Apple hatched years-long plan to reduce royalty payments to Qualcomm, documents reveal

Posted:
in iPhone edited April 19
Though in its court battles Apple argued that Qualcomm patents weren't any more valuable than those of companies like Ericsson and Huawei, in private the company praised them -- and was aiming to sue Qualcomm as far back as 2014, according to newly-exposed documents.

Qualcomm HQ


"Engineering wise, they have been the best," said Apple's senior VP of hardware, Johny Srouji, in a March 2015 email quoted by the Washington Post. Another document shown in court, a 2009 internal Apple memo from an accountant, stated that Qualcomm is "widely considered the owner of the strongest patent portfolio for essential and relevant patents for wireless standards."

Apple decided it wouldn't sue Qualcomm until after the end of 2016, when Qualcomm would've paid out billions of dollars under their exclusive partnership, the Post continued. A third Apple document from June 2016 was labeled "Qualcomm Royalty Reduction," with one section explicitly stating "Goal: Reduce Apple's net royalty to Qualcomm."

The strategy was to "hurt Qualcomm financially" and "put Qualcomm's licensing model at risk," the document said. Apple didn't launch its first lawsuit against Qualcomm until January 2017, at which point it argued that Qualcomm not only owed nearly $1 billion in royalty rebates but maintained abusive practices forcing chip buyers to sign patent license agreements.

Apple lawyer Ruffin Cordell made the Ericsson and Huawei references on Tuesday, during the first and only day of the Apple v. Qualcomm trial. Cordell's argument was that a group of patents twice the size of Qualcomm's cost Apple a fraction of what Qualcomm was asking. Qualcomm lawyers, however, claimed that internal Apple documents revealed the iPhone maker intentionally licensed other, less expensive patents to make Qualcomm look overbearing.

The idea was to "selectively filter" a group of patent licenses that would serve as "evidence as a comparable in disputes with others," according to the Apple material.

The trial came to an abrupt end after opening statements, at which time the two companies announced a settlement of all ongoing litigation. Apple is paying an undisclosed amount to Qualcomm and entering into a new licensing agreement -- UBS analysts speculated that former may be worth $6 billion, and the latter almost $9 per iPhone.

The Post report may suggest that Apple settled not just to put 5G modems in 2020 iPhones, but because it couldn't succeed with clear evidence it wanted to reduce royalties.
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Comments

  • Reply 1 of 55
    mac_dogmac_dog Posts: 676member
    What do you call a lawyer at the bottom of the sea?
    A good start. 
    dt17fastbaggerrobbyxjdwjbdragon
  • Reply 2 of 55
    gatorguygatorguy Posts: 20,453member
    That's certainly another spin on this than the poor, aggrieved, over-paying Apple vs the evil, greedy, law-breaking Qualcomm it's usually been portrayed as here. If accurate it leaves a different taste. 
    dysamoriaavon b7mike54LatkolarryjwSoliacejax805pratikindiapentaechemengin
  • Reply 3 of 55
    MplsPMplsP Posts: 1,296member
    gatorguy said:
    That's certainly another spin on this than the poor, aggrieved, over-paying Apple vs the evil, greedy, law-breaking Qualcomm it's usually been portrayed as here. If accurate it leaves a different taste. 
    Sort of - My take on it was that QC had abusive licensing practices and Apple was trapped so they developed a long term plan to get out of the trap.

    There's a lot in this story that fits with everything else - QC has good engineers and makes good chips and they have one of the largest (if not the largest) portfolio of patents, many of which are required for mobile phones. They used their position to strong-arm companies into paying high royalties. If you're QC, you say that's the cost of using our tech. If you're Apple, Samsung, or some other company, they're excessive. 

