Apple sues Qualcomm for £800 million in 'withheld payments'

January 23, 2017 // 10:45 a.m.

Tags: #apple #baseband #federal-trade-commission #frand #ftc #licence #licensing #patent #qualcomm

Apple has removed any doubt that it was the source of a complaint to the US Federal Trade Commission alleging anti-competitive behaviour from Qualcomm by filing an £800 million lawsuit against the company.

Filed last week, the FTC's suit against mobile chip giant Qualcomm came with three key allegations: that the company forced baseband processor customers to sign onerous licensing conditions which included financial penalties for daring to use a competitor's products at any time; that it refused to licence its standard-essential patents under the required fair, reasonable, and non-discriminatory (FRAND) terms; and, more specifically, that it had forced Apple into using Qualcomm chips exclusively from 2011 through 2016 through draconian licensing conditions.

The FTC confirmed that its investigation into the allegations had sprung from a complaint but did not name the company involved. With only Apple and Qualcomm's names attached, though, it wasn't any great mystery, and now Apple has tacitly confirmed itself as the source of the complaint by filing its own suit against Qualcomm seeking what it claims are withheld payments of around £800 million.

'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,' the company claimed in its statement following the filing. '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 $1B 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.'

Qualcomm, naturally, denies Apple's allegations, just as it denied the validity of the FTC's case. '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 mischaracterised 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,' claimed Qualcomm general counsel Dan Rosenberg. '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 meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.'

Qualcomm's share price has dropped nearly three percent following Apple's filing, wiping out a partial recovery made after a similar drop after the FTC's announcement and taking the company's value to its lowest level since September 2016.
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