Apple claims recent Supreme Court ruling makes Qualcomm iPhone IP agreement invalid

Posted:
in iPhone
Apple has escalated its legal attack on Qualcomm, declaring the iPhone broadband chip license agreement is invalid, and the manufacturer is illegally double-dipping in its demand for a royalty payment for chip technology in conjunction with charging for the chips.




First reported by Reuters, Apple is utilizing a recent U.S. Supreme Court decision that put tighter restrictions on manufacturers to control how products are used or resold. Apple argues that Qualcomm is entitled to only "one reward" rather than reaping profit on the sale of the broadband, and take a percentage of the iPhone selling price from the intellectual property license.

The formal buyers of the broadband chips are Apple's manufacturers -- which then pass the costs on to Apple. As part of the filing, Apple has asked the court to stop Qualcomm's lawsuits against Foxconn, and three other manufacturers.

The lawsuit that started the battle was filed in January, with Apple accusing Qualcomm of unfair licensing terms. Apple claims that Qualcomm withheld nearly $1 billion in rebates in retaliation for participating in a South Korean antitrust investigation.

Apple alleges Qualcomm abuses its "monopoly power" of the mobile wireless chip market to skirt fair, reasonable and nondiscriminatory (FRAND) patent commitments to charge customers exorbitant royalty rates. Qualcomm also restricts sales of chips to buyers who have agreed to license its SEPs, a practice Apple refers to as "double-dipping" -- the point hammered home in the court filing on Monday.

Those accusations mirror certain claims addressed in a U.S. Federal Trade Commission antitrust lawsuit also lodged in January.

More recently, In April, Qualcomm revealed contract manufacturers using Qualcomm technologies to Apple product components were withholding royalty payments at Apple's behest.

Qualcomm denies all of Apple's assertions and claims that Apple is interfering with its contract manufacturers. Qualcomm initially outlined its case in a countersuit also in April.

In its myriad counter-complaints, Qualcomm has declared that Apple is in breach of contract. Qualcomm asserts that Apple has not suffered tangible injury, antitrust or otherwise, from Qualcomm's business practices.
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Comments

  • Reply 1 of 21
    No comment
  • Reply 2 of 21
    steven n.steven n. Posts: 1,061member
    "Why Can't we all just get along?"


  • Reply 3 of 21
    When are these companies going to learn, play nice with Apple or whatever part you are providing to them they will either empower another supplier to beat you, or build it in house. 
  • Reply 4 of 21
    rob53rob53 Posts: 1,918member
    It's about time the judicial system actually ruled in favor of the consumer in the Lexmark case. Consumers are the ones paying the higher costs of electronics when a company like Qualcomm abuses its power, effectively double charging for things. I don't usually quote Foss Patents, http://www.fosspatents.com/2017/06/apples-amended-san-diego-complaint.html, but he has a very comprehensive discussion on what's going on and what the final impact might be. 
  • Reply 5 of 21
    podlasekpodlasek Posts: 28member
    Let's see if I get this.

    Qualcomm charges for the chip, then charges a fee to actually USE the chip?

    Is that correct?
    macseekerlongpathdysamoriajbdragon
  • Reply 6 of 21
    tallest skiltallest skil Posts: 43,399member
    podlasek said:
    Let's see if I get this. Qualcomm charges for the chip, then charges a fee to actually USE the chip? Is that correct?
    If they can legally redefine a piece of hardware as a "service", I can see them easily getting away with this.
  • Reply 7 of 21
    rob53rob53 Posts: 1,918member
    podlasek said:
    Let's see if I get this.

    Qualcomm charges for the chip, then charges a fee to actually USE the chip?

