Qualcomm sues Apple in Germany as quarterly profits suffer steep decline

Posted:
in General Discussion edited July 2017
Qualcomm on Wednesday escalated its patent infringement fight against Apple with the filing of two separate German cases in Mannheim and Munich, where it seeks to block the import and sale of all iPhones.


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


According to a report from dpa, Qualcomm is leveraging two patents, one for each venue, in its new action against Apple.

The intellectual property at play covers battery efficiency technology and originates from the same batch of six patents leveraged against Apple in Qualcomm's U.S. International Trade Commission complaint, reports FOSS Patents. Specifically, the chipmaker is claiming infringement of U.S. Patent No. 8,698,558 for a "Low-voltage power-efficient envelope tracker" and No. 9,608,675 for a "Power tracker for multiple transmit signals sent simultaneously."

Unlike the ITC complaint, which targets iPhones that integrate wireless modems manufactured by Intel, the pair of German lawsuits seek an end to imports of all iPhone models. All current iPhone models sold in Europe rely on Intel components.

Apple began using Intel modems with iPhone 7, with the chipmaker winning about 30 percent of all orders for the handset. More recently, rumors suggest Apple will further diversify its supply chain and incorporate Intel chips in 50 percent of all iPhones made in 2017.

Interestingly, Qualcomm last week filed a motion in San Diego requesting that Apple not sue or initiate "additional duplicative" actions against in foreign jurisdictions while the U.S. actions are being decided, FOSS Patents notes. The filing, and Qualcomm's Wednesday complaints in Germany, suggest the company views general lawsuits and patent infringement cases differently.

Speaking at a technology conference earlier this week, Qualcomm CEO Steve Mollenkopf said the company's fight with Apple is about intellectual property licensing and contractual agreements, adding that he expects the battle to end in an out of court settlement.

In relation to the ongoing legal kerfuffle, Qualcomm today announced a 40 percent drop in profits for its third fiscal quarter of 2017 as the company failed to garner revenue generated by patent royalties from Apple, reports The Wall Street Journal. The firm's patent licensing division took a huge hit, with revenue falling to $1.17 billion, down 42 percent year-over-year.

Qualcomm earned $865 million in profits on revenue of $5.37 billion, also down 11 percent from the same period last year.

Qualcomm's legal troubles are only intensifying. On Tuesday, Apple manufacturers Foxconn, Compal, Wistron and Pegatron filed an antitrust suit against the chipmaker claiming violation of two sections of the Sherman Act. The filing, backed by Apple, is a counterclaim to a lawsuit Qualcomm lodged in May seeking to force Apple contract manufacturers to maintain royalty payments during the legal dispute. The suppliers began to underpay or withhold royalty payments in the first quarter.

Comments

  • Reply 1 of 18
    It’s amusing watching the enormous weight of Apple and it’s ancillaries coming down upon Qualcomm. Especially after they’ve lost virtually every legal dispute of note already. 
    magman1979watto_cobrajony0
  • Reply 2 of 18
    tommikeletommikele Posts: 254member
    I sure wish I had shorted Qualcomm when this shtstorm started.
  • Reply 3 of 18
    kevin keekevin kee Posts: 946member
    It doesn't look good for Qualcomm.
  • Reply 4 of 18
    lkrupplkrupp Posts: 6,607member
    For all the talk about how small Apple’s market share is vs Android the shear power of Apple’s financial muscle and influence can literally shake the foundations of otherwise very large companies. Possibly only Walmart and Amazon can wield similar power in their markets. If Qualcomm thinks they can force Apple to the negotiating table with these lawsuits they should think again.
    edited July 2017 larryamagman1979pscooter63watto_cobra[Deleted User]jony0
  • Reply 5 of 18
    The Qualcomm board of directors should look out, with profit and revenue drops like that they're painting a target upon their own heads.
    magman1979pscooter63[Deleted User]watto_cobrajony0
  • Reply 6 of 18
    macseekermacseeker Posts: 402member
    This might sound like a stupid question but hey, what the heck.

    qualcomm sells the radio chips.  A Apple supplier buys the chips with the associated licenses with them to be incorporated in Apple devices.  Apple is just a customer to the supplier.  The Apple supplier bought the chips legally from qualcomm.  If qualcomm had any problems, they wouldn't have sold the chips to the Apple supplier in the first place.  Why should Apple be sued by qualcomm?

