Cupertino giant Apple has decided to sue San Diego-based chip company Qualcomm, maker of the iPhone’s base-band processor. Apple will sue the later for an amount of $1 billion as sources confirmed. The lawsuit portrays Qualcomm as an extortionist over basic smartphone technology as reported by CNBC. FTC had also filed an antitrust lawsuit against Qualcomm, alleging it was using its patents to strong-arm competitors into paying exorbitant royalties, even for devices that don’t use Qualcomm-made components.
Qualcomm guaranteed it would use its modem tech exclusively for a five-year period, from 2011 to 2016 for Apple. The agreement essentially shut out every other manufacturer of baseband processors from the world’s most popular smartphone, which the lawsuit says unfairly hampered competitors’ development. Apple casts Qualcomm as a lazy company that no longer innovates because its business is built around “older, legacy technologies” and that it collects many royalties “for no reason” — essentially accusing the chip-maker of being a patent troll. Apple also gave some detail on just how large Qualcomm’s royalties are. According to the company’s statement, the royalties Qualcomm collects on the iPhone are five times those of the device’s other “cellular patent licensors” combined.
The world’s most valuable company going after one of its own partners, especially one as important to the iPhone as Qualcomm, was something few could have predicted. The lawsuit will certainly have reverberations in the wireless industry for years to come, and could lead to big changes in the cellular modem market as 5G technology — the successor to 4G LTE — takes hold. In 2016, Qualcomm held a whopping 65 percent of the market for mobile baseband modems (and 50 percent of the revenue), figures that could tumble as these lawsuits proceed and competitors pounce.
Apple’s full legal filing:
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 $1Billion 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.
While we are still in the process of reviewing the complaint in detail, it is quite clear that Apple’s claims are baseless. 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 KFTC decision and FTC complaint, by misrepresenting facts and withholding information. We welcome the opportunity to have these merit less claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.
This has been the biggest filing by Apple since their last litigation with Samsung in regard with their patent issues. No idea how far its gonna drag. Hope things get settled soon. For more updates keep following our blog.