Qualcomm Files New Lawsuit in Ongoing Apple Feud, Now Targeting Four Major iPhone Suppliers

[MacRumors]

In the ongoing feud between Apple and Qualcomm, the latter company today has brought four of Apple's main iPhone and iPad suppliers into the legal battle by filing a breach of contract complaint against Foxconn, Pegatron, Wistron, and Compal.

Qualcomm has sued the four manufacturers for "breaching their license agreements" by failing to pay royalties on the use of Qualcomm's technology in the assembly of Apple's devices. For its part in the production of iPhones, Qualcomm supplies the LTE modem in Apple's smartphone.

The cessation of royalty payments by the iPhone manufacturers isn't too surprising, as it follows a report from April in which Apple itself stopped paying its suppliers for royalties related to Qualcomm. According to Qualcomm, "the manufacturers say they must follow Apple's instructions not to pay," so in retaliation Qualcomm is suing the four companies, asking them to comply with long-standing contractual obligations as well as pay any withheld royalties.

Qualcomm said that Foxconn, Pegatron, Wistron, and Compal are still paying royalties for Qualcomm technology related to non-Apple products "under the very same agreements that apply to the Apple products." Qualcomm further mentioned that its license agreements with the manufacturers began before Apple even sold its first iPhone, meaning that "Apple is not a party to the agreements" and shouldn't be able to interfere so heavily in its business.

"It is unfortunate that we must take this action against these long-time licensees to enforce our agreements, but we cannot allow these manufacturers and Apple to use our valuable intellectual property without paying the fair and reasonable royalties to which they have agreed," said Don Rosenberg, executive vice president and general counsel of Qualcomm.

"As Apple continues to collect billions of dollars from consumer sales of its Qualcomm-enabled products, it is using its market power as the wealthiest company in the world to try to coerce unfair and unreasonable license terms from Qualcomm in its global attack on the company. Our license agreements with Apple's manufacturers remain valid and enforceable. The manufacturers must continue to live up to their obligations under these agreements and Apple should immediately cease its tortious interference."

In the original report relating Apple's suspension of royalty payments, the move was suggested to hurt Qualcomm to the tune of $500 million, causing the company to adjust its third quarter guidance from $5.3 billion - $6.1 billion in revenue down to $4.8 billion - $5.6 billion. The argument between the two companies originates back to an FTC complaint regarding Qualcomm's anticompetitive patent licensing practices, for which Apple sued Qualcomm, accusing the company of charging unfair royalties for "technologies they have nothing to do with."

The feud reached a boiling point in April due to Apple's decision to stop royalty payments to its manufacturers in relation to Qualcomm technology, and would continue doing so until the conflict was resolved. The move particularly hurt Qualcomm because the company's licensing deals are directly with iPhone suppliers, like the four it is now suing, and not Apple itself.

In a statement given last month, Apple said, "We've been trying to reach a licensing agreement with Qualcomm for more than five years but they have refused to negotiate fair terms." The company called Qualcomm's demands "unreasonable," arguing that Qualcomm has been "charging higher rates" based on Apple's own innovation in its devices, "not their own."

Article Link: Qualcomm Files New Lawsuit in Ongoing Apple Feud, Now Targeting Four Major iPhone Suppliers

 

[Avieshek]

Let the game begin!

Qualcomm vs everybody.

 

[BeefCake 15]

Is Qualcomm the only player in the game for this technology and can it be done else where?

 

[Andres Cantu]

What a mess.

 

[4jasontv]

Oooh, they should try suing the users too! They are benefiting from Qualcomm tech without paying. Also, there are the companies that ship Qualcomm's stuff and don't pay royalties. And of course tech news sites should pay. They are making ad revenue off of Qualcomm!

 

[coolfactor]

If it's true that Qualcomm willfully chose to charge higher rates, simply because of Apple's status in the market, then they deserve what they get. The value of something should be based on the effort that went into it, not status.

 

[Pbrutto]

I think the more it is Qualcomm vs everybody, the less likely Qualcomm is to win. I don't know anything about the licensing for this particular part, but if there is a way for anyone else to make this part and Qualcomm looses the court case...no more Qualcomm

 

[yeah]

Intel better step up their modem game...