    I intentionally put the "Q" as "q" for qualcomm as they are acting like babies.
    watto_cobra
  • Reply 7 of 18
    Rayz2016Rayz2016 Posts: 4,555member
    macseeker said:
    This might sound like a stupid question but hey, what the heck.

    qualcomm sells the radio chips.  A Apple supplier buys the chips with the associated licenses with them to be incorporated in Apple devices.  Apple is just a customer to the supplier.  The Apple supplier bought the chips legally from qualcomm.  If qualcomm had any problems, they wouldn't have sold the chips to the Apple supplier in the first place.  Why should Apple be sued by qualcomm?

    I intentionally put the "Q" as "q" for qualcomm as they are acting like babies.
    I'd try and answer your question, but to be honest, I'm still struggling with how Qualcomm can charge both Apple and its suppliers for the same patents. 
    pscooter63watto_cobrajmey267
  • Reply 8 of 18
    Rayz2016Rayz2016 Posts: 4,555member
    lkrupp said:
    For all the talk about how small Apple’s market share is vs Android the shear power of Apple’s financial muscle and influence can literally shake the foundations of otherwise very large companies. Possibly only Walmart and Amazon can wield similar power in their markets. If Qualcomm thinks they can force Apple to the negotiating table with these lawsuits they should think again.
    "If you're holding a gorilla by the gonads then you'd best not fall asleep."

    radarthekatwatto_cobrajony0
  • Reply 9 of 18
    JinTechJinTech Posts: 323member
    lkrupp said:
    For all the talk about how small Apple’s market share is vs Android the shear power of Apple’s financial muscle and influence can literally shake the foundations of otherwise very large companies. Possibly only Walmart and Amazon can wield similar power in their markets. If Qualcomm thinks they can force Apple to the negotiating table with these lawsuits they should think again.
    And in all seriousness we can thank Tim Cook for this. Prior to being the CEO of Apple he was in charge of operations and managing the supply chain. I'd say if it weren't for Tim, Apple would be in a pretty tough spot. Jobs was the visionary but Cook made sure all the checks and balances were in place behind the scenes. 
    propodwatto_cobrajony0
  • Reply 10 of 18
    Looking at how this is going down, is Qualcomm's CEO's statement that these things will get settled out of court be at the same level of stupidity of the Blackberry CEOs saying "it will be fine" when the iPhone launched?
    edited July 2017 watto_cobra
  • Reply 11 of 18
    Rayz2016Rayz2016 Posts: 4,555member
    Looking at how this is going down, is Qualcomm's CEO's statement that these things will get settled out of court be at the same level of stupidity of the Blackberry CEOs saying "it will be fine" when the iPhone launched?
    It's a bit different. Qualcomm's CEO knows that the company will be runnng on fumes by the time it reaches court, and then will be bankrupt when he loses. What he needs is a quick resolution. What he's saying is that he's ready to talk. 
    watto_cobra
  • Reply 12 of 18
    foggyhillfoggyhill Posts: 4,767member
    While Apple is small by market share, it's massive profit haul across many different industry, Tablets, Laptops, phones, wearables, etc.

    Means they got a much much larger sway than anyone else, even Samsung.

    Pissing off Apple as a supplier is probably the dumbest thing you can ever do.

    Qualcom has in fact pissed off all its biggest clients and now that Intel is gearing up its modem production, they lost leverage on someone with a very big stick.
    jony0
  • Reply 13 of 18
    maestro64maestro64 Posts: 4,414member
    Wishful thinking on Qcom part trying to sue Apple on power management, Apple has been doing power management since the rarity 90's with laptops they could easily show lots of prior art work on that topic.
  • Reply 14 of 18
    croprcropr Posts: 882member
    macseeker said:
    This might sound like a stupid question but hey, what the heck.

    qualcomm sells the radio chips.  A Apple supplier buys the chips with the associated licenses with them to be incorporated in Apple devices.  Apple is just a customer to the supplier.  The Apple supplier bought the chips legally from qualcomm.  If qualcomm had any problems, they wouldn't have sold the chips to the Apple supplier in the first place.  Why should Apple be sued by qualcomm?

