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12 April 2017Patents

Qualcomm files counterclaim in patent suit with Apple

Semiconductor company Qualcomm has filed a counterclaim in its dispute with Apple over alleged unfair patent royalties.

In January WIPR reported that Apple had sued Qualcomm at the US District Court for the Southern District of California after it had allegedly been 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, the suit said.

Apple argued that 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”.

Qualcomm allegedly demanded that third parties pay it a royalty which is greater than the value of Qualcomm’s contribution, in order to purchase the company’s chips.

Apple asked the court for a breach of contract ruling and to enjoin Qualcomm from demanding further “excessive” royalties.

On Monday, April 10, Qualcomm filed a counterclaim (pdf) at the California court saying that it denied every allegation in the complaint by Apple.

Qualcomm said that “Apple cannot credibly contest the value of Qualcomm’s patent portfolio, as hundreds of licensees—including the companies that manufacture Apple’s cellular devices—have consistently paid royalties reflecting that value to Qualcomm for years”.

The semiconductor business added that Apple has attempted to force Qualcomm to accept “less than fair value” for its IP.

Qualcomm added that Apple “failed” to uphold its share of the bargain in a business co-operation and patent agreement between the companies.

The semiconductor company also said that Apple rejected a fair, reasonable, and non-discriminatory offer that it made in July last year.

Qualcomm asked for compensatory and punitive damages, costs, attorneys’ fees and a jury trial.

Don Rosenberg, executive vice president and general counsel of Qualcomm, said in a release issued by the company on April 10:  "Over the last ten years, Apple has played a significant role in bringing the benefits of mobile technology to consumers with its popular products and services. But Apple could not have built the incredible iPhone franchise that has made it the most profitable company in the world, capturing over 90% of smartphone profits, without relying upon Qualcomm's fundamental cellular technologies".

He added that Apple "refuses" to acknowledge the "well established and continuing value of those technologies".

"It has launched a global attack on Qualcomm and is attempting to use its enormous market power to coerce unfair and unreasonable licence terms from Qualcomm. We intend to vigorously defend our business model, and pursue our right to protect and receive fair value for our technological contributions to the industry," he concluded.

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