Apple adds to Qualcomm legal battles with new UK lawsuit

Posted:
in iPhone edited March 2017
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.

Comments

  • Reply 1 of 14
    sflocalsflocal Posts: 4,535member
    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.
    What Apple does with your tech and how much they profit from THEIR products by including it is none of your business you arrogant twit.

    What, should Apple have charged me more to buy an iMac because I use it to help me generate revenue in my business versus someone who buys one to browse the cute kitten youtube videos?

    Qualcomm is more than welcome to build their own phone from the ground up and see how well that works for them.
    patchythepiratejony0badmonk
  • Reply 2 of 14
    kkerstkkerst Posts: 330member
    They used to build phones, many years before Apple. They got out of the business because it was easier to sell chips and IP. Less overhead.
    gatorguybadmonk
  • Reply 3 of 14
    Herbivore2Herbivore2 Posts: 362member
    QCOM should cave, but they aren't and the modem slot will belong entirely to Intel in short order. QCOM will have no advantages in the move to 5G networks and their model at that point will no longer guarantee excessive profits.

    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. 
    badmonk
  • Reply 4 of 14
    evilutionevilution Posts: 1,352member
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    SpamSandwich[Deleted User]
  • Reply 5 of 14
    gatorguygatorguy Posts: 20,437member
    evilution said:
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    On that specific measurement it is the same. The royalties are a percentage of the handset cost which is a perfectly legal and a common patent monetization basis. Apple didn't have a gun to their head when they voluntarily accepted and signed Qualcomm's patent agreement. Now they've decided it's not OK. 

    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. 
    edited March 2017
  • Reply 6 of 14
    MplsPMplsP Posts: 1,284member
    Except from what the article says, their licensing fees were dependent on manufacturers signing exclusivity agreements for Qualcomm chips. 

    Either way, Apple's suit appears to be due to Qualcomm denying promised Payments, which is another matter completely
  • Reply 7 of 14
    gatorguy said:
    evilution said:
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    On that specific measurement it is the same. The royalties are a percentage of the handset cost which is a perfectly legal and a common patent monetization basis. Apple didn't have a gun to their head when they voluntarily accepted and signed Qualcomm's patent agreement. Now they've decided it's not OK. 

    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. 
    Was it not the FTC who said the agreement was not legal or fair?

    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.
  • Reply 8 of 14
    bellsbells Posts: 124member
    gatorguy said:
    evilution said:
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    On that specific measurement it is the same. The royalties are a percentage of the handset cost which is a perfectly legal and a common patent monetization basis. Apple didn't have a gun to their head when they voluntarily accepted and signed Qualcomm's patent agreement. Now they've decided it's not OK. 

    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. 
    Except FRAND rates generally are set at a percentage of the applicable component cost. Their are standard patent holders that have tried to access a percentage of a complete product sale as opposed to just the component cost. That generally however is not successful in Court. That is the argument Motorola made against Microsoft when suing for billions on FRAND patents. Motorola lost though and Microsoft only had to pay a small percentage of component costs, which if I recall was only a few million dollars.

    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.
  • Reply 9 of 14
    carnegiecarnegie Posts: 709member
    gatorguy said:
    evilution said:
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    On that specific measurement it is the same. The royalties are a percentage of the handset cost which is a perfectly legal and a common patent monetization basis. Apple didn't have a gun to their head when they voluntarily accepted and signed Qualcomm's patent agreement. Now they've decided it's not OK. 

    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. 
    Apple, of course, didn't literally have a gun to its head when it agreed to Qualcomm's terms. But the allegation made by Apple, and supported by the findings of various regulatory bodies, effectively is that Qualcomm did hold a (figurative) gun to Apple's head. If most of the allegations made by Apple and various regulatory bodies are true, then there should be little doubt that Qualcomm acted improperly and likely illegally (the latter depending, of course, on various jurisdiction's laws).

    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. 
  • Reply 10 of 14
    gatorguygatorguy Posts: 20,437member
    adm1 said:
    gatorguy said:
    evilution said:
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    On that specific measurement it is the same. The royalties are a percentage of the handset cost which is a perfectly legal and a common patent monetization basis. Apple didn't have a gun to their head when they voluntarily accepted and signed Qualcomm's patent agreement. Now they've decided it's not OK. 

