Some of you may remember the suit Apple brought against Qualcomm back in January. In it Apple alleged that Qualcomm was withholding around $1 billion from Apple in retaliation for their cooperation with Korean authorities during an anti-trust investigation (another similar suit in the US with the FTC is ongoing) in addition to failing to adhere to FRAND licensing (fair, reasonable, and non-discriminatory). Well, Qualcomm's had some time to think about it.
In an entirely unexpected twist Qualcomm has responded to Apple's accusations with their own counter-claims, in which they allege that Apple did not engage in good faith negotiations, that Qualcomm's licensing terms actually are FRAND, that Apple has interfered with their licensing agreements with manufacturers outside of Apple in the latter's supply chain, made false statements (presumably in the recent Korean anti-trust investigation), and finally that they throttled the performance of Qualcomm's modems on the iPhone 7 while also making threats against Qualcomm to not expose this.
Apple currently uses Qualcomm's modems for SIM unlocked devices and US CDMA carriers, while Intel handles that in the US GSM models. But, Apple's earlier devices from the 6s to the 4s all used Qualcomm modems. Given the number of devices sold by Apple that easily makes them one of Qualcomm's biggest customers. This little spat between the two of them could also be bad for consumers of future Apple products, as Qualcomm's modems perform better than Intel's.
This might just be a fight between Apple and Qualcomm, but for those of us living the sweet life with Android it could spell trouble as well. Qualcomm's had a tight grip on their IP historically, and they've pretty well cornered the smartphone chipset market. If they win the case and their licensing costs are found to be reasonable then Qualcomm might have more leverage on future products and licensing arrangements with Android device manufacturers. Few phone chipset manufacturers choose to pay licensing now for Qualcomm's CDMA and LTE IP, so Qualcomm's functional monopoly may continue in the US (with some notable exceptions).
Qualcomm's full statement:
Qualcomm Incorporated (NASDAQ: QCOM) today filed its Answer and Counterclaims to the January lawsuit brought by Apple against the Company in the U.S. District Court for the Southern District of California. Qualcomm’s filing details the value of the technologies Qualcomm has invented, contributed and shared with the industry through its licensing program, as well as Apple’s failure to engage in good faith negotiations for a license to Qualcomm’s 3G and 4G standard essential patents on fair, reasonable and non-discriminatory terms. The filing also outlines how Apple:
- Breached agreements and mischaracterized agreements and negotiations with Qualcomm;
- Interfered with Qualcomm’s long-standing agreements with Qualcomm licensees that manufacture iPhones and iPads for Apple;
- Encouraged regulatory attacks on Qualcomm’s business in various jurisdictions around the world by misrepresenting facts and making false statements;
- Chose not to utilize the full performance of Qualcomm’s modem chips in its iPhone 7, misrepresented the performance disparity between iPhones using Qualcomm modems and those using competitor-supplied modems; and
- Threatened Qualcomm in an attempt to prevent it from making any public comparisons about the superior performance of the Qualcomm-powered iPhones.
Qualcomm seeks, among other things, damages from Apple for reneging on its promises in several agreements and to enjoin Apple from further interference with Qualcomm’s agreements with the companies that manufacture iPhones and iPads for Apple.