    Is that correct?
    That's what I believe Apple is claiming. Qualcomm charges Apple's CMs (contract manufacturers) licensing fees then also charges Apple for the same thing. They might even charge Apple for Intel modems as well. Of course, the CMs pass along the charges to Apple so Apple would be paying twice for the same item. This is what the Supreme Court ruled against Lexmark, http://www.fosspatents.com/2017/05/supreme-court-rules-against-lexmark-on.html. "Lexmark tried to leverage its patents on toner cartridges against various so-called remanufacturers (companies that buy up empty toner cartridges, refill them, and then sell the refilled cartridges)." (from Foss Patents) I result of that ruling is that once a product is sold, the manufacturer doesn't have an rights when that product is sold again. In Apple's case, Apple is paying the CMs who have already "bought" the components and are re-selling them to Apple. Only the CMs should have to pay any fees, not Apple (as a second charge). 
    radarthekatdysamoriajbdragon
  • Reply 8 of 21
    Mike WuertheleMike Wuerthele Posts: 3,344administrator
    podlasek said:
    Let's see if I get this.

    Qualcomm charges for the chip, then charges a fee to actually USE the chip?

    Is that correct?
    Yeah, that's essentially it. Qualcomm does some other things like "Buy the snapdragon chip, so you can get the modem you want" and other things, but at the core of this is exactly what you're saying.
    dysamoria
  • Reply 9 of 21
    dysamoriadysamoria Posts: 1,818member
    podlasek said:
    Let's see if I get this. Qualcomm charges for the chip, then charges a fee to actually USE the chip? Is that correct?
    If they can legally redefine a piece of hardware as a "service", I can see them easily getting away with this.
    This must never be allowed to happen. The software licensing model has already done enough damage (consumer abuse) to other industries.
    tallest skil
  • Reply 10 of 21
    thttht Posts: 2,867member
    I'm surprised Apple hasn't mentioned the Apple v Samsung SCOTUS case, where the SCOTUS decided (by something like 7-2) that licensing fees for Apple's design patent can't be applied to the entire cost of the device, only to the component in question. Well, it seems QCOM's licensing fee structure of it being a percentage of the cost of the entire device would most certainly apply if I understand what was argued in this SCOTUS case right.
    jbdragonstantheman
  • Reply 11 of 21
    gatorguygatorguy Posts: 19,295member
    tht said:
    I'm surprised Apple hasn't mentioned the Apple v Samsung SCOTUS case, where the SCOTUS decided (by something like 7-2) that licensing fees for Apple's design patent can't be applied to the entire cost of the device, only to the component in question. Well, it seems QCOM's licensing fee structure of it being a percentage of the cost of the entire device would most certainly apply if I understand what was argued in this SCOTUS case right.
    Those are two different thing. Qualcomm isn't asserting DESIGN PATENT claims. The royalties are for UTILITY patents, and licensed under the standards that do expressly permit this type of royalty basis. So that's why Apple didn't mention it. It's not pertinent.

    That doesn't mean recent legal rulings will allow that to go on, but it was never deemed illegal when the basis was established. It's relatively common as a matter of fact. Of course Qualcomm is quite aggressive in their demands and I don't think there's any way they'll be allowed to continue as is. 
    edited June 2017
  • Reply 12 of 21
    bellsbells Posts: 82member
    gatorguy said:
    tht said:
    I'm surprised Apple hasn't mentioned the Apple v Samsung SCOTUS case, where the SCOTUS decided (by something like 7-2) that licensing fees for Apple's design patent can't be applied to the entire cost of the device, only to the component in question. Well, it seems QCOM's licensing fee structure of it being a percentage of the cost of the entire device would most certainly apply if I understand what was argued in this SCOTUS case right.
    Those are two different thing. Qualcomm isn't asserting DESIGN PATENT claims. The royalties are for UTILITY patents, and licensed under the standards that do expressly permit this type of royalty basis. So that's why Apple didn't mention it. It's not pertinent.

    That doesn't mean recent legal rulings will allow that to go on, but it was never deemed illegal when the basis was established. It's relatively common as a matter of fact. Of course Qualcomm is quite aggressive in their demands and I don't think there's any way they'll be allowed to continue as is. 
    It is undecided whether FRAND licensing allows this type of royalty basis. Patent holders like Qualcomm are fighting for that. However Motorola got smacked down when it argued for that against Microsoft. 


