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

[IG88]

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

I don't think it's misleading. Qualcomm demands a percentage of of the iPhone's average selling price. That's ******** and Qualcomm is definitely getting paid for tech it has nothing to do with. These patents are ridiculous anyhow. If you buy the chip from the mfg, why the hell would you have to turn around and pay them again?

 

[uroshnor]

"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.

Apple generally does not licence technology to third parties, with a handful of exceptions.

FireWire is one of the few examples that's strictly licenced by Apple. There are a few others like USB, MPEG & H.264 where a third party licensing body representing a pool of patent holders , and Apple merely gets a cut.

What Apple has done more recently is things like Lightning , where they don't licence the patents at all, but rather run a 3rd party quality control program with its own standards and licensing fees.

If they don't generally licence , how can they be patent trolls ?

 

[jadot]

I hope they give it to charity when they get it back. It's an obscene amount of money.

 

[uroshnor]

This argument Apple is using is the same one Samsung is using against Apple in the lawsuit for rounded rectangles. Apple is a hypocrite, can't have it both ways.

Not really, and they can.

Qualcomm isn't selling mobile phones , its selling components.

Samsung is selling mobile phones (and a different subsidiary sells components)

Apple does not sell components , it only sells finished goods.

Samsung used (apple owned) design patents without seeking a licence (noting that Apple generally does not lincence its designs).

That means the Samsung case is immediately in wilful infringement land. Involving things that are finished goods sold in retail.

The internal Samsung documents literally proved that their intent was to copy their competitors products in order to improve their products.

It's perfectly reasonable to base $ off retail price in that case.

If something is sold as a component, it has its own price, independent of the finished good it goes in to.

 

[MH01]

I personally think it comes down to both of these companies bullying each other around for what they want. And nobody wants to give up what they owe.

Completely agree. There is no victim in this situation.

 

[tooltalk]

what is exactly a Royalty "rebate"?

You agree to use Qualcomm's baseband exclusively and nobody else's, then Qualcomm send you back "rebate" for being a loyal customer.

Apple better start making all their own components .
Lawsuits against the supplying vendors usually backfire on you.
Better open some more chinese factories Mr. Cook - you will need them.

The problem here isn't that Apple isn't manufacturing their own baseband.

 

[Kabeyun]

I love these lawsuit threads. Most of these posts are a joke. No one here actually has meaningful knowledge of the complete fact pattern or the intricacies of the law dealing with them. Even the one experienced patent lawyer in the room knows no details of the agreements or actions of these two companies. "Apples should this." "Qualcomm's a total that." "Both companies did the other thing." Even when you seem to be right, there's a host of other data you don't know. Snark away for another couple of days and then go back to complaining about AirPods (preferably having actually used them first).

 

[macfacts]

I wasn't aware that Apple's design was a standards essential patent that is licensed under FRAND terms.

I know Apple's patents aren't standard essential patents. It also doesn't matter that Qualcomm's are cause they can legally take a percentage, as shown here https://forums.macrumors.com/thread...-royalty-rebates.2028613/page-2#post-24216673

I'm not saying if taking a percentage of the final product is fair or not. I'm saying Apple is a hypocrite for wanting it both ways.
[doublepost=1485005803][/doublepost]

Not really, and they can.

...

Apple can have it both ways and you think there is nothing wrong with it?

 

[samcraig]

That is irrelevant.
[doublepost=1484981784][/doublepost]

This is irrelevant.
[doublepost=1484981881][/doublepost]
Many of them actually were.

It's actually very relevant.

 

[tooltalk]

Not really, and they can.

Qualcomm isn't selling mobile phones , its selling components.

Samsung is selling mobile phones (and a different subsidiary sells components)

Apple does not sell components , it only sells finished goods.

Samsung used (apple owned) design patents without seeking a licence (noting that Apple generally does not lincence its designs).

That means the Samsung case is immediately in wilful infringement land. Involving things that are finished goods sold in retail.

The internal Samsung documents literally proved that their intent was to copy their competitors products in order to improve their products.

It's perfectly reasonable to base $ off retail price in that case.

If something is sold as a component, it has its own price, independent of the finished good it goes in to.

No court found Samsung's willful infringement, so do you know something Apple's lawyers couldn't figure out?

