Apple sues Qualcomm for $1 bn

Days after the US government filed a lawsuit against global chip manufacturer Qualcomm of forcing Apple to use its chips in exchange for lower licensing fees, the Cupertino-based tech giant has sued Qualcomm for nearly $1 billion over royalties.

According to a CNET report, in a lawsuit on Friday, Apple alleged the wireless chipmaker didn’t give fair licensing terms for its processor technology.

“Apple also said Qualcomm sought to punish it for cooperating in a South Korean investigation into Qualcomm’s licensing practices by withholding a $1 billion rebate,” the report added.

“For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with,” Apple said in a statement.

“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 CNET report added, quoting the statement.

Meanwhile, Qualcomm called Apple allegations “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 programme,” Don Rosenberg, Qualcomm Executive Vice President and General Counsel, said in a statement:

“Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent [South Korean Fair Trade Commission] decision and FTC complaint, by misrepresenting facts and withholding information,” Rosenberg added.

Apple designs the processors in iPhones and iPads but buys chips from Qualcomm to connect to 4G LTE and other cellular networks.

Earlier this week, the US Federal Trade Commission (FTC) accused Qualcomm of maintaining a monopoly over chips for cellular phones through a “no license, no chips” policy under which it will supply its baseband processors only on the condition that cell phone manufacturers agree to Qualcomm’s preferred license terms.

That policy imposed “onerous” supply and patent-licensing terms to extract high royalties from cell phone makers and weaken competitors, the commission said.

“Qualcomm recognised that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors,” the FTC statement said.

“Despite its commitment to license standard-essential patents on FRAND terms, Qualcomm has consistently refused to license those patents to competing suppliers of baseband processors,” it added.

Fair, reasonable and non-discriminatory terms (FRAND) denote a voluntary licensing commitment that standards organisations request from the owner of an intellectual property right (usually a patent) that may become, essential to practice a technical standard.

Qualcomm refuted FTC’s charges, saying that the lawsuit was based on “flawed legal theory.”

“Qualcomm has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms. The FTC’s allegation to the contrary — the central thesis of the complaint — is wrong,” the company was quoted as saying in a CNET report.