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Apple CEO Tim Cook to Be Deposed in Qualcomm v. Apple Lawsuit on June 27
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Apple and the rest of the industry should change the 5G standard to an implementation that does not need a Qualcomm patent and then make their own chips.
From my point of view this is starting to look like the SCO Unix Licensing fiasco for Qualcomm.
https://en.wikipedia.org/wiki/SCO—Linux_controversies
I'd like that if they made it open source, so that anyone can use it and no one would be able to sue over it.
I can completely agree with the idea "that Qualcomm's practice of charging a percentage of an iPhone's entire value is excessive." It should be a flat rate royalty.
But is that not exactly the same as how Apple take a 30% cut on the App Store....
But is that not exactly the same as how Apple take a 30% cut on the App Store....
I am on the Qualcomm side on this one. If this is what Apple has agreed to in their contracts, then that's what they need to honour. They can try and renegotiate or go for a competitor of Qualcomm. Tim Cook needs to make better deals, if he suddenly feels he and Apple are getting "robbed". This is what happens when adults start acting like spoiled children. It would be hilarious to have this case life on Judge Judy. She'd be like "Cook! **** and pay up. Dismissed! Case closed!"
That's quite a different thing from what Qualcomm has been doing. Apple didn't seek to have use of the App Store included in an industry standard such that everyone wanting to develop software or distribute software had to use it, and in return for having it made part of such a standard (which would create greater demand - forced demand - for its use) agree to certain terms when it came to the pricing of its use, and then systemically violate those terms which it had agreed to so that it could make developers pay a higher rate to use the App Store than they would otherwise agree to pay.
Qualcomm wants to have it both ways. They want to: (1) Have their IP included in industry standards, which forces industry participants to use it; and (2) be able to charge those industry participants more than they'd otherwise be able to, and more than (and under worse terms than) they agreed to when they sought to (and agreed to) have their IP included in the industry standards.
What Qualcomm has been doing is egregious. I won't go through every aspect of what they've been accused of doing. I encourage those who are interested in understanding the situation to read the findings of the various regulatory agencies which have taken action against Qualcomm, as well as the court filings of Qualcomm and of those companies which have accused it of wrongdoing.
But here is some of what Qualcomm is accused of doing. First, as I indicated, it's sought to have its IP included in industry standards. This means that others wanting to make certain kinds of products have to use its IP whether they want to or not. They can't make, e.g. phones which work with existing systems, without using Qualcomm IP (and that of numerous other patent holders). In order to have that be the situation, Qualcomm has agreed to (F)RAND licensing terms. But Qualcomm has violated those terms, as well as the laws of some of the jurisdictions it operates in, in myriad ways.
It's refused to license its standards-essential IP to competitors such as Intel. That would be fine if it hadn't agreed not to refuse to as part of getting that IP included in industry standards. But it agreed to license that IP to any willing licensee, including competitors. In violating its own contractual commitments in that way, it's held back its competition in the chipset market, and for a long time effectively prevented any competition when it came to certain kinds of chipsets. Then, knowing that industry participants had to buy Qualcomm chipsets, it forced them to agree to improper licensing terms (relating to those chipsets and others) as a condition of getting those chipsets.
It went on to construct a royalty scheme which meant that, if industry participants bought other chipsets from Qualcomm's competitors rather than from Qualcomm, they'd end up paying a higher royalty on the Qualcomm standards-essential IP in those chipsets. Qualcomm, in effect, charged companies (which had little choice but to license its IP) more for its IP if those companies didn't buy chipsets from Qualcomm. That's also a violation of the contractual commitments it made and further stifled competition. Competitors where effectively priced out of markets (and not by normal market forces or performance, but by Qualcomm gaining an advantage through contractual commitments and then violating those contractual commitments). Not being able to sell certain kinds of chipsets, because they would effectively be too expensive (do to the licensing surcharge Qualcomm was effectively enforcing), meant that competitors couldn't justify devoting more resources to developing those chipsets. That meant that their own versions couldn't keep up with the performance of Qualcomm's.
