has established in the marketplace for our technology, even though Apple has generated billions in profits from using that technology.” While the value of Qualcomm’s patents have “tangibly and meaningfully increased over time,” it has never raised its royalty rates, Mollenkopf added"

    It appears that Qualcomm's PR is going to push the story that this boils down to Apple squeezing yet another supplier in order to increase their own profits, and that it's a business dispute that should be settled under contract law in any event.

    "even though Apple has generated billions in profits from using that technology."

    And this shows how stupid Qualcomm is. The sheer arrogance thinking their cellular radio is somehow responsible for Apples billions in profit.

    Apples profit comes from their superior processors that allow advanced functions, cameras, build quality, customer support, security & privacy and most importantly, their complete ecosystem and iOS. Even iMessage on it's own is a bigger contributor than a cellular radio.
    StrangeDayspatchythepiratebadmonk
  • Reply 18 of 32
    davidwdavidw Posts: 977member
    gatorguy said:
    darelrex said:
    Qualcomm CEO Steve Mollenkopf: "Apple's complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property."

    No, it's not, as I'm sure Mollenkopf knows very well. When Qualcomm (like many other companies, including Apple) allowed certain of their patents to be included in a telecom standard that is now unavoidable by any company that makes working mobile phones at all, they specifically agreed to a per-device, FRAND-contract-stipulated fee for those patents. This suit is about how Qualcomm has been charging much more than that fee, charging different amounts to different phone makers and for different phones, and in general trampling all over the terms of the contract they willingly entered.

    This is hardly "frivolous" (Thinkman); it cuts to the very core of how telecom standards can function without everyone in the business being held hostage by any one company that doesn't care what it signed. It is also not a "zero sum game" (Thinkman); if Apple buys these chips from Intel, then Intel can simply send the FRAND-contract-stipulated royalty to Qualcomm, and Qualcomm can scream for more, but not receive more. That is perfectly legal under the terms to which Qualcomm agreed.
    Have you read the agreement they entered into with IEEE as a condition of including their patents in the 3G/4G standards? Do you know the IEEE position regarding patent royalties? I suspect not. I have and they don't make the all the kinds of stipulations and restrictions you may presume they do even if it might be good if they did, or at least good if you are a buyer of the rights and not a seller. There's that issue with "fair"

    It was only February of 2015 when they finally got around to better defining what they considered to be "fair" licensing terms, long after the patents were committed and the standards agreed on.

    IEEE members contributing to the standards pool:
    • must offer to license those patents to all applicants requesting licenses, and cannot pick and choose among licensees (ie, cannot exclude Apple even if they might like to for whatever reason)
    • may not seek, or threaten to seek, injunctions against potential licensees who are willing to negotiate for licenses (this is why they were allowed to file for an import ban, sometimes inaccurately called an injunction, at the ITC last month. Apple is presumably no longer willing to negotiate for a license, at least not outside court)
    • may insist that licensees offer them reciprocal licenses under their own patents (aka cross-licensing, and yeah I know some don't think that's fair but it's a common industry practice and not just in tech)
    • may arbitrate disputes over FRAND terms 
    • may charge a reasonable royalty that is based, among other things, on the value that the patented technology contributes to the smallest salable component of the overall product (there's that ill-defined smallest salable component thing again and coupled with an equally ill-defined value to the overall product)
    • should ensure that subsequent purchasers of these patents (example would be another modem maker) agree to abide by the same commitments.
    BTW, the IEEE cleared these terms thru the US DOJ before approving them. 

    The ITU which also handles standards necessary for wireless communications on our smartphones has not yet issued any clarity on what constitutes FRaND and based on their application form prefers to stay hands-off. Negotiations for a license are specifically mentioned as being between the licensor and licensee. If you are really interested you can access their forms and patent license terms here:
    http://www.itu.int/en/ITU-T/ipr/Pages/default.aspx
    And do you know for sure that Qualcomm had kept their end of the deal when they accepted SEP status on their patents? All this means nothing if you can't prove Qualcomm negotiated their licenses, even by their own FRAND terms, when negotiating with Apple or any other entity that needs to use their SEP's. Have you read the license contract between Qualcomm and Apple? Does that contract meet the FRAND standards that Qualcomm is obligated to oblige by? Or you don't know?

    I'm sure Apple must have read what you posted and they for sure would know if Qualcomm negotiated in good faith and FRAND under Qualcomm own terms. China and S. Korea has already determined that Qualcomm did not negotiate their SEP licenses under FRAND terms. You think China "FTC"  and S. Korea "FTC" didn't have access to what you posted, so they made up their own FRAND standards, just so that each of them can fine Qualcomm nearly $1B? 
    patchythepirate
  • Reply 19 of 32
    gatorguygatorguy Posts: 21,283member
    gatorguy said:
    gatorguy said:
    darelrex said:
    Qualcomm CEO Steve Mollenkopf: "Apple's complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property."

