Federal courts in the US have ruled that Qualcomm owes Apple nearly a billion dollars, or £754 million from previous payment agreements, in the latest salvo in a multifaceted legal battle between the two companies.
The ruling made in the Southern District of California by Judge Gonzalo Curiel is in relation to patent royalty rebate payments. These payments were part of a collaboration agreement between the two American tech behemoths, in which they would both reimburse each other for the use of patented technologies.
Apple would reimburse contracted factories that had paid Qualcomm royalties for the use of its patents in the production of Apple smartphones. These contracted factories’ expenses would then be paid back by Apple through rebates paid by Qualcomm.
Qualcomm stated that they stopped paying the rebates because they believed Apple had negated the agreement by telling smartphone manufactures to make false claims to the Korean Fair Trade Commission, which was in the process of investigating the company.
Despite the ruling, the outcome awaits a trial in the case which is due to start next month. In a statement to Reuters Qualcomm’s VP and general counsel Don Rosenberg commented that: “Although the Court today did not view Apple’s conduct as a breach of Apple’s promises to Qualcomm in the 2013 Business Cooperation and Patent Agreement, the exposure of Apple’s role in these events is a welcome development.”
In relation to the payments Rosenberg stated that: “Apple has already offset the payment at issue under the agreement against royalties that were owed to Qualcomm.”
While Apple have said that it welcomes the courts decision and that it believes Qualcomm’s ‘illegal practices’ are damaging their shared technology industry.
Qualcomm’s clash with Apple is costing it heavily in legal fees and clearly weighing on the balance sheet, as well as the minds of its leadership: Qualcomm executives February 1 said they had reduced operating expenses by $850 million, but failed to meet their target of $1 billion owing, in part, to litigation costs.
Apple v Qualcomm: The War Goes On
This week’s ruling is not the first legal decision in the Apple v Qualcomm dispute.
In January 2017 Apple sued Qualcomm for $1 billion in a lawsuit in which Apple claimed the latter was “charging royalties for technologies they have nothing to do with.”
Apple claimed in the initial case that: “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.”
Japan Fair Trade Commission Brings Qualcomm Good News
It’s a topsy-turvy legal week for Qualcomm: a more positive result came in Japan, where regulators today reversed a nearly ten-year-old ruling that maintained that Qualcomm was violating Japanese antimonopoly laws.
Don Rosenberg, Qualcomm’s general counsel commented on the legal turnover: “[We]Are very gratified to learn that after years of considering the evidence and applicable legal authority, the Japan Fair Trade Commission has concluded there was nothing improper about Qualcomm’s cross-licensing program.”
“Today’s decision affirms our confidence that once Qualcomm was afforded a full hearing, and actual evidence was considered, the JFTC would find that our cross-licensing program was completely lawful and the product of arms-length, good-faith negotiations with our Japanese licensees. The JFTC is now the second antitrust agency after the Taiwan Fair Trade Commission to have revoked its ruling against Qualcomm.”