    From what I've read, many of the patents were or should have been covered under FRAND, but 'should have been covered' is far different from the company actually abiding by it in good faith, and the 'Reasonable' portion of FRAND leaves a lot of wiggle room. I'm sure QC would say $100 per device is very reasonable.
    thtdavendysamoriaentropysn2itivguySolijas99StrangeDayschasmrcfa
  • Reply 4 of 55
    Apple's view that the royalties were too high, but a willingness to work with Qualcomm's portfolio isn't unsavoury, rather it's pretty much what various government's bodies have been finding with regard to Qiualcomm's practices: They charge too much for standard essential patents, and their all or nothing model carries the cruft of garbage patents in exchange for the far fewer essential ones that are actually needed.
    thtradarthekatdavententhousandthingsn2itivguycharlesgresStrangeDays
  • Reply 5 of 55
    wood1208wood1208 Posts: 1,945member
    I need closure on this. I know Qualcomm caved-in but how much.
  • Reply 6 of 55
    Johan42Johan42 Posts: 163member
    Qualcomm can charge whatever they want for their products. If Apple does not like it they can get modems from someone else. But they won’t do that...being the most hypocritical company and all, that complains of high prices for modems while overcharging their customers.
    mike54Latkoacejax805fastbaggerwilliamlondonkestralpentaechemengin
  • Reply 7 of 55
    Johan42 said:
    Qualcomm can charge whatever they want for their products. If Apple does not like it they can get modems from someone else. But they won’t do that...being the most hypocritical company and all, that complains of high prices for modems while overcharging their customers.
    Educate yourself on FRAND then try again with the trolling comments. 
    revenantericthehalfbeemwhiteradarthekatpujones1tenthousandthingslarryjwn2itivguyleavingthebiggSoli
  • Reply 8 of 55
    Johan42 said:
    Qualcomm can charge whatever they want for their products. If Apple does not like it they can get modems from someone else. But they won’t do that...being the most hypocritical company and all, that complains of high prices for modems while overcharging their customers.
    Sorry that the price is too high for you, maybe you should pick up a Samsung, oops never mind. 
    edited April 20 StrangeDayswilliamlondon
  • Reply 9 of 55
    revenantrevenant Posts: 491member
    Johan42 said:
    Qualcomm can charge whatever they want for their products. If Apple does not like it they can get modems from someone else. But they won’t do that...being the most hypocritical company and all, that complains of high prices for modems while overcharging their customers.
    apple can charge whatever they want for their products. if you do not like it, you can get products from someone else. but will you? being a hypocritical person that defends one company by saying they can charge whatever they want but condemn another for the same thing you say they are allowed to do is silly and shows a glaring hole in your 'logic'.


    dysamoriaradarthekatpujones1n2itivguycharlesgresleavingthebiggjas99StrangeDaysDanManTXwilliamlondon
  • Reply 10 of 55
    gatorguy said:
    That's certainly another spin on this than the poor, aggrieved, over-paying Apple vs the evil, greedy, law-breaking Qualcomm it's usually been portrayed as here. If accurate it leaves a different taste. 

    You forget Qualcomm has lost 5 major antitrust cases around the world costing them billions in fines. The FTC case is currently awaiting a decision.

    So yes, Qualcomm has been found guilty of being greedy and breaking the law.


    Edit: Just read the source article. So a reporter at the trial is talking about things they heard/saw during the beginning of the trial (during opening arguments for both sides).

    Curious why they decided to focus on items that make Apple potentially look bad and Qualcomm good. Opening arguments typically contain damning things about both sides. Yet we only really heard from one side. 

    edited April 20 luxetlibertasradarthekatpujones1n2itivguyleavingthebiggStrangeDaysDanManTXpscooter63
  • Reply 11 of 55
    dysamoriadysamoria Posts: 2,083member
    mac_dog said:
    What do you call a lawyer at the bottom of the sea?
    A good start. 
    Because all lawyers are evil... sigh. Grow up. There are plenty of people who become lawyers to do good things, not to be scum. Corporations and others who set out to be abusive and greedy look for the kind of lawyer that will be fine with that kind of behavior. Put the blame where it belongs: the scum that makes a market for abusive scummy lawyers to advance.
    n2itivguywilliamlondonchemengin
  • Reply 12 of 55
    revenant said:
    Johan42 said:
    Qualcomm can charge whatever they want for their products. If Apple does not like it they can get modems from someone else. But they won’t do that...being the most hypocritical company and all, that complains of high prices for modems while overcharging their customers.
    apple can charge whatever they want for their products. if you do not like it, you can get products from someone else. but will you? being a hypocritical person that defends one company by saying they can charge whatever they want but condemn another for the same thing you say they are allowed to do is silly and shows a glaring hole in your 'logic'.


    How is the other poster being illogical? They are just pointing out that Apple charges what the market can bear the same way that Qualcomm does.
    acejax805williamlondon
  • Reply 13 of 55
    avon b7avon b7 Posts: 3,664member
    gatorguy said:
    That's certainly another spin on this than the poor, aggrieved, over-paying Apple vs the evil, greedy, law-breaking Qualcomm it's usually been portrayed as here. If accurate it leaves a different taste. 

    You forget Qualcomm has lost 5 major antitrust cases around the world costing them billions in fines. The FTC case is currently awaiting a decision.

    So yes, Qualcomm has been found guilty of being greedy and breaking the law.


    Edit: Just read the source article. So a reporter at the trial is talking about things they heard/saw during the beginning of the trial (during opening arguments for both sides).

    Curious why they decided to focus on items that make Apple potentially look bad and Qualcomm good. Opening arguments typically contain damning things about both sides. Yet we only really heard from one side. 

