Earlier this month, Qualcomm confirmed that it has filed lawsuits in an intellectual property court in Beijing, China, where most iPhones are built. In its claim, the company asserted patent infringement and requested remedy in the form of an injunction, which has not been sought before and will delay the production and sale of Apple products in China.
According to Qualcomm, Apple is not compensating Qualcomm for the technology that it developed and licensed to Apple to use in its iPhones and similar models. Currently, Qualcomm is awarded royalties based on the total selling price of iPhones. For example, Apple buys 4G LTE chips from Intel, which uses Qualcomm’s technology. Therefore, Apple pays Qualcomm for the licensing of these processors, but it has to pay Qualcomm based on the $650 value of the iPhone, not $20 for the chip which, technically, Qualcomm also produces.
Qualcomm is alleging infringement on three non-standard essential patents, which cover power management and the Force Touch technology; Apple incorporates the latter into its touch screens. But, this is not the first time we are hearing of these allegations; Apple and Qualcomm began a feud earlier this year regarding whether Apple had to pay Qualcomm licensing fees.
In January 2017, Apple sued Qualcomm for $1 billion, accusing the company of charging unfair royalties for “technologies they have nothing to do with” and failing to pay for quarterly rebates. Additionally, Apple alleged Qualcomm charged excessive licensing fees by requesting a percentage of an iPhones entire value. It was at this time that Apple and its suppliers stopped paying Qualcomm all licensing fees. Qualcomm disagreed and justified its licensing fees by stating that its “inventions are at the heart of every iPhone and extend well beyond modern technologies or cellular standards.” Additionally, it is Qualcomm’s position that Apple continues to use its technology while refusing to pay for it.
Following these incidents, Qualcomm filed a counterclaim and withheld all payments to iPhone manufacturers. Qualcomm even turned to the United States International Trade Commission in July, seeking to block the imports of “illegal” iPhone and iPad models into the United States. If this ban on imports were to become effective, it is unclear as to which iPhone models would be affected. As a result, the ITC began looking into Qualcomm’s battle with Apple