 

[PBG4 Dude]

I think the more it is Qualcomm vs everybody, the less likely Qualcomm is to win. I don't know anything about the licensing for this particular part, but if there is a way for anyone else to make this part and Qualcomm looses the court case...no more Qualcomm

Qualcomm owns the patents behind wireless communication technology. Even if someone else invented a replacement chip, they'd still have to license spectrum-related patents. It's like that FRAND lawsuit between Apple and Nokia years back over 3G patents.

 

[gigapocket1]

Apple is trying to negotiate because either A. They are switching completely to intel in their next chips. Or B. They have a new chip up their sleeve that they have devoloped

 

[d5aqoëp]

Intel's next gen modem has caught up with Qualcomm's X16 modem or is at par. That's why Apple is having a go at them. But Apple has stopped all royalties means that Apple's lawyers have found foolproof case with them.

 

[err404]

Apple will end up back-paying. The issue isn't the validity of the patent, it's the cost. Apple is claiming that the price is unfairly/inconsistently applied to different companies. Apple is withholding further payments until the court determines a fair rate. At that point Apple will pay the new agreed amount.

 

[JPack]

Can't wait until 5G is here.

With 3G and LTE, Qualcomm has a stranglehold on the patents, but it'll be Huawei and ZTE's time to shine for 5G.

 

[69Mustang]

Oooh, they should try suing the users too! They are benefiting from Qualcomm tech without paying. Also, there are the companies that ship Qualcomm's stuff and don't pay royalties. And of course tech news sites should pay. They are making ad revenue off of Qualcomm!

Hyperbole aside, this argument only works if the aforementioned parties (users, shippers, tech sites) actually have contracts with Qualcomm.

More to a valid point, the 4 companies continue to pay Qualcomm royalties under the contentious contract, except as it relates to Apple. They are essentially pawns in a big boy fight. Sucks to be them.

End of the day, Apple will end up paying Qualcomm their royalties. The only question is how much.

 

[agsystems]

Is Qualcomm the only player in the game for this technology and can it be done else where?

I don't think you can be backward compatible and not use their patents - you can come up with a clean room implementation for next gen 6G but since you will need to support 3G/4G/5G, you will still have to pay up.

 

[Solomani]

This is not going to end well for Qualcomm. Intel and Samsung have also joined forces with Apple and the FTC to sue Qualcomm. Basically, it's Qualcomm versus Everyone. See Bloomberg article below:

Intel and Samsung Gang Up on Qualcomm, Backing FTC Monopoly Suit

 

[Cameroncafe10a]

The next iPhone should use an Intel modem... That would teach Qualcomm a lesson!

 

[yodaphone]

Oooh, they should try suing the users too! They are benefiting from Qualcomm tech without paying. Also, there are the companies that ship Qualcomm's stuff and don't pay royalties. And of course tech news sites should pay. They are making ad revenue off of Qualcomm!

The price of phones include these licensing fees. No company can just "ship" **** without paying royalties, maybe in god forsaken places, but definitely not in the US. Moreover, tech "news" sites are reporting news.
[doublepost=1495056631][/doublepost]

The next iPhone should use an Intel modem... That would teach Qualcomm a lesson!

Intel tried its hand with it & failed. Samsung & a few chinese cos. have some modems though. Will Apple work with them?
[doublepost=1495056791][/doublepost]

Can't wait until 5G is here.

With 3G and LTE, Qualcomm has a stranglehold on the patents, but it'll be Huawei and ZTE's time to shine for 5G.

huewei & ZTE are well known for IP theft. no one uses their chips fearing more lawsuits.

 

[Cameroncafe10a]

If there was an award for being stupid, then this guy should get it, unless he's trying to be sarcastic

The price of phones include these licensing fees. No company can just "ship" **** without paying royalties, maybe in god forsaken places, but definitely not in the US. Moreover, tech "news" sites are reporting news.
[doublepost=1495056631][/doublepost]

Intel tried its hand with it & failed. Samsung & a few chinese cos. have some modems though. Will Apple work with them?
[doublepost=1495056791][/doublepost]

huewei & ZTE are well known for IP theft. no one uses their chips fearing more lawsuits.

<- skip to 11:30

New Intel modem has speeds of 1 gigabyte per second - seems pretty good to me!

 

[4jasontv]

If there was an award for being stupid, then this guy should get it, unless he's trying to be sarcastic

The price of phones include these licensing fees. No company can just "ship" **** without paying royalties, maybe in god forsaken places, but definitely not in the US. Moreover, tech "news" sites are reporting news.