Qualcomm has also, in effect, double charged customers for standards-essential IP. It sells them chipsets which substantially embody some of that IP, yet also requires them to pay licensing royalties for it. U.S. common law is clear in that selling components which substantially embody given patents exhausts the patent-holders rights in those patents with regard to those components which it sold (whether they are sold in the U.S. or not). So Qualcomm isn't entitled to royalties on the IP in those components in addition to whatever it gets when it sells them.
Qualcomm also, as you indicate, applies royalty rates which are based on the value of end products which incorporate components which use its IP. Under U.S. common law, it is not entitled to such royalties. U.S. courts have said that patent holders aren't entitled to royalties based on the value of end products , even if the royalty rate is correspondingly low, unless all of the value of those end products is created by their patents. This is another way in which Qualcomm is violating its contractual commitments to license on (F)RAND terms. Further, U.S. courts have been clear in that standards-essential patent holders are only entitled to royalties which compensate them for the intrinsic value of their IP - not for the value created by its inclusion in industry standards. So the question would be something like: What would the would-be licensee be willing to pay if it didn't need the IP in order to comply with an industry standard (and make its products work with existing systems)? How much would it be willing to pay for whatever increased performance (or other advantage) the IP adds?
Qualcomm has also violated its contractual commitments in a number of other ways. It has, e.g., required that licensees cross license their own IP without offsetting compensation. And it's required licensees to license (and effectively pay for) IP which they don't want or need in order to get that which they do need (again, because it's been included as parts of industry standards). Additionally, Qualcomm has - according to regulatory decisions which have either been upheld or which Qualcomm hasn't challenged - violated anti-trust laws of jurisdictions which it operates in.
Put together, Qualcomm's actions have been egregious. It made commitments to do (and not do) certain things so that it could gain leverage over the industry. Then it broke those commitments (as well as the laws of jurisdictions in which it operates) and used that leverage to extract greater compensation than it was entitled to for its IP - greater compensation than it would have been able to get if it didn't have that agreed-upon leverage. In the process it also artificially held back competition and, likely, the pace of advancement in the industry. There are reasons why certain Intel chipsets didn't perform as well as Qualcomm's chipsets, and some of them have to do with Qualcomm's contract-violative and illegal actions. Its ill-gotten stranglehold on the industry needed to be broken. And now, thanks to some regulatory bodies and market participants such as Apple, it effectively has been. Or, at least, it is in the process of being broken.
I want to be clear. I wouldn't have a problem with companies doing (many of) the kinds of things Qualcomm did, if they hadn't gained the power to do them through contractual agreements they made and then broke. I'm a regulatory minimalist. The issue here is how Qualcomm got the power it wielded to begin with, and then its systemic violation of the commitments it made in order to acquire that power.
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I understand. I was responding to your query about the use of the term in U.S. English.
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So they disable features on Qualcomm's modem to have better performance, but disable features for the battery on their CPU to slow down the phone's performance. Is that what you are saying?
Perfect example of the US patent system gone off the rails. Why should the market be forced to pay Qualcomm royalties in perpetuity? Qualcomm is gaming the system like a big pharma player.
Qualcomm is the exact opposite of a trustworthy supplier.
They want money, and they will take all of it.
They want money, and they will take all of it.
Agreed, and if Qualcomm want's fair compensation for this technology Apple should pay. The lawsuit, as I have read it, is that Qualcomm also want's money for the iPhone camera, and FaceID, and battery, and every other component of the iPhone that isn't even remotely related to wireless networking.
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Quality material with an unfortunately dry 3rd act. For its credit it does leave one feeling as if you spent a day in a courtroom. I can't vouch that the content is 100% true, but the story told is compelling and the characters are colorful while remaining relatable. If you can only handle 1000 words about Qualcomm I would recommend reading the article first, but if you are still craving content associated with the topic you can't go wrong with this comment. I give this wall of text three and a half heart valves. I look forward to future posts.
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Hmm. It would be interesting to see Apple's response to a similar argument against Apple for the fee it charges developers, particularly for IAP revenue, in the App store. I realise the situations aren't completely analogous but I see some intersection.
Edit... never mind. I got further clarification reading further along...
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Sure, not arguing that. Qualcomm does, however, seem to be charging wildly different costs to different companies, and seems to be pretty hostile.