    No, it's not, as I'm sure Mollenkopf knows very well. When Qualcomm (like many other companies, including Apple) allowed certain of their patents to be included in a telecom standard that is now unavoidable by any company that makes working mobile phones at all, they specifically agreed to a per-device, FRAND-contract-stipulated fee for those patents. This suit is about how Qualcomm has been charging much more than that fee, charging different amounts to different phone makers and for different phones, and in general trampling all over the terms of the contract they willingly entered.

    This is hardly "frivolous" (Thinkman); it cuts to the very core of how telecom standards can function without everyone in the business being held hostage by any one company that doesn't care what it signed. It is also not a "zero sum game" (Thinkman); if Apple buys these chips from Intel, then Intel can simply send the FRAND-contract-stipulated royalty to Qualcomm, and Qualcomm can scream for more, but not receive more. That is perfectly legal under the terms to which Qualcomm agreed.
    Have you read the agreement they entered into with IEEE as a condition of including their patents in the 3G/4G standards? Do you know the IEEE position regarding patent royalties? I suspect not. I have and they don't make the all the kinds of stipulations and restrictions you may presume they do even if it might be good if they did, or at least good if you are a buyer of the rights and not a seller. There's that issue with "fair"

    It was only February of 2015 when they finally got around to better defining what they considered to be "fair" licensing terms, long after the patents were committed and the standards agreed on.

    IEEE members contributing to the standards pool:
    • must offer to license those patents to all applicants requesting licenses, and cannot pick and choose among licensees (ie, cannot exclude Apple even if they might like to for whatever reason)
    • may not seek, or threaten to seek, injunctions against potential licensees who are willing to negotiate for licenses (this is why they were allowed to file for an import ban, sometimes inaccurately called an injunction, at the ITC last month. Apple is presumably no longer willing to negotiate for a license, at least not outside court)
    • may insist that licensees offer them reciprocal licenses under their own patents (aka cross-licensing, and yeah I know some don't think that's fair but it's a common industry practice and not just in tech)
    • may arbitrate disputes over FRAND terms 
    • may charge a reasonable royalty that is based, among other things, on the value that the patented technology contributes to the smallest salable component of the overall product (there's that ill-defined smallest salable component thing again and coupled with an equally ill-defined value to the overall product)
    • should ensure that subsequent purchasers of these patents (example would be another modem maker) agree to abide by the same commitments.
    BTW, the IEEE cleared these terms thru the US DOJ before approving them. 

    The ITU which also handles standards necessary for wireless communications on our smartphones has not yet issued any clarity on what constitutes FRaND and based on their application form prefers to stay hands-off. Negotiations for a license are specifically mentioned as being between the licensor and licensee. If you are really interested you can access their forms and patent license terms here:
    http://www.itu.int/en/ITU-T/ipr/Pages/default.aspx

    I have some very simple questions for you, based on your points above:

    - Do you agree with China and SK fining Qualcomm?
    - Do you think Apple will win or lose their case against Qualcomm?
    - Do you think Qualcomm with win or lose against the FTC?
    1. Based on what I've read yes I do
    2. 50/50 chance IMHO
    3. Neither win nor lose. They'll settle, tho may agree to some fine in doing so. That's what they did in China.

    I have another question I forgot. There are 3 phones that all use the exact same cellular modem (the smallest salable part. A $200 Android phone, a $600 iPhone and a $4,000 Vertu.

    The Android phone pays $5 royalty. Should Apple Pay $15 and Vertu pay $100 because the same chip is being used in a higher priced phone?
    That's common industry practice, taking a percentage of the value. It's not specific to Qualcomm.

    Fair? That depends on whether Ericthehalfbee developed the tech and is licensing the patents for as much as can be deemed reasonable, or whether Ericthehalfbee needs a license to use it in order to sell something for profit. Which Ericthehalfbee is asking, Eric-the-inventor or Eric-the-marketer?
    edited January 2017
  • Reply 20 of 32
    This is just one more example of a frivolous lawsuit. I don't know if this is a proposed bill, or just a suggestion from a legislator, but it says (paraphrasing) Frivolous lawsuits need to have financial consequences when they are found to be baseless. Of course this is baseless, but if it's tried in Texas - where patent trolls more often win than not - anything could happen.
    I'm assuming you're just a guy on the internet. How do you know whether it's frivolous or not? Because the defendant said so?
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