  • Reply 13 of 21
    gatorguygatorguy Posts: 19,295member
    bells said:
    gatorguy said:
    tht said:
    I'm surprised Apple hasn't mentioned the Apple v Samsung SCOTUS case, where the SCOTUS decided (by something like 7-2) that licensing fees for Apple's design patent can't be applied to the entire cost of the device, only to the component in question. Well, it seems QCOM's licensing fee structure of it being a percentage of the cost of the entire device would most certainly apply if I understand what was argued in this SCOTUS case right.
    Those are two different thing. Qualcomm isn't asserting DESIGN PATENT claims. The royalties are for UTILITY patents, and licensed under the standards that do expressly permit this type of royalty basis. So that's why Apple didn't mention it. It's not pertinent.

    That doesn't mean recent legal rulings will allow that to go on, but it was never deemed illegal when the basis was established. It's relatively common as a matter of fact. Of course Qualcomm is quite aggressive in their demands and I don't think there's any way they'll be allowed to continue as is. 
    It is undecided whether FRAND licensing allows this type of royalty basis. Patent holders like Qualcomm are fighting for that. However Motorola got smacked down when it argued for that against Microsoft. 


    Then we agree that's it's not an illegal royalty basis.
  • Reply 14 of 21
    tmaytmay Posts: 3,170member
    gatorguy said:
    bells said:
    gatorguy said:
    tht said:
    I'm surprised Apple hasn't mentioned the Apple v Samsung SCOTUS case, where the SCOTUS decided (by something like 7-2) that licensing fees for Apple's design patent can't be applied to the entire cost of the device, only to the component in question. Well, it seems QCOM's licensing fee structure of it being a percentage of the cost of the entire device would most certainly apply if I understand what was argued in this SCOTUS case right.
    Those are two different thing. Qualcomm isn't asserting DESIGN PATENT claims. The royalties are for UTILITY patents, and licensed under the standards that do expressly permit this type of royalty basis. So that's why Apple didn't mention it. It's not pertinent.

    That doesn't mean recent legal rulings will allow that to go on, but it was never deemed illegal when the basis was established. It's relatively common as a matter of fact. Of course Qualcomm is quite aggressive in their demands and I don't think there's any way they'll be allowed to continue as is. 
    It is undecided whether FRAND licensing allows this type of royalty basis. Patent holders like Qualcomm are fighting for that. However Motorola got smacked down when it argued for that against Microsoft. 


    Then we agree that's it's not an illegal royalty basis.
    It may not be illegal, but it certainly is challengeable with a probability of at least some success.
  • Reply 15 of 21
    sflocalsflocal Posts: 4,249member
    dysamoria said:
    podlasek said:
    Let's see if I get this. Qualcomm charges for the chip, then charges a fee to actually USE the chip? Is that correct?
    If they can legally redefine a piece of hardware as a "service", I can see them easily getting away with this.
    This must never be allowed to happen. The software licensing model has already done enough damage (consumer abuse) to other industries.
    Two totally different things.  The software licensing model (like Office365 and Adobe Creative Suite) are always updated and kept current.

    Buying a chip to install in a piece of hardware is a different thing entirely.  It's sold and used and that's it.  There is no "service' after the sell.  Unless Qualcomm has some arrangement to keep firmware current in sold chips, that Qualcomm chip is a widget.  Done.
  • Reply 16 of 21
    gatorguygatorguy Posts: 19,295member
    tmay said:
    gatorguy said:
    bells said:
    gatorguy said:
    tht said:
    I'm surprised Apple hasn't mentioned the Apple v Samsung SCOTUS case, where the SCOTUS decided (by something like 7-2) that licensing fees for Apple's design patent can't be applied to the entire cost of the device, only to the component in question. Well, it seems QCOM's licensing fee structure of it being a percentage of the cost of the entire device would most certainly apply if I understand what was argued in this SCOTUS case right.
    Those are two different thing. Qualcomm isn't asserting DESIGN PATENT claims. The royalties are for UTILITY patents, and licensed under the standards that do expressly permit this type of royalty basis. So that's why Apple didn't mention it. It's not pertinent.