    You could always forget 'why' they chose to focus on this or that and simply take on board the quoted material.

    In that context (information from the horse's mouth), we now, as Gatorguy points out, have a take that adds some more colour to the picture.

    That we didn't learn more is due to Apple stopping the case.
  • Reply 14 of 55
    mike54mike54 Posts: 320member
    Apple's plan went belly-up. I hope Apple pays up big to Qualcomm. Apple used it's own customers and played off Intel to get cheaper prices from Qualcomm. I expected nothing less from Tim Cook's Apple.
    Latkowilliamlondonchemengin
  • Reply 15 of 55
    LatkoLatko Posts: 355member
    Johan42 said:
    Qualcomm can charge whatever they want for their products. If Apple does not like it they can get modems from someone else. But they won’t do that...being the most hypocritical company and all, that complains of high prices for modems while overcharging their customers.
    Sorry that the price is too high for you, maybe you should pick up a Samsung, oops never mind. 
    You seem be the kind of guy that looks for a new woman if it’s your turn to do the dishes
    edited April 20 jcs2305acejax805chemengin
  • Reply 16 of 55
    revenant said:
    Johan42 said:
    Qualcomm can charge whatever they want for their products. If Apple does not like it they can get modems from someone else. But they won’t do that...being the most hypocritical company and all, that complains of high prices for modems while overcharging their customers.
    apple can charge whatever they want for their products. if you do not like it, you can get products from someone else. but will you? being a hypocritical person that defends one company by saying they can charge whatever they want but condemn another for the same thing you say they are allowed to do is silly and shows a glaring hole in your 'logic'.


    How is the other poster being illogical? They are just pointing out that Apple charges what the market can bear the same way that Qualcomm does.
    The other poster is not being illogical—they are being disingenuous by ignoring the patent abuses that set this whole thing off. Read up on FRAND. Simply put, Qualcomm cannot charge whatever they want. For their modems, yes. For their patents, no. They will lose the U.S. case just as they have lost the other cases around the world. 

    Apple settled this case because it would have been business malpractice not to do so after Intel could not meet their 5G modem deadlines. 

    With regard to this news, it all comes down to what is meant by “selectively filter” — here it just means Apple created a strategy to expose Qualcomm’s abuse of its patents by creating equivalent, comparable sets of patents from others.

    The Qualcomm opening statement desperately tries to spin this, but in the end Apple would have just explained it — it’s not criminal or underhanded, it’s just prudent — take measures to defend yourself and to expose the abuser.

    If your best opening statement is to spin your opponent’s choice of words, you have a weak case, especially when said opponent is focused on facts in their opening statement. 

    EDIT: To observe that my statement, “Qualcomm cannot charge whatever they want. For their modems, yes. For their patents, no.” may sum up the settlement itself — Apple agrees to a Qualcomm-friendly price for the modems, while Qualcomm gives Apple what it wants with regard to the patents.
    edited April 20 n2itivguyericthehalfbeeStrangeDayspscooter63
  • Reply 17 of 55
    revenant said:
    Johan42 said:
    Qualcomm can charge whatever they want for their products. If Apple does not like it they can get modems from someone else. But they won’t do that...being the most hypocritical company and all, that complains of high prices for modems while overcharging their customers.
    apple can charge whatever they want for their products. if you do not like it, you can get products from someone else. but will you? being a hypocritical person that defends one company by saying they can charge whatever they want but condemn another for the same thing you say they are allowed to do is silly and shows a glaring hole in your 'logic'.


    The biggest difference is Apple is not selling components they offered to be a part of a standard for a new technology used by everyone. Then use it to bang prevent other companies using other tech with an all or nothing model. 
    n2itivguytenthousandthingsericthehalfbeejas99StrangeDayspscooter63
  • Reply 18 of 55
    mike54 said:
    Apple's plan went belly-up. I hope Apple pays up big to Qualcomm. Apple used it's own customers and played off Intel to get cheaper prices from Qualcomm. I expected nothing less from Tim Cook's Apple.
    Your view is very distorted in that you’re blatantly ignoring FRAND and QC’s malpractice in its monopolistic practices were in violation of. The real travesty is how QC’s been able to do its dirty deeds for as long at it has without facing justice. 
    tenthousandthingsjas99StrangeDays
  • Reply 19 of 55
    How is the other poster being illogical? They are just pointing out that Apple charges what the market can bear the same way that Qualcomm does.
    You and I have a choice of smartphones, so we pay the price we are willing to pay..

    Qcom being the only supplier, Apple clearly is not in the same position..
    Solijas99
  • Reply 20 of 55
    Unfortunately apple shot itself in the foot here
    they were trying to bully a big company but it backfired on them
    It's time for Apple pay the piper
    williamlondonpratikindia
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