The internal benchmarking document didn't prove their design infringement -- it was for the trade dress part of lawsuit. Not part of the design lawsuit.

And no, only fanbois found reasonable that the end-user price or total profit should be used as "royalty base." If Apple lawyer's "smallest salable unit" theory is correct, the maximum amount Samsung owes to Apple should be the cost of Android, or zero.

 

[Paul Dawkins]

It's actually very relevant.

It is not relevant. Start using your head.

 

[kdarling]

I don't think it's misleading. Qualcomm demands a percentage of of the iPhone's average selling price. That's ******** and Qualcomm is definitely getting paid for tech it has nothing to do with.

As I pointed out in Post #40 above, it's a very common industry practice, and was sanctioned by the US Department of Justice. And it's done for a good reason.

Apple already lost a case at the ITC partly because of their claiming it was not fair. The ITC ruled instead that:

The reality is, Apple doesn't want to pay what everyone else does. They want to be treated special, and get lower prices. Apparently a quarter trillion dollars of profit in the bank isn't good enough.

These patents are ridiculous anyhow. If you buy the chip from the mfg, why the hell would you have to turn around and pay them again?

The chip manufacturer doesn't usually pay for the code licenses. The manufacturer of the device that uses the chip does that.

One of the reasons the costs are separated, is because individual chip prices can fall dramatically with mass production, but the value of the patented code to use on those chips does not.

A rough parallel is with computers and apps. Computer hardware gets cheaper, but the value of important apps pretty much stays the same.

Apple generally does not licence technology to third parties, with a handful of exceptions.

Apple licensed their utility patents to HTC for about $8-12 a device. They also have limited cross licenses with Microsoft, Nokia, Sony Ericsson, et al.

Samsung used (apple owned) design patents without seeking a licence (noting that Apple generally does not lincence its designs).

Actually, back before the trials, Apple offered to license its IP to Samsung... for ridiculously high amounts of $30 per phone or $40 per tablet... for patents like slide-to-unlock which have since been invalidated or no longer used. And now Apple complains about a few dollars per device for patents which actually make a phone useful as a phone.

That means the Samsung case is immediately in wilful infringement land. Involving things that are finished goods sold in retail.

On the contrary, the fact that Apple's patents would look invalid to a normal observer, is why Samsung was NOT found guilty of willful infringement.

The internal Samsung documents literally proved that their intent was to copy their competitors products in order to improve their products.

Again on the contrary, most of that review document was not about direct copying, but comparing user experiences and how to enhance them. I actually checked out each one. Less than a dozen of the suggestions that were unique to Apple were used... and even some of those could be argued to not be Apple-only (like showing all Bluetooth options on a settings page).

 

[samcraig]

It is not relevant. Start using your head.

Thanks for the attempted insult. It's relevant in context when you have people saying one (vs the other) is a bully. Both companies are - and naturally looking after their own interests.

 

[Keirasplace]

I love these lawsuit threads. Most of these posts are a joke. No one here actually has meaningful knowledge of the complete fact pattern or the intricacies of the law dealing with them. Even the one experienced patent lawyer in the room knows no details of the agreements or actions of these two companies. "Apples should this." "Qualcomm's a total that." "Both companies did the other thing." Even when you seem to be right, there's a host of other data you don't know. Snark away for another couple of days and then go back to complaining about AirPods (preferably having actually used them first).

Well, we know at a minimum that QUALCOM is not licensing FRAND tech at FRAND rate and using standard IP as a means of strongarming clients with no recourses to buy other products from them (that's part of the Korean lawsuit too).

There is not a lot of wiggle room in the kind of things; doesn't require high level of lawyerly expertise to understand the basics although we can quibble all day long on the details.

Surprised there hasn't been more lawsuits about all this before. But, there is no doubt the EU will now sue. The chance of Qualcom losing in one of those venues is more than 50% (though there is no certainty in court cases).

 

[Paul Dawkins]

It's relevant in context when you have people saying one (vs the other) is a bully. Both companies are - and naturally looking after their own interests.

This is irrelevant. Justice is based on your actions (you do what you do and get what you deserve based on your actions), I couldn't care less if both of them or one of them is a bully. That has nothing to do with justice.

Only social justice warriors have this crippled idea stuck in their heads that because the company is a bully (allegedly - most likely not true) it's somehow ok for them to get ****ed when objectively they might have a good point for suing.