    That doesn't mean recent legal rulings will allow that to go on, but it was never deemed illegal when the basis was established. It's relatively common as a matter of fact. Of course Qualcomm is quite aggressive in their demands and I don't think there's any way they'll be allowed to continue as is. 
    It is undecided whether FRAND licensing allows this type of royalty basis. Patent holders like Qualcomm are fighting for that. However Motorola got smacked down when it argued for that against Microsoft. 


    Then we agree that's it's not an illegal royalty basis.
    It may not be illegal, but it certainly is challengeable with a probability of at least some success.
    ..and you agree with me too. I'm on a roll. :)
    edited June 2017
  • Reply 17 of 21
    gatorguygatorguy Posts: 19,295member
    sflocal said:
    dysamoria said:
    podlasek said:
    Let's see if I get this. Qualcomm charges for the chip, then charges a fee to actually USE the chip? Is that correct?
    If they can legally redefine a piece of hardware as a "service", I can see them easily getting away with this.
    This must never be allowed to happen. The software licensing model has already done enough damage (consumer abuse) to other industries.
    Two totally different things.  The software licensing model (like Office365 and Adobe Creative Suite) are always updated and kept current.

    Buying a chip to install in a piece of hardware is a different thing entirely.  It's sold and used and that's it.  There is no "service' after the sell.  Unless Qualcomm has some arrangement to keep firmware current in sold chips, that Qualcomm chip is a widget.  Done.
    Don't they have to do so when new versions of iOS/Android get released? I think so. 
  • Reply 18 of 21
    shaminoshamino Posts: 399member
    gatorguy said:
    sflocal said:
    Buying a chip to install in a piece of hardware is a different thing entirely.  It's sold and used and that's it.  There is no "service' after the sell.  Unless Qualcomm has some arrangement to keep firmware current in sold chips, that Qualcomm chip is a widget.  Done.
    Don't they have to do so when new versions of iOS/Android get released? I think so. 

    Not really.  Whatever firmware/microcode that may be embedded in the chip drives the radio circuits (3G, LTE, etc.) and has nothing to do with the functionality of iOS, which is all application-level features.

    It's like claiming that you need to load new firmware into your Mac's Wi-Fi chip whenever macOS gets updated.  Although it may be theoretically possible to update this firmware, I've never heard of it ever happening.  The device drivers that go between the chip and the OS frequently need to be updated, but never the code running inside the chip itself.
  • Reply 19 of 21
    gatorguygatorguy Posts: 19,295member
    shamino said:
    gatorguy said:
    sflocal said:
    Buying a chip to install in a piece of hardware is a different thing entirely.  It's sold and used and that's it.  There is no "service' after the sell.  Unless Qualcomm has some arrangement to keep firmware current in sold chips, that Qualcomm chip is a widget.  Done.
    Don't they have to do so when new versions of iOS/Android get released? I think so. 

    Not really.  Whatever firmware/microcode that may be embedded in the chip drives the radio circuits (3G, LTE, etc.) and has nothing to do with the functionality of iOS, which is all application-level features.

    It's like claiming that you need to load new firmware into your Mac's Wi-Fi chip whenever macOS gets updated.  Although it may be theoretically possible to update this firmware, I've never heard of it ever happening.  The device drivers that go between the chip and the OS frequently need to be updated, but never the code running inside the chip itself.
    Ah, device drivers and not firmware. Gotcha, much appreciated. So in a nutshell Qualcomm still has work to maintain even after the chip is shipped, which is kinda the point I was attempting to make. 

    EDIT: So Qualcomm does apparently do a baseband firmware update as needed to be bundled in with a new iOS version update. 
    edited June 2017
  • Reply 20 of 21
    jony0jony0 Posts: 267member
    It would seem that Qualcomm is quite rapacious !
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