Apple sues Qualcomm for US$1 bln over royalties

PUBLISHED : Saturday, 21 January, 2017, 7:24am
UPDATED : Saturday, 21 January, 2017, 7:24am

Apple is suing Qualcomm for roughly $1 billion, saying Qualcomm has been “charging royalties for technologies they have nothing to do with.”

The suit follows the US Federal Trade Commission’s lawsuit against Qualcomm earlier this week over allegedly unfair patent licensing practises.

The complaint, filed in US District Court in San Diego on Friday, alleges that Qualcomm has withheld $1 billion in rebate payments owed to Apple under an agreement between the two companies because Apple cooperated with an anti-trust investigation by the Korea Fair Trade Commission, or KFTC.

Qualcomm is a major supplier to both Apple and Samsung for “modem” chips that help phones connect to wireless networks.

The South Korean anti-trust regulator in December fined Qualcomm a record US$865 million for anti-competitive patent licensing practicss.

“Qualcomm has withheld the required contractual payments from Apple even though the agreement clearly permits Apple to respond to the KFTC’s lawful investigation and requests for information,” according to the lawsuit. “If that were not enough, Qualcomm then attempted to extort Apple into changing its responses and providing false information to the KFTC in exchange for Qualcomm’s release of those payments to Apple. Apple refused.”

Efforts to reach Qualcomm have been unsuccessful. The company has said in the past that its 3G and 4G cellular patents are essential to what makes smartphones truly mobile with the ability to link to the internet from almost anywhere. The royalties it has been charging for these key technologies for more than two decades are not unreasonable, the company contends.

The San Diego wireless giant also vigorously denies claims made by the FTC and the Korea Fair Trade Commission, saying they are based on a flawed legal theory and inaccurate information about the mobile industry.

Apple issued the following statement regarding the lawsuit:

“For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. 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. Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties. Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.

“To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding nearly $1 billion in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.

“Apple believes deeply in innovation and we have always been willing to pay fair and reasonable rates for patents we use. We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts.”