    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. 
    Was it not the FTC who said the agreement was not legal or fair?

    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.
    I don't believe the FTC or any other government body, court, or regulatory body has ever ruled that basing patent royalties on end-device cost is illegal or unfair. You've confusing things with some particular use  of it in some specific circumstance perhaps? It is neither patently :) illegal nor unfair. 
  • Reply 11 of 14
    gatorguygatorguy Posts: 20,437member
    carnegie said:
    gatorguy said:
    evilution said:
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    On that specific measurement it is the same. The royalties are a percentage of the handset cost which is a perfectly legal and a common patent monetization basis. Apple didn't have a gun to their head when they voluntarily accepted and signed Qualcomm's patent agreement. Now they've decided it's not OK. 

    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. 
    Apple, of course, didn't literally have a gun to its head when it agreed to Qualcomm's terms. But the allegation made by Apple, and supported by the findings of various regulatory bodies, effectively is that Qualcomm did hold a (figurative) gun to Apple's head. If most of the allegations made by Apple and various regulatory bodies are true, then there should be little doubt that Qualcomm acted improperly and likely illegally (the latter depending, of course, on various jurisdiction's laws).

    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. 
    I don't see how it would illegally violate FRAND. Wouldn't you have to start with FRAND laws? There aren't any. I think perhaps you really mean antitrust violations.
  • Reply 12 of 14
    gatorguygatorguy Posts: 20,437member
    MplsP said:
    Except from what the article says, their licensing fees were dependent on manufacturers signing exclusivity agreements for Qualcomm chips. 

    Either way, Apple's suit appears to be due to Qualcomm denying promised Payments, which is another matter completely
    Yup, Qualcomm's general licensing provisions aren't holding up well with the new views from regulatory agencies. I think their general royalty basis being an end device may well survive but the cross-licensing provisos and what really ends up as royalty-stacking probably will not. Qualcomm's revenues are going to be taking a big hit over the next few years as contracts come up for renewal. Just my personal opinion of course.
  • Reply 13 of 14
    gatorguygatorguy Posts: 20,437member
    bells said:
    gatorguy said:
    evilution said:
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    On that specific measurement it is the same. The royalties are a percentage of the handset cost which is a perfectly legal and a common patent monetization basis. Apple didn't have a gun to their head when they voluntarily accepted and signed Qualcomm's patent agreement. Now they've decided it's not OK. 

    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. 
    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.
    That's pretty far removed from the facts, tho you'd be forgiven for it based on some of the reporting i've seen and comments made here on the forums. Then again I guess 100% is a percentage. :)

    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. 
  • Reply 14 of 14
    carnegiecarnegie Posts: 709member
    gatorguy said:
    carnegie said:
    gatorguy said:
    evilution said:
    FRAND pricing is the same for anyone who wants to licence the tech. If it wasn't, it would be RAND.
    You can't ramp it up because the customer is successful.
    On that specific measurement it is the same. The royalties are a percentage of the handset cost which is a perfectly legal and a common patent monetization basis. Apple didn't have a gun to their head when they voluntarily accepted and signed Qualcomm's patent agreement. Now they've decided it's not OK. 

    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. 
    Apple, of course, didn't literally have a gun to its head when it agreed to Qualcomm's terms. But the allegation made by Apple, and supported by the findings of various regulatory bodies, effectively is that Qualcomm did hold a (figurative) gun to Apple's head. If most of the allegations made by Apple and various regulatory bodies are true, then there should be little doubt that Qualcomm acted improperly and likely illegally (the latter depending, of course, on various jurisdiction's laws).

    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. 
    I don't see how it would illegally violate FRAND. Wouldn't you have to start with FRAND laws? There aren't any. I think perhaps you really mean antitrust violations.
    I didn't say it would illegally violate FRAND, I said it would violate FRAND. Violating FRAND (i.e. failing to offer SEP licenses on FRAND terms) would not in itself be illegal in the sense that it was a violation of law. What I referenced as (if the allegations are true) likely being illegal relates, yes, to monopolistic practices. That's something in addition to the alleged FRAND violations, though there's considerable overlap between those possibilities when it comes to what Qualcomm is accused of doing.

    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.
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