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23 January 2017Patents

Apple sues Qualcomm for demanding unfair patent royalties

Apple has sued Qualcomm, accusing the semiconductor company of abusing its monopoly in the mobile device market to gain unfair royalties from Apple’s inventions.

The case, which was filed on Friday, January 20 at the US District Court for the Southern District of California, was brought after Apple had been allegedly overcharged billions of dollars by Qualcomm.

Qualcomm is one of many companies to have contributed to the development of “standards related to how cellular phones connect to voice and data networks”, entitling Qualcomm to a fair royalty based on the value of its particular contribution, according to the suit.

Apple stated: “Qualcomm is not entitled to collect royalties based on the contribution of others to the standard or unrelated innovation by companies that utilise the standard—but this is precisely the business model that Qualcomm has established and that it protects through monopoly power and unlawful licences.”

In order for Apple to purchase Qualcomm chips or obtain access to patents linked to a cellular standard, Qualcomm is allegedly demanding that third parties pay Qualcomm a royalty which is greater than the value of Qualcomm’s contribution.

Qualcomm said in a statement: “While we are still in the process of reviewing the complaint in detail, it is quite clear that Apple’s claims are 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.”

Apple has asked the court for a ruling that Qualcomm is liable for breach of contract. It has also asked for a ruling that Qualcomm has breached the “implied covenant of good faith and fair dealing”.

Apple wants the court to enjoin Qualcomm from demanding further “excessive” royalties from Apple that are not consistent with Qualcomm’s fair, reasonable and non-discriminatory licensing obligations.

The US Federal Trade Commission (FTC) last week also sued Qualcomm, accusing it of using anti-competitive tactics.

The FTC alleged that Qualcomm has used its dominant position to “impose onerous and anti-competitive supply and licensing terms on cell phone manufacturers and to weaken competitors”.

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