Thanks for the attempted insult.

If you can't handle words lock yourself in a dungeon.

 

[samcraig]

This is irrelevant. Justice is based on your actions (you do what you do and get what you deserve based on your actions), I couldn't care less if both of them or one of them is a bully. That has nothing to do with justice.

Only social justice warriors have this crippled idea stuck in their heads that because the company is a bully (allegedly - most likely not true) it's somehow ok for them to get ****ed when objectively they might have a good point for suing.


If you can't handle words lock yourself in a dungeon.

Irrelevant to you. And your words were fine - it was just a sad attempt at an insult. Have a lovely weekend.

 

[Paul Dawkins]

Irrelevant to you. And your words were fine - it was just a sad attempt at an insult. Have a lovely weekend.

Don't be so easily wounded then.

If someone tells me to use my head i don't start complaining about some ridiculous attempts to insult, I revise my statements and if I'm wrong I will say that I'm wrong, if I'm not I will come up with additional arguments to support my position.

This is how it works in a world with intellectual people.

 

[samcraig]

Don't be so easily wounded then.

If someone tells me to use my head i don't start complaining about some ridiculous attempts to insult, I revise my statements and if I'm wrong I will say that I'm wrong, if I'm not I will come up with additional arguments to support my position.

This is how it works in a world with intellectual people.

Great vowel movement there. I never said I was wounded. If you can't tell I was mocking you for the sad attempt at an insult, perhaps you shouldn't include yourself in the "world of intellectual people." Just a thought. Thanks for the tips though. Since you're very new here (or have rejoined because you were previously banned) you should know that I have no problem admitting when and if I'm wrong. In this case, my opinion is my opinion. You can disagree - that's your right. But that doesn't make it a fact.

Enjoy your Saturday.

 

[Michael Goff]

I know Apple's patents aren't standard essential patents. It also doesn't matter that Qualcomm's are cause they can legally take a percentage, as shown here https://forums.macrumors.com/thread...-royalty-rebates.2028613/page-2#post-24216673

I'm not saying if taking a percentage of the final product is fair or not. I'm saying Apple is a hypocrite for wanting it both ways.
[doublepost=1485005803][/doublepost]

Apple can have it both ways and you think there is nothing wrong with it?

My point was more that you can't compare the two.

 

[kdarling]

Well, we know at a minimum that QUALCOM is not licensing FRAND tech at FRAND rate

On the contrary, Apple gets the same contract offers as everyone else. That's what FRAND means. It doesn't mean giving your IP away for cheap.

Apple doesn't want those same offers, though. Instead, they want lower rates than anyone else has been paying.

Apple is trying to change the rules of the game to their own benefit, which is understandable, but no one can say they've not been offered non-discriminatory ETSI FRAND rates.

Surprised there hasn't been more lawsuits about all this before.

Oh there have been attempts before, especially over cross licensing, which is allowed by the ETSI contract that Apple also signed. A notable attempt occurred around the turn of the century, IIRC. It failed.

But Apple has a lot of political clout, and could get some changes where others could not.

 

[IG88]

As I pointed out in Post #40 above, it's a very common industry practice, and was sanctioned by the US Department of Justice. And it's done for a good reason.

Apple already lost a case at the ITC partly because of their claiming it was not fair. The ITC ruled instead that:

View attachment 684715

The reality is, Apple doesn't want to pay what everyone else does. They want to be treated special, and get lower prices. Apparently a quarter trillion dollars of profit in the bank isn't good enough.



The chip manufacturer doesn't usually pay for the code licenses. The manufacturer of the device that uses the chip does that.

One of the reasons the costs are separated, is because individual chip prices can fall dramatically with mass production, but the value of the patented code to use on those chips does not.

A rough parallel is with computers and apps. Computer hardware gets cheaper, but the value of important apps pretty much stays the same.



Apple licensed their utility patents to HTC for about $8-12 a device. They also have limited cross licenses with Microsoft, Nokia, Sony Ericsson, et al.



Actually, back before the trials, Apple offered to license its IP to Samsung... for ridiculously high amounts of $30 per phone or $40 per tablet... for patents like slide-to-unlock which have since been invalidated or no longer used. And now Apple complains about a few dollars per device for patents which actually make a phone useful as a phone.

View attachment 684729



On the contrary, the fact that Apple's patents would look invalid to a normal observer, is why Samsung was NOT found guilty of willful infringement.



Again on the contrary, most of that review document was not about direct copying, but comparing user experiences and how to enhance them. I actually checked out each one. Less than a dozen of the suggestions that were unique to Apple were used... and even some of those could be argued to not be Apple-only (like showing all Bluetooth options on a settings page).

Thanks for the reply, I always wondered about the chip cost vs patent licensing and why they were separate. This is the part that still bother me though.

Say my neighbor and I both build devices with a Qualcomm LTE chip. His device sells for $100, my device sells for $1000. Why should Qualcomm get more $$ per device on mine when their chip is being used for the same function in both, which is LTE connectivity?

To take it further, let say my neighbor across the street builds something that costs $10,000,000 with their LTE chip. Again, that's ludicrous that they get a cut of the $10,000,000 machine that has a $5 LTE chip in it.

I understand that chip prices can plummet, but to me the value of the patent should be included in the chip price. To me what the industry is doing would be like Home Depot charging more $$ for 2 x 4 lumber just because it's being used in a more expensive house.

Yes I understand the DOJ authorized it but it still feels like bs to me. It shouldn't matter what the chip is being used for or how much the device ends up selling for.

 

[Michaelgtrusa]

RE: charging royalties by price of phone.

This is actually not unusual for patent royalties; they can be a percentage of a company's revenue. More to the point, it's EXTREMELY common for cellular SEPs (standard-essential patents).

This was done partly in order to encourage lower prices on phones, to get more phones into the hands of the public. (In essence, companies with bigger profits subsidize cheaper phones, where $2 profit on a $40 phone cannot possibly pay full royalties.) And it worked. In a fairly short period, billions on the planet had phones.

Guess who took advantage of that huge infrastructure and market that they had no part in creating? Yep, Apple, who has made many billions in profit even after paying royalties.

--

Besides the fact that percentage of price is the normal contract for these kind of FRAND patents, here are two important notes that people need to know:

1. Royalty as a percentage of sales was specifically allowed by the DOJ. I tracked down the original approval document back when this was originally questioned:

View attachment 684641

2. Just as with taxes, Apple cleverly avoided paying full royalties anyway, by lowering the "price of the phone". Insiders claim that Apple only pays Qualcomm a percentage of the price Apple pays for each iPhone AT THE FOXCONN FACTORY, which was around $250 last time I checked on this a few years ago.... NOT on what Apple themselves resell the phone for later on, which is of course hundreds of dollars higher.

So all that whining about poor Apple "paying extra for their technology" amounts to a few dimes per device... and is nothing compared to how much Apple gouges its own customers.

For instance, Apple charges its customers hundreds of dollars for extra storage which only costs Apple a few dollars. Yet Apple only pays Qualcomm a few cents more because the percentage is based on Apple's Foxconn cost, not their final customer profit.

Bravo. Greed lives on.

 

[jinnj]

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

Wrong. The more money Apple makes the more they are charging for their licenses also that other companies pay less. Also this isn't just Apple suing them it's a group of companies and government agencies. Nokia tried this multiple times and failed.
[doublepost=1485037068][/doublepost]

To me what the industry is doing would be like Home Depot charging more $$ for 2 x 4 lumber just because it's being used in a more expensive house.

That is the best analogy ever!

 

[inscrewtable]

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

But they are only suing for money that is already owed, are they not?

 

[hot spare]

On the contrary, Apple gets the same contract offers as everyone else. That's what FRAND means. It doesn't mean giving your IP away for cheap.

Apple doesn't want those same offers, though. Instead, they want lower rates than anyone else has been paying.

Apple is trying to change the rules of the game to their own benefit, which is understandable, but no one can say they've not been offered non-discriminatory ETSI FRAND rates.



Oh there have been attempts before, especially over cross licensing, which is allowed by the ETSI contract that Apple also signed. A notable attempt occurred around the turn of the century, IIRC. It failed.

But Apple has a lot of political clout, and could get some changes where others could not.

Looks like you have lot of knowledge in this issue. Out of curiosity, how does one value a FRAND patent? Who determines what is a fair price?