Apple claims mega ARM chip maker Qualcomm “charges it at least five times more in payments that all the other cellular patent licensors we have agreements with combined.” It also alleges extortion so it is suing Qualcomm.
It said in a statement, “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."
It added, "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."
Patrick Moorhead, Moor Insights & Strategy analyst said, “This will likely be troublesome for Qualcomm that, by being so far ahead technologically with so much market share, has a painted target on its back. There’s nothing clear-cut about this case.”
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Qualcomm supplied Apple with modem chips up to its iPhone 6s series – to allow for telco network connection - but even if Apple use alternative modem suppliers as it did from Intel for its iPhone 7 series, Qualcomm still benefits as it licenses the technology to Intel.
Qualcomm has not yet formally responded on the Apple suit but Qualcomm General Counsel Don Rosenberg called Apple’s claims “baseless.” In a statement, he said, “Apple mischaracterized agreements and negotiations and failed to acknowledge the enormity and value of the technology Qualcomm invented. We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices.”
Qualcomm has been under siege recently with the Korean FTC fining it US$854 million in December 2016 for unfair patent licencing practices – Qualcomm has appealed. It faced a US$975 million fine in China in early 2015.
Last week the US Federal Trade Commission filed an anti-trust suit accusing the company of using anti-competitive tactics to maintain its monopoly in the supply of a key semiconductor device.
Qualcomm said it believed the FTC action was based "on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry".
“The complaint seeks to advance the interests and bargaining power of companies that have generated billions in profit from sales of products made possible by the fundamental 3G and 4G cellular technology developed by innovators like Qualcomm”.
“The portrayal of facts offered by the FTC as the basis for the agency’s case is significantly flawed. Qualcomm has never withheld or threatened to withhold chip supply to obtain agreement to unfair or unreasonable licensing terms. The FTC's allegation to the contrary — the central thesis of the complaint — is wrong.”