Apple Sues Qualcomm for $1 Billion in Unpaid Royalty Rebates [Updated]

[MacRumors]

Following an FTC complaint alleging Qualcomm engaged in anticompetitive patent licensing practices, Apple has filed a lawsuit against Qualcomm claiming the company has charged unfair royalties for "technologies they have nothing to do with."

According to a statement Apple shared with several news sites, Qualcomm "reinforces its dominance" through exclusionary tactics and high patent licensing fees. Apple's full statement is below:

"For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. The more Apple innovates with unique features such as TouchID, advanced displays, and cameras, to name just a few, the more money Qualcomm collects for no reason and the more expensive it becomes for Apple to fund these innovations. Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties. Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.

To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding nearly $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.

Apple believes deeply in innovation and we have always been willing to pay fair and reasonable rates for patents we use. We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts."

In the lawsuit, filed in a federal district court in the Southern District of California, Apple accuses Qualcomm of using its position as the supplier of a key iPhone component to drive up patent licensing fees.

Qualcomm supplies the LTE modems used in Apple's line of iPhones, and up until 2016, the company was Apple's sole supplier. The iPhone 7 and the iPhone 7 Plus use modems from both Qualcomm and Intel.

Qualcomm reportedly forced Apple to use its LTE chips exclusively in iOS devices and pay a percentage of the total average selling price of an iPhone for access to Qualcomm patents.

Qualcomm is supposed to provide Apple with quarterly rebates, but has failed to do so for the past year because of Apple's participation in an antitrust investigation against Qualcomm in South Korea. That investigation led to an $850+ million fine against Qualcomm for anticompetitive licensing practices.

Apple is seeking $1 billion in rebate payments that have been withheld.

Earlier this week, the United States Federal Trade Commission filed a lawsuit against Qualcomm that focused in part on Apple and Qualcomm's licensing deals. According to the FTC, Qualcomm imposes "onerous and anticompetitive supply and licensing terms" on its smartphone partners by abusing its patent portfolio.

Qualcomm has said it has "grave concerns" about the lack of evidence supporting the FTC's allegations and has promised to defend itself in federal court.

Update 1/25: Apple has also filed two lawsuits against Qualcomm in Beijing. The first, which seeks 1 billion yuan ($145.32 million) in damages accuses Qualcomm of abusing its clout in the chip industry. The second claims Qualcomm has not fulfilled promises to license standard essential patents fairly.

Article Link: Apple Sues Qualcomm for $1 Billion in Unpaid Royalty Rebates [Updated]

 

[Tycho24]

I hope these bullies get a comeuppance!

 

[samcraig]

I hope these bullies get a comeuppance!

Both companies are bullies.

 

[imran5720]

21st century's bullfight

 

[Bigsk8r]

Get the popcorn going, this could get interesting...

 

[Apple_Robert]

Good on Apple for taking a stand.

 

[gotluck]

still want qualcomm modems in my iphone

no intel for me yet!

 

[Sevanw]

Lol, Apple, hustling till it's last breath. Get a life

 

[r03dz]

This is hilarious. Apple is a huge bully of a company.

 

[oneMadRssn]

Someone's gotta stop these patent trolls.

</s>

 

[citysnaps]

Excellent! Apple will prevail on this.

 

[rimcrazy]

Gee, now if Samsung would only buy Qualcom then Apple would only have 1 huge lawsuit instead of 2!

 

[Kaibelf]

Lol, Apple, hustling till it's last breath. Get a life

Get a life? Any person or company worth its salt should expect a contract to be honored. If the payments are due, then they should be paid, period. Maybe your word is mud, but to normal people a deal is a deal.

 

[Orlandoech]

Good on Apple for taking a stand.

Funny how when Apple sues someone, people like you say "Good for Apple", then when people/companies sue Apple it's "frivolous case".

 

[Wowereit]

"For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. The more Apple innovates with unique features such as TouchID, advanced displays, and cameras, to name just a few, the more money Qualcomm collects for no reason and the more expensive it becomes for Apple to fund these innovations."

That's purposefully misleading.
Qualcomm is not charging Apple royalties for Apple's own technologies.

 

[Apple_Robert]

Funny how when Apple sues someone, people like you say "Good for Apple", then when people/companies sue Apple it's "frivolous case".

Some may show bias that way, but I judge each case on its own merits (or lack thereof).

 

[lowendlinux]

Hey look two big companies with deep pocket and good lawyers going to court..for another decade

 

[Johnny Vegas]

Thank goodness! Go get them Apple, sue their pants off! I'll just wait patiently for the iPhone price to drop as a result

 

[cariacou]

not a good time to be working at Qualcomm

 

[WRChris]

Funny how when Apple sues someone, people like you say "Good for Apple", then when people/companies sue Apple it's "frivolous case".

You can't blindly say all lawsuits are frivolous just because some are. Did you read the article or skip to the comments?

 

[cfunk]

That's purposefully misleading.
Qualcomm is not charging Apple royalties for Apple's own technologies.

Well, they are to an extent. Qualcomm is getting royalties based on the selling price. The more non-Qualcomm tech they put into the iPhone, potentially driving up the price, the more Qualcomm receives, even though the cost of their components in the phone is likely decreasing.

 

[Headrush69]

That's purposefully misleading.
Qualcomm is not charging Apple royalties for Apple's own technologies.

If their royalties are based on a percentage of the phone, they actually are.

If I introduce a new phone and the only difference is has a bigger screen for example, why should any patent company get more $$$ for the exact same chip used?

 

[blacktape242]

what is exactly a Royalty "rebate"?

 

[kognos]

Apple using Intel is starting to make sense now.

I get that it's all about saving a buck here and there. But seriously, Qualcomm wanting a slice of the whole iPhone pie does just sound unreasonable to me. Usually these kinds of things are licensed simply: Apple pays $2.43 a chip from Qualcomm (for example, I have no idea the actual $$). Why try to eat into the whole pie? That's not their business, so that's where I tend to agree with Apple.

I don't have any love for Intel either, but Intel's problem isn't solely the chip, it's that they too would have to license from Qualcomm to get the same CDMA coverage that I believe they exclusively own. And then I'm sure they aren't licensing on a item-by-item basis, they would again want a cut of the end product. Shady?

 

[Naraxus]

"According to a statement Apple shared with several news sites, Qualcomm "reinforces its dominance" through exclusionary tactics and high patent licensing fees."

This is rich coming from the company who's made their entire fortune through exclusionary tactics & patent troll licensing fees.