Apple $7B behind in royalty payments to Qualcomm
Apple is now $7 billion behind in patent royalty payments to Qualcomm after directing contract manufacturers to withhold further remittance on grounds that the chipmaker participates in unfair licensing practices, according to testimony presented in court Friday.
Apple's iPhone X used both Qualcomm and Intel modems.
Qualcomm commented on Apple's unpaid royalties in a court hearing in California, reports Reuters.
Apple does not directly license Qualcomm patents, though money from the tech giant does end up in the chipmaker's coffers through reimbursements made to partner manufacturers that do pay royalties.
The $7 billion figure, and a number of other major details surrounding the sprawling legal battle, are in dispute. Apple for its part argues Qualcomm's royalty rates are unfair and amount to price gouging and extortion.
Last year, Apple filed suit against Qualcomm, claiming the chipmaker participates in monopolistic practices and other nefarious business strategies including withholding nearly $1 billion in rebates as retribution for participating in a South Korean antitrust investigation. The initial case ultimately spawned some 100 separate suits and countersuits around the world.
As it applies to royalties, Apple alleges Qualcomm flouts FRAND (fair, reasonable and nondiscriminatory) patent commitments to charge customers, including suppliers, exorbitant rates on standard-essential patents. The chipmaker further restricts sales to buyers who agree to license its SEPs, a practice Apple refers to as "double-dipping."
When Apple halted royalty payments, so too did partner suppliers using Qualcomm IP.
During today's proceedings, Qualcomm also attempted to forward a motion to render moot Apple's patent validity challenges, reports Bloomberg. The company filed the motion earlier this month and presented its case in court on Friday.
At issue are nine Qualcomm patents "handpicked" by Apple to illustrate weak spots in the chipmaker's portfolio of mobile technology IP. Apple is attempting to invalidate the inventions that Qualcomm asserts is essential to current mobile standards. Qualcomm is attempting to avoid scrutiny of the patents by saying it has no plans to leverage them in infringement assertions against Apple and its contract manufacturers.
Apple in its own filing opposed the request, saying Qualcomm is attempting to deflect allegations of double-dipping. Specifically, Apple argues that Qualcomm should not be able to demand a license on patented technology if that same technology is built into its baseband chips sold to smartphone makers.
In addition to the California court action, Qualcomm lodged a complaint with the U.S. International Trade Commission that seeks to halt the import of iPhones powered by Intel modems.
For its part, Qualcomm on multiple occasions has said the legal battle comes down to favorable IP pricing, and that it expects the fight to end in a settlement.
Apple's iPhone X used both Qualcomm and Intel modems.Qualcomm commented on Apple's unpaid royalties in a court hearing in California, reports Reuters.
Apple does not directly license Qualcomm patents, though money from the tech giant does end up in the chipmaker's coffers through reimbursements made to partner manufacturers that do pay royalties.
The $7 billion figure, and a number of other major details surrounding the sprawling legal battle, are in dispute. Apple for its part argues Qualcomm's royalty rates are unfair and amount to price gouging and extortion.
Last year, Apple filed suit against Qualcomm, claiming the chipmaker participates in monopolistic practices and other nefarious business strategies including withholding nearly $1 billion in rebates as retribution for participating in a South Korean antitrust investigation. The initial case ultimately spawned some 100 separate suits and countersuits around the world.
As it applies to royalties, Apple alleges Qualcomm flouts FRAND (fair, reasonable and nondiscriminatory) patent commitments to charge customers, including suppliers, exorbitant rates on standard-essential patents. The chipmaker further restricts sales to buyers who agree to license its SEPs, a practice Apple refers to as "double-dipping."
When Apple halted royalty payments, so too did partner suppliers using Qualcomm IP.
During today's proceedings, Qualcomm also attempted to forward a motion to render moot Apple's patent validity challenges, reports Bloomberg. The company filed the motion earlier this month and presented its case in court on Friday.
At issue are nine Qualcomm patents "handpicked" by Apple to illustrate weak spots in the chipmaker's portfolio of mobile technology IP. Apple is attempting to invalidate the inventions that Qualcomm asserts is essential to current mobile standards. Qualcomm is attempting to avoid scrutiny of the patents by saying it has no plans to leverage them in infringement assertions against Apple and its contract manufacturers.
Apple in its own filing opposed the request, saying Qualcomm is attempting to deflect allegations of double-dipping. Specifically, Apple argues that Qualcomm should not be able to demand a license on patented technology if that same technology is built into its baseband chips sold to smartphone makers.
In addition to the California court action, Qualcomm lodged a complaint with the U.S. International Trade Commission that seeks to halt the import of iPhones powered by Intel modems.
For its part, Qualcomm on multiple occasions has said the legal battle comes down to favorable IP pricing, and that it expects the fight to end in a settlement.
Comments
I would expect Apple has the cash set aside as a risk management strategy just in case the court case is unsuccessful.
The U.S. patent system is the biggest culprit in my opinion. When a patent like “an apparatus being able to receive some type of information ...” is valid and can be used to extort all mobile device makers and thwart all inventors from making new inventions, something is really wrong.
"Specifically, Qualcomm said that it would offer a royalty rate for its patents on the 5G NR standard, up to and including release 15 of the 3GPP specifications, of 2.275% of the selling price of branded single-mode 5G handsets; and a royalty rate of 3.25% of the selling price of branded multi-mode (3G/4G/5G) handsets. And for manufacturers that want to license both Qualcomm’s “cellular standard essential patents” as well as its patents that are not essential to the standard, the company said it would charge a royalty rate of 4% of the selling price for branded single-mode handsets and 5% of the selling price for branded multi-mode handsets.
The company added that its rates were capped at $500 for the selling price of the phone."
That's still one heck of a lot of money considering how many iPhones are sold, so of course Apple will fight it. Whatever they can trim goes in the bank.
If that's not a clear case of patent exhaustion, I don't know what is. Samsung tried to do this years ago and lost in the courts. What I find surprising is that Apple didn't contest this from the get go.
the sad thing is consumers probably won’t see any direct benefit. If a company is paying $30 per phone and that gets cut to $5 or eliminated, are they going to drop the price from $599 to $574 or $569? Maybe, but my guess is most of them are going to pocket the extra.
Lesson?? Don’t frack the organizations that put food on your table!!!
Greedy asswipes charging for aloe saturated buttwipes when supplying sandpaper. :0.
QC has had a virtual monopoly on cellular modems for quite a while and has taken full advantage of their position. Intel is starting to come up, but the general agreement is that their chips are still not on par with QC’s. I suspect other companies have been similarly dissatisfied with QC’s licensing arrangements but have not been in a position like Apple to actively challenge them.
How 5G plays out remains to be seen. I don’t necessarily want QC to die, but I do think they’re due a comeuppance. What the marketplace needs is fair competition with appropriate regulation to ensure that vital technology patents are reasonably licensed. Having QC go bankrupt only to leave another company with a monopoly accomplishes nothing.