It will all be academic in a few years anyway. If recent rumours are to be trusted about Apple wanting to make it's own CPUs for Macs because if this true then I see them also doing the same for iPhone and iPads in terms of chips they use from Intel/Qualcomm etc. That way problem solved. I certainly for what it is worth think the rumour is true.
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well I am pretty sure that Hatty Lamar's work predates his work by a LONG time and if it was not for her then there would be NO Cell phones or Qualcomm etc
No but various implementation of how to do the decoding were.
The derivative patents by Qualcomm are what were are talking about, and no patents don't last forever.
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But she didn't invent spread spectrum.
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Let's separate the Anti-Tust suits that have be decided against Qualcomm for paying customers not to use the chips of others and doing things that are predatory from the lawsuit with Apple.
Apple is bent because Qualcomm takes a percentage.
Those numbers have never been overturned in any suit. The numbers are the same for everyone.
Ericsson charges a flat rate of about $2.50 in emerging markets and $5 is developed markets.
Qualcomm charges a percentage based on single or multimode handsets.
Ericsson gets more at the low end and causes handsets in emerging markets to cost more.
Qualcomm with it's percentage of wholesale makes an emerging market handset cheaper but the developed market pays more.
Ericsson tops out at $5 per handset and Qualcomm at 5% will need a handset to cost about $100 to get that same $5.
The licensing model and rates that Qualcomm charges are the same for Samsung, LG, HTC, Essential or anyone else that gets a license. Apple is bent because they see it eating money that they want to retain.
Apple signed the agreement but doesn't like the terms now that the iPhone is expensive and successful.
If Apple makes 50 million iPhones at an average wholesale price of $500, they would owe Qualcomm $1.25 billion.
They would owe $250 million under Ericsson's terms and is capped at $5 per phone.
But let's be clear that 5% is for all SEPs; ie. the entire patent portfolio covers the applications, operation and other features of most phones.
Apple likes to claim that this is like a rear window defroster maker asking for $500 per car.
The car will still function without a defroster. Your back window is just fogged up.
Try using a cell phone with no modem or DSP.
(1) What agreement (presumably with Qualcomm to pay royalties based on the entire value of iPhones?), which Apple signed, are you referring to?
(2) To the extent Apple was, in effect (though not necessarily pursuant to an agreement which it signed), complying with Qualcomm's licensing terms, it was because Apple had little choice but to do so if it wanted to make smartphones. Qualcomm, in part as a result of its contract-violative practices, had an effective monopoly in some areas. It used that monopoly to unilaterally impose contract-violative licensing terms, to include those covering areas where it didn't have an effective monopoly.
(3) You can't really separate the anti-trust issues from the Apple lawsuit. They are part of the allegations made by Apple and part of the scheme of policies (some illegal, some contract-violative) which Qualcomm implemented and which worked together to allow Qualcomm to extract more licensing fees than it otherwise would have been able to. Those policies also worked together to stifle competition and create greater demand for Qualcomm's chipsets.
(4) Apple's complaint against Qualcomm, and the complaints of other industry participants as well as numerous regulatory bodies, go far beyond Qualcomm basing royalties on the value of end products. The ways in which Qualcomm violated its contractual commitments and the laws of some jurisdictions, and in so doing harmed Apple and other industry participants (as well as, perhaps, the industry as a whole), are numerous. I touched on some of them in my post, but there are others.
(5) U.S. courts (most notably the D.C. Circuit) have been clear in that SEP holders are not entitled to royalties based on the entire value of end products unless the entire value of those products is created by their patents. Parties can, of course, freely agree to use such a royalty base. But an SEP holder can't impose such royalty base on a would-be licensee. It can't require that a would-be licensee agree to use such a royalty base or else refuse to license to them. A would-be licensee refusing to agree to such a royalty base doesn't make them an unwilling licensee. I won't get lost in the case law here; I've already gone further into it in other threads. But I can get cites for those interested in reading applicable case law for themselves.
