Qualcomm’s chip licenses invalid: Apple

Reuters

Thu, Jun 22, 2017 - Page 10

Apple Inc on Tuesday broadened a legal attack on Qualcomm Inc, arguing to a US federal court that license agreements that secure the chipmaker a cut of every iPhone manufactured were invalid.

If successful, Apple’s attack would undermine a core tenet of Qualcomm’s business model.

“Apple is trying to distract from the fact that it has made misleading statements about the comparative performance of its products, and threatened Qualcomm not to disclose the truth,” Qualcomm general counsel Don Rosenberg told reporters in an e-mailed statement.

Apple sued San Diego-based Qualcomm in January, saying the chipmaker improperly withheld US$1 billion in rebates because Apple helped South Korean regulators investigate Qualcomm.

Apple’s initial lawsuit was a relatively narrow one focused on whether it violated a contract with Qualcomm by helping regulators that were investigating Qualcomm’s business practices.

However, the new filing expands Apple’s claims and seeks to stop Qualcomm’s longstanding business model using a legal theory based on a ruling last month.

The US Supreme Court made it harder for manufacturers and drug companies to control how their products are used or resold, ruling last month against printer company Lexmark International Inc in a patent dispute over another company’s resale of its used ink cartridges.

In a brief, Apple took aim at Qualcomm’s practice of requiring customers to sign patent license agreements before purchasing chips, known in the industry as “no license, no chips.”

The license allows Qualcomm to take a percentage of the overall selling price for the iPhone in exchange for supplying the modem chips that let the phones connect to cellular data networks.

Apple argued that the ruling involving Lexmark showed that Qualcomm was entitled to only “one reward” for its intellectual property and products.

Qualcomm should be allowed to charge for either a patent license or a chip, but not both, Apple said.

Apple wants to be able to buy chips without signing the license agreement that forces it to pay a part of the overall iPhone sale price.

“As Apple recently acknowledged, it is rarely first to market with any new technology, which shows it is relying heavily on the R&D [research and development] investments in the most revolutionary technologies by companies like Qualcomm. We are confident these truths will prevail in our legal disputes with Apple,” Rosenberg said.

Apple has also asked the court to stop lawsuits that Qualcomm had filed against Foxconn Technology Group (富士康) and three other contract makers that assemble the iPhone on Apple’s behalf and are the formal buyers of Qualcomm’s chip, as is standard in the electronics industry.