Apple and Qualcomm seem to be headed toward a head-on collision, with Apple suing the the wireless chipmaking company for apparently overcharging for use of its patents.
“For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with,” Apple said in a statement. “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.”
Apple is asking a federal district court in the Southern District of California to lower the amount of money it has to pay Qualcomm in licensing fees, and to order that Qualcomm return $1 billion to Apple. As per Apple’s claims, Qualcomm charges “at least five times more in payments than all the other cellular patent licensors we have agreements with combined.”
At present, Qualcomm is awarded royalties based on the total selling price of phones. For example, for the iPhone 7 and 7 Plus, Apple buys its 4G LTE chips from Intel, which use some of Qualcomm’s technology. As a result, Apple pays Qualcomm for the licensing of these processors, but must pay based on the $650 value of the iPhone, as opposed to the $20 value of the Intel chip.
Two years back, Qualcomm paid out close to $1 billion in China at the conclusion of an antitrust investigation. In December last year, South Korea also ordered that Qualcomm pay it $850 million after its supposedly monopolistic “unfair business model” was the subject of a three-year investigation.
Due to Apple’s participation in this latter investigation, the company alleges that Qualcomm tried to punish it by withholding a massive $1 billion rebate, the sum Apple wants back.
In response to Apple’s claims, Qualcomm’s executive vice president and general counsel, Don Rosenberg, issued a statement saying that:
“Apple has intentionally mischaracterized our agreements and negotiations, as well as the enormity and value of the technology we have invented, contributed and shared with all mobile device makers through our licensing program. Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent [South Korean Fair Trade Commission] decision and FTC complaint, by misrepresenting facts and withholding information. We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.”