(6) There are, of course, reasons why Qualcomm and some other industry participants would like royalties to be based on the entire value of end products. It benefits not only Qualcomm but, e.g., some smartphone makers. But that doesn't mean that those who don't benefit (e.g. Apple, perhaps Samsung) are obliged to go along with that model - even if it allows for more less-expensive smartphones to be sold. That ostensible benefit doesn't, by itself, justify Qualcomm or others violating the contractual commitments they've made and which they otherwise benefit greatly from. Apple shouldn't have to, if it doesn't want to, effectively subsidize less-expensive competition. Further, if Qualcomm wasn't violating its (F)RAND commitments in other ways, it wouldn't much matter that royalties were based on the entire value of products because the products in question would be chipsets themselves rather than, e.g., smartphones. Qualcomm would be licensing its SEPs to, e.g., Intel, and Apple wouldn't need to pay royalties for that IP because Qualcomm's patent rights would be exhausted with Intel's payment of royalties - based, presumably, on the value of the chipsets it sold (if not on some smaller unit). Qualcomm has only been able to do what it's done because of its refusal to license its SEPs to (chipset) competitors.
"wildly different costs"? Are you saying you are privy to Qualcomm's licensing agreements with their wireless licensees, which btw is a trade secret? Where is this wildly unsubstantiated claim coming from?
Qualcomm, like many other wireless patent holders, publishes their FRAND rates for wireless patents time to time, so the whole world can see what their FRAND rates are like. The final rate varies for different licensees -- it depends on many factors such as agreed sales volumes, duration, cross-licensing, etc, and other terms and conditions, but this hardly tantamounts to "charging wildly" different fees nor is Qualcomm accused of charging discriminatory rates for different licensees (by regulators). Apple continues to make unsubstantiated claims (but I guess it's really their lawyers doing their job to cover all bases.)
Further, it's Apple who has billigerently fought against pretty much every single wireless patent holder every time their licensing contract is up for renewal. Apple always claims that their royalty basis and rates are inappropriate, but lost or settled every single case. Having exhausted all legal options, this time around, it seems like Apple lied to regulators all around the world to attack Qualcomm and some, including the latest from the EU, used Apple's testimony to fine Qualcomm over $1+B. Apple is the only one so far to claim that they received "KICK-BACK" from Qualcomm not to use competitors' product (ie, Intel), but Qualcomm's countersuit clearly indicates that it was Apple who proposed and demanded "rebates" in exchange for "exclusivity." I'm guessing part of the deposition is to clarify Apple's true role in all this (note that according to Qualcomm, the company was not asked to explain their agreements or even allowed to respond or counter Apple's accusation in other jurisdictions).
Qualcomm is clearly quilty of other anti-trust issues that are also in violation of FRAND -- such as their refusal to license to competing OEMs (Intel, MediaTek to name a few) and predatory cross-licensing requirements -- but Apple's accusations that Qualcomm's rates and basis are inappropriate are filmsy at best.
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That would be the original agreement that Apple had with Qualcomm to license the complete IP portfolio.
Also Apple uses and has used the following patents:
US Patent No. 8,698,558
US Patent No. 8,633,936
US Patent No. 9,608,675
US Patent No. 8,838,949
US Patent No. 9,535,490
US Patent No. 8,487,658
https://www.qualcomm.com/news/relea...gement-complaints-against-apple-international
None of these are *REQUIRED* but Apple uses them.
Apple is quick to file suit about the way something looks but quite often discounts the IP and work of others to its own benefit.
Samsung and Qualcomm put to rest their issues and Samsung will not participate in any litigation against Qualcomm moving forward.
Also Qualcomm is suing Apple with the accusation that Apple disclosed trade secrets to intel while they were developing modem technology.
The case is more than about FRAND/SEP.
"Qualcomm has also faced an antitrust investigation in South Korea, which it accused Apple of interfering in, and it has been fined $1.2 billion by European antitrust regulators for paying Apple to use its LTE chips in iOS devices. In South Korea, Qualcomm was fined 1.03 trillion won, or $902 million."
If Qualcomm has had issues, and been fined elsewhere, may not be a link or foothold, but wouldn't that come under Qualcomm is acting in a 'shady' way?
If Qualcomm has had issues, and been fined elsewhere, may not be a link or foothold, but wouldn't that come under Qualcomm is acting in a 'shady' way?
I'm not assuming anything; just saying it's a funny word to use for some people. But yes, I don't think most Americans give a stuff about how they come across.
Qualcomm even puts up billboard ads in the US telling people how much Apple relies on them. I don't know what they're trying to do.