    I intentionally put the "Q" as "q" for qualcomm as they are acting like babies.
    Qualcomm does not sell physical goods.  It sells a license on a chip design. The Apple supplier does not buy the chips, but produces the chips.  Qualcomm can only stop the supplier to produce the chips by a court order.
     
    The supplier must buy for every chip produce a license fee, that is calculated of the value of the device (read Apple iPhone) where the chip is used.  Up to now the supplier transparently invoiced the paid license to Apple.  Apple recently has instructed the supplier to no longer pay the license.

    So Apple is directly involved in 3 ways: the value of the iPhone, the invoice that is transparently sent to Apple and the initiative of Apple to instruct its suppliers to cease payments.  So  it seems logical that Qualcomm sues Apple. 

    Whether this is justified or not, is of course another matter
    edited July 2017
  • Reply 15 of 18
    jmey267jmey267 Posts: 46member
    How many government entities are going after Qualcomm? I know the U.S. is but who else is? Just curious
    edited July 2017
  • Reply 16 of 18
    gatorguygatorguy Posts: 19,805member
    jmey267 said:
    How many government entities are going after Qualcomm? I know the U.S. is but who else is? Just curious
    No one else at this point AFAIK. Both Korea and China already dealt with them, fining Qualcomm and requiring some licensing changes. But the issue most complained about here, basing royalties on the cost of the device rather than a component, passed muster with both countries so don't expect that to change very soon unless the US case(s) forces it. 
    jony0
  • Reply 17 of 18
    carnegiecarnegie Posts: 576member
    jmey267 said:
    How many government entities are going after Qualcomm? I know the U.S. is but who else is? Just curious
    Government regulatory bodies are at various stages of investigations or actions against Qualcomm:


    (1) Japan's Fair Trade Commission made findings against Qualcomm in 2009. Qualcomm has not as-yet accepted those findings and (in effect) the appeals process is ongoing.

    (2) Korea's Fair Trade Commission made findings against Qualcomm in 2010. Qualcomm has not as-yet accepted those findings and the appeals process is ongoing. Korea's Fair Trade Commission also made findings against Qualcomm in 2015. Qualcomm has not as-yet accepted those findings and the appeals process is ongoing.

    (3) The European Commission made preliminary findings, in two separate investigations, against Qualcomm in 2015. Those investigations are ongoing.

    (4) China’s National Development and Reform Commission made findings against Qualcomm in 2015. Qualcomm has accepted those findings and agreed to pay a fine and change its practices in China. 

    (5) Taiwan's Fair Trade Commission has been investigating Qualcomm since 2015. That investigation is ongoing.

    (6) The United States' Fair Trade Commission has made findings against Qualcomm. Qualcomm has not as-yet accepted those findings and litigation in the matter is ongoing.



     
    jmey267avon b7jony0
  • Reply 18 of 18
    gatorguygatorguy Posts: 19,805member
    carnegie said:
    jmey267 said:
    How many government entities are going after Qualcomm? I know the U.S. is but who else is? Just curious
    Government regulatory bodies are at various stages of investigations or actions against Qualcomm:


    (1) Japan's Fair Trade Commission made findings against Qualcomm in 2009. Qualcomm has not as-yet accepted those findings and (in effect) the appeals process is ongoing.

    (2) Korea's Fair Trade Commission made findings against Qualcomm in 2010. Qualcomm has not as-yet accepted those findings and the appeals process is ongoing. Korea's Fair Trade Commission also made findings against Qualcomm in 2015. Qualcomm has not as-yet accepted those findings and the appeals process is ongoing.

    (3) The European Commission made preliminary findings, in two separate investigations, against Qualcomm in 2015. Those investigations are ongoing.

    (4) China’s National Development and Reform Commission made findings against Qualcomm in 2015. Qualcomm has accepted those findings and agreed to pay a fine and change its practices in China. 

    (5) Taiwan's Fair Trade Commission has been investigating Qualcomm since 2015. That investigation is ongoing.

    (6) The United States' Fair Trade Commission has made findings against Qualcomm. Qualcomm has not as-yet accepted those findings and litigation in the matter is ongoing.



     
    Ah, I forgot about Taiwan. Thanks for the reminder. As for the EU is that still an active investigation? Otherwise the others have made their decisions as you noted, tho Qualcomm is within their rights to appeal. 
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