Of course it was sarcasm, so no need for name calling. That aside, I am pretty sure that companies that "ship" stuff, like FedEx, UPS, and USPS don't pay Qualcomm royalties regardless if they are in a god forsaken place like the US. Link referencing is citing news not reporing news. All they are doing is collecting ad revenue by referencing Qualcomm's IP. Basically stealing. Kinda like what the end users are doing by buying devices from companies that aren't paying their royalties. There isn't much difference between that and getting it from the back of a van.

 

[JPack]

I don't think you can be backward compatible and not use their patents - you can come up with a clean room implementation for next gen 6G but since you will need to support 3G/4G/5G, you will still have to pay up.

Cross-patent licensing is used. For instance, Apple licenses baseband technologies from Qualcomm, Moto, Huawei, Ericsson, ZTE, etc. Instead of collecting royalties, those companies negotiate cross-licensing deals as Apple has many valuable patents.

The bigger you are, the more R&D you do, the more patents you file, the better position you'll be in. We can already see this with 5G as Qualcomm is no longer as dominant as it was with 4G-LTE.
[doublepost=1495067450][/doublepost]

The next iPhone should use an Intel modem... That would teach Qualcomm a lesson!

It has nothing to do with who manufacturers and designs the baseband modem. The issue here is the certain
declared-essential patents for cellular standards.

 

[kdarling]

In the ongoing feud between Apple and Qualcomm, the latter company today has brought four of Apple's main iPhone and iPad suppliers into the legal battle by filing a breach of contract complaint against Foxconn, Pegatron, Wistron, and Compal.

Was waiting for this to happen. Qualcomm's patent licensing contracts are with those phone manufacturers, not with Apple.

(Because of that, Apple has actually been getting away for ten years now paying much less than normal, since the royalty is based on the relatively small amount Apple pays Foxconn for each iPhone, not on the wholesale price like other phone makers.)

Is Qualcomm the only player in the game for this technology and can it be done else where?

Qualcomm basically invented 3G, and a lot of 4G. Eventually their patent influence will lessen, but not as long as phones require backward compatibilty.

If it's true that Qualcomm willfully chose to charge higher rates, simply because of Apple's status in the market, then they deserve what they get. The value of something should be based on the effort that went into it, not status.

Nope, Qualcomm did not charge Apple more because they were Apple. In fact, they didn't charge Apple at all, since their contracts were and still are with the phone manufacturers (factories).

When Apple says that they paid higher rates (through the factories), all that they really mean is that they hate the fact that cellular royalties are based on product price. And that method applies to everyone, not just Apple as they like to imply.

In other words, Samsung pays more royalties for a premium phone than for a cheap phone. But Apple has some of the highest priced / profit phones on the planet. Heh, but then think of Vertu phones at $10K a pop! I kid a bit; there's a cap on fees, and again, Apple isn't paying on their street price at all. They're paying on the ~$250 they pay Foxconn et al. More like Huawei prices.

Note that charging by price (or even profit, which is not done here) is not an uncommon way of charging for Intellectual Property, btw. With cellular especially, it helps spread the costs fairly amongst companies making billions (e.g. Apple, Samsung, etc) on high profit devices, and companies making almost nothing on cheap phones for the masses. The more phones in use, the more we have a worldwide cellular network, without which the high profit phones could not work at all.

The next iPhone should use an Intel modem... That would teach Qualcomm a lesson!

Actually, Intel's modems use Qualcomm IP. Intel even bought a company specifically to get to use some internal Qualcomm chip design.

But in the end, Qualcomm does not care what modem a manufacturer uses. They get paid a royalty for the IP necessary to make and use anyone's modem.

Think of it like this: Microsoft gets paid for Windows, not matter what CPU chip you use. And as with store franchises, those who make more, pay more in fees.

Cross-patent licensing is used. For instance, Apple licenses baseband technologies from Qualcomm, Moto, Huawei, Ericsson, ZTE, etc. Instead of collecting royalties, those companies negotiate cross-licensing deals as Apple has many valuable patents.

Those other companies also make phones, where cross licensing Apple's UI patents is useful as protection. Qualcomm does not make phones and so Apple cannot sue them over small things like slide to unlock. This is a thorn in Apple's side, as they have almost zero leverage... a rare position for Apple, who is used to bullying suppliers.