The second biggest seller of smartphone devices in the world is filing a $1 billion lawsuit against Qualcomm over patent royalties. And it is not just Apple going after the chip maker giant -- a few days ago, the Federal Trade Commission (FTC) has also sued Qualcomm, accusing the company of anticompetitive practices.
In the lawsuit it filed, the iPhone maker claims that Qualcomm is unfairly demanding overwhelming royalties for technologies, some of which the processor manufacturer did not even develop in the first place, like Apple’s Touch ID. According to Apple, Qualcomm has overcharged it billions of dollars through an illegal scheme, and Apple is now seeking damages of nearly $1 billion.
Through an official statement, Apple pointed out how Qualcomm has achieved success by making the most of older, legacy standards, but is now unfairly protecting its dominance by way of exclusionary methods and even overcharging of royalties. On that last note, Apple has also stated that Qualcomm is insisting on charging the iPhone maker at least five times more in payments compared to all other cellular patent licensors Apple has contracts with combined. Not only that, Apple is also charging that Qualcomm has withheld almost $1 billion in payments in retaliation for Apple’s cooperation with federal agencies in investigating the chip maker. Apple has requested a trial by jury.
As for the FTC’s lawsuit, the agency is charging that Qualcomm is trying to protect its monopoly on the production of semiconductors for smartphones and other mobile devices by employing anticompetitive practices. Qualcomm allegedly accomplished this by imposing onerous and anticompetitive supply and licensing conditions on mobile manufacturers, which means that it is in violation of the FTC Act on more than one count.
Qualcomm currently has a no license no chip policy, under which it is able to sell baseband chips only to phone makers that ink a patent licensing agreement with Qualcomm. According to the FTC, the chip maker is not actually licensing standard essential patents to competitors, even though it has promised to do so. Moreover, Qualcomm is being accused of offering Apple reduced patent royalties under an exclusive contract that does not allow Apple to work with Qualcomm’s rivals within a period of half a decade.
In response to the FTC’s lawsuit, Qualcomm is claiming that the agency is suing without acquiring all the information, and added that the investigation was rushed in order to wrap up before the official inauguration of Donald Trump.
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