Apple sues Qualcomm for excessive royalties, battles for $1 billion

Qualcomm seems to be in trouble. Couple of days back, US FTC has filed an appeal against Qualcomm for its malpractices.

Qualcomm engaged in exclusionary conduct that taxes its competitors’ baseband processor sales, reduces competitors’ ability and incentive to innovate and raises prices paid by consumers for cell phones and tablets.

FTC found that Qualcomm threatened supply of baseband processors to its  customers that didn’t agree to its patent licensing. It also levied Licensing tax on companies that purchased baseband processors from its competitors.

The Chipset maker in the past has already been orders to pay $954M in China and $854M for patent licensing in Korea.

The Chip maker already has its own share of issues and now, Apple has sued Qualcomm, with figure going at $1 billion. Apple claims that Chip maker charged excessive royalties for its basic cellular standards.

Apple Statement on the matter –

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 $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.

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