Qualcomm CEO Says Out of Court Settlement With Apple Could Happen

[LordVic]

This is how it works. Say I have a FRAND patent. I charge everyone 10 dollars a unit. But you say you won't pay that, you're a potentially huge customer and I'm afraid you'll challenge the validity of the patents. So I'm willing to accept less from you. But if I do that, then my 10 dollar rate is not sustainable - it's no longer "non discrimatory." So everyone else gets to pay less. I don't want that. So instead I say "hey, you pay 10 dollars too, but if You Agree to assist with engineering (don't worry - no work involved) we will pay you back 4 dollars a unit so you end up paying only 6."

That's what's going on here. It's an end run around ND in FRAND. But Qualcomm refused to pay because allegedly apple employees testified against Qualcomm in the Korean investigation. That's why Qualcomm doesn't want to call it a "rebate" but that's what it is.

And if they can't sue each other over patents, then why did Qualcomm just sue Apple over patents? (Not that such a clause would be legally binding anyway).

there's lots of supposition in your statement that isn't directly verifiable.

Qualcomm isn't suing Apple over patents. they're suing them over not honouring their side of the contract. once Qualcomm believes Apple is not honouring their side of the agreement, then the agreement isn't enforceable since it was already broken, thus allowing QC to sue.

the problem with this case is there's a lot of finger wagging, and a lot of things being claimed without evidence here.

if we want to break it down to ONLY what we legitimately know.


1. QualComm invented CDMA network technologies and require that anyone using CDMA pays a CDMA license. This FRAND based and all companies are supposedly getting the same deal.
2. Qualcomm doesn't charge Apple directly for this license. it is paid for by the manufacturer on behalf of Apple and passed through as a part of manufacturing costs of the device. This has been the practice for years, even prior to Apple's iPhone and is applicable to All uses of CDMA.
3. Apple claims they should no longer be paying the rates they've been paying for years. claims the money that Qualcomm has been giving to Apple for X purposes is a rebate on those license fees. Qualcomm claims they're part of an agreement to help pay for implementation and future research and is not a rebate of the CDMA license.
4. Apple refuses to continue to pay, so they withold payments on the licenses to their manufacturers and then force those manufacturers to stop paying their existing royalties to QualComm

this is all we know, anything else we're guessing on

 

[cmaier]

there's lots of supposition in your statement that isn't directly verifiable.

Qualcomm isn't suing Apple over patents. they're suing them over not honouring their side of the contract. once Qualcomm believes Apple is not honouring their side of the agreement, then the agreement isn't enforceable since it was already broken, thus allowing QC to sue.

the problem with this case is there's a lot of finger wagging, and a lot of things being claimed without evidence here.

if we want to break it down to ONLY what we legitimately know.


1. QualComm invented CDMA network technologies and require that anyone using CDMA pays a CDMA license. This FRAND based and all companies are supposedly getting the same deal.
2. Qualcomm doesn't charge Apple directly for this license. it is paid for by the manufacturer on behalf of Apple and passed through as a part of manufacturing costs of the device. This has been the practice for years, even prior to Apple's iPhone and is applicable to All uses of CDMA.
3. Apple claims they should no longer be paying the rates they've been paying for years. claims the money that Qualcomm has been giving to Apple for X purposes is a rebate on those license fees. Qualcomm claims they're part of an agreement to help pay for implementation and future research and is not a rebate of the CDMA license.
4. Apple refuses to continue to pay, so they withold payments on the licenses to their manufacturers and then force those manufacturers to stop paying their existing royalties to QualComm

this is all we know, anything else we're guessing on

Qualcomm IS suing Apple on five non-FRAND patents in the southern district of California.

And I am not assuming much - I read the complaints and i am very familiar with these sorts of agreements.

 

[69Mustang]

Erm No I think they are about right in their summary of it.
What exactly is wrong?

To be honest, pretty much everything you said.

That Apple are accusing Qualcomm of charging them twice?

Ironic that you're misquoting the quote that you're attempting to defend. The quote from @isomorphic states: Qualcomm:[Charges Apple X% of MSRP, after charging Foxconn by some other scheme.] It doesn't state anything about charging Apple twice. It's also wrong because Qualcom doesn't charge Apple anything. They charge Apple's contract manufacturers assembled cost & licensing fees (that's what Apple has issues with btw) and Apple reimburses the manufacturers. They don't charge based on MSRP of device. Helluva difference.

That the FTC are accusing Qualcomm of bad practises?

The FTC issues with Qualcomm have nothing to do with Apple lawsuit. That issue can't be conflated with Apple's issue into some unifying argument.

That Qualcomm states they should receive a % of total iPhone sale price as their tech is fundamental to how the iPhone works?

Untrue. I challenge you to find one single source to corroborate that statement. As previously stated they charged on assembled cost not sale price.

That Qualcomm therefore thinks that does not qualify as FRAND when that is what FRAND is therefore(in part)?

Neither Apple nor Qualcomm raised the specter of FRAND in Apple's lawsuit. That was us, the amateur Perry Masons that practice in forums.

That Qualcomm is counter suing Apple in return for being sued ?

This is true. Funny thing, none of the 6 patents Qualcomm is using for ammunition is covered under FRAND.

That all seems wrong doesn't it (end sarcasm).

Yes, yes it does. Probably could have saved that sarcasm.[/QUOTE]

 

[cmaier]

there's lots of supposition in your statement that isn't directly verifiable.

Qualcomm isn't suing Apple over patents. they're suing them over not honouring their side of the contract. once Qualcomm believes Apple is not honouring their side of the agreement, then the agreement isn't enforceable since it was already broken, thus allowing QC to sue.

the problem with this case is there's a lot of finger wagging, and a lot of things being claimed without evidence here.

if we want to break it down to ONLY what we legitimately know.


1. QualComm invented CDMA network technologies and require that anyone using CDMA pays a CDMA license. This FRAND based and all companies are supposedly getting the same deal.
2. Qualcomm doesn't charge Apple directly for this license. it is paid for by the manufacturer on behalf of Apple and passed through as a part of manufacturing costs of the device. This has been the practice for years, even prior to Apple's iPhone and is applicable to All uses of CDMA.
3. Apple claims they should no longer be paying the rates they've been paying for years. claims the money that Qualcomm has been giving to Apple for X purposes is a rebate on those license fees. Qualcomm claims they're part of an agreement to help pay for implementation and future research and is not a rebate of the CDMA license.
4. Apple refuses to continue to pay, so they withold payments on the licenses to their manufacturers and then force those manufacturers to stop paying their existing royalties to QualComm

this is all we know, anything else we're guessing on

Also Qualcomm has filed a patent action against Apple in the ITC.

 

[apolloa]

Hey QC, why don't you join forces with IMG and create a truly terrifying paper tiger to threaten Apple? Surely two empty lawsuits are better than one?
[doublepost=1500395324][/doublepost]

The "modern way to do business"?
I'm sorry, when was this magical time in the past when patent lawsuits were not important?
Early computer days?
TV tubes? Zworykin vs Farnsworth.
Radio? Lots of patent fights there.
Flight? Wright brothers were in constant lawsuits.
[doublepost=1500395807][/doublepost]

You're claiming far more than is actually known. As usual the details of these settlements are confidential.
What IS known is
- Nokia will be providing certain network infrastructure product and services to Apple. Apple will resume carrying Nokia digital health products (formerly under the Withings brand) in Apple retail and online stores
AND
- Nokia will receive an up-front cash payment from Apple, with additional revenues during the term of the agreement.
The value of the agreement will be reflected partially as patent licensing net sales in Nokia Technologies and partially as net sales in other Nokia business groups.

https://www.apple.com/newsroom/2017/05/nokia-and-apple-sign-agreement-settle-all-litigation/

Note all the wiggle room in those carefully written statements. In PARTICULAR there is room for a deal along the lines of:
Apple pays Nokia something "for patent rights"
Nokia gives Apple network equipment "at better than market prices".
Apple wins --- they don't pay any NET money.
Nokia wins --- they get to continue claiming that their patents are worth something.

This is standard for how these deals go down. The whole art is to figure out a way that lets both parties feel they didn't lose.

Patents ARE important FOR EVERYONE AND NOT JUST APPLE!!!!

Yet it's always Apple who uses them to try and bargain for a cheaper deal, or ban the competition from sale to gain market share.......

Sorry, if you don't like the truth of how modern day business is practiced then you'll have to erase the last few years of Apples history...

I don't recall the Wright brothers screwing over their suppliers refusing to pay for technology that essentially means their plane could exist in the first whilst making billions of said technology...
[doublepost=1500402554][/doublepost]

I haven't lol'd in a long time. This is only about money. And Apple lawyers settle all the time.



Short term memory

Late last year Apple's lawyers claimed almost the exact same things against Nokia, e.g. patent abuse and royalties based off phone price, and then refused to pay Nokia any more royalties until a court could decide things, same as they're doing with Qualcomm.

This year Apple settled out of court with Nokia, including a large payment and royalties.

With Qualcomm though, Apple is ramping up its PR to build sentiment against them, a tactic which would not work against Nokia.

Would this by any chance be the same court Ericsson offered to settle a price for Apple to use its technology? That offer which Apple flatly and abruptly refused! And then they amazingly settled out of court before being ripped to shreds by Ericsson?

 

[69Mustang]

Qualcomm IS suing Apple on five non-FRAND patents in the southern district of California.

And I am not assuming much - I read the complaints and i am very familiar with these sorts of agreements.

You're right, they are suing Apple over non-FRAND patents (I thought it was 6, but it could be 5).
I have a question about your example of FRAND in a previous quote:

This is how it works. Say I have a FRAND patent. I charge everyone 10 dollars a unit...

I've always understood that FRAND doesn't mean charge everyone the same price as in your example. Meaning you can have a FRAND patent and charge 10 different licensees 10 different prices: "This does not mean that the rates and payment terms can’t change dependent on the volume and creditworthiness of the licensee. However it does mean that the underlying licensing condition included in a licensing agreement must be the same regardless of the licensee. This obligation is included in order to maintain a level playing field with respect to existing competitors and to ensure that potential new entrants are free to enter the market on the same basis." - Reasonable and Non-Discriminatory Licensing

Example - Underlying condition: 2% of assembled cost w/ A credit rating. A+ credit rating subtract .05% from rate. B credit rating add .3% to rate. 5M-10M units sub .03% from rate. 10M-50M units sub .05% from rate, etc.
Thus everyone is working with the same underlying conditions but the rate won't be the same.

 

[farewelwilliams]

Hey QC, why don't you join forces with IMG and create a truly terrifying paper tiger to threaten Apple? Surely two empty lawsuits are better than one?

what?

 

[hotgril]

What is it you people usually say, "Don't like it, don't buy it". Shouldn't be hard if "The iPhone wouldn't exist without us" is wrong.

I'm not really the representative for Apple fans*, but I personally don't recall saying unconditionally "don't like it, don't buy it." Anyway, there's a difference between "the iPhone wouldn't exist without us" and "the iPhone won't exist if Apple doesn't buy from us." What we know is they hold the patents and/or whatever market resources necessary to create the chips, however that came to be. A lot of the patents are FRAND, and those come down to standards agreements more than innovation.

* I really only care about the Mac and think more than half of Apple's products are stupid at this point

 

[kdarling]

Would this by any chance be the same court Ericsson offered to settle a price for Apple to use its technology? That offer which Apple flatly and abruptly refused! And then they amazingly settled out of court before being ripped to shreds by Ericsson?

Apple also settled with Nokia after claiming all sorts of negative things.

It's just SOP for lawyers to claim that: The patents they're accused of infringing are invalid. If they're valid, then they don't apply. If they apply, then they cost too much.

Unless they're the ones doing the suing, then everything they said was wrong with high pricing and device price basing does not apply, and patents are suddenly worth everything a defendant made in profit

 

[cmaier]

You're right, they are suing Apple over non-FRAND patents (I thought it was 6, but it could be 5).
I have a question about your example of FRAND in a previous quote:

I've always understood that FRAND doesn't mean charge everyone the same price as in your example. Meaning you can have a FRAND patent and charge 10 different licensees 10 different prices: "This does not mean that the rates and payment terms can’t change dependent on the volume and creditworthiness of the licensee. However it does mean that the underlying licensing condition included in a licensing agreement must be the same regardless of the licensee. This obligation is included in order to maintain a level playing field with respect to existing competitors and to ensure that potential new entrants are free to enter the market on the same basis." - Reasonable and Non-Discriminatory Licensing

Example - Underlying condition: 2% of assembled cost w/ A credit rating. A+ credit rating subtract .05% from rate. B credit rating add .3% to rate. 5M-10M units sub .03% from rate. 10M-50M units sub .05% from rate, etc.
Thus everyone is working with the same underlying conditions but the rate won't be the same.

It is true that the rates don't have to be identical. But there needs to be a rational basis for the differences - they need to reflect something approaching equivalent value to the patent holder, otherwise it begins to look discriminatory. Credit rating would be a good example of reasons to differ. But that doesn't change my overall explanation of what's going on here.

 

[AZREOSpecialist]

I hope Apple destroys them.

 

[Gasu E.]

Please don't settle. Take them to court. Try and get every penny out of them... and fail. Fail so that the little guys who can't sue Qualcomm can get a reasonable price when trying to develop something beyond a pad of glass.

Outside of the patent infringement lawsuit, which is only a small part of the Qualcomm actions against Apple, none of the things Qualcomm is doing have any relevance to small companies.

 

[69Mustang]

It is true that the rates don't have to be identical. But there needs to be a rational basis for the differences - they need to reflect something approaching equivalent value to the patent holder, otherwise it begins to look discriminatory. Credit rating would be a good example of reasons to differ. But that doesn't change my overall explanation of what's going on here.

I wasn't questioning your explanation. Apologies if it appeared so. I was questioning the example you presented. It leaves one with the impression that a lot of people have. The impression that FRAND rate means same rate. A lot of arguments are made based on that incorrect assumption.

 

[lowendlinux]

I hope these two companies batter each other in the ring for decades I simply can't think of any tech companies right now that need a black eye more than these two.

 

[Solomani]

Settle it already.

 

[grkm3]

Will taking the work in house let them avoid tangling with Qualcomm though or just turn the heat up higher? Samsung makes its own Exynos chip which by most measures is much better than the Qualcomm Snapdragons, yet the US is stuck with Qualcomm inside while most other markets get Exynos. I'm not sure why that is. I know we have a mix of CDMA and GMS networks but is that the only reason or are there threats of lawsuits and other legal matters that keep Samsung from providing Exynos phones to carriers who have GSM networks?

Because they put Samsung in a tough spot.either pay more to license cdma to use in the exynos or pay less to buy a Snapdragon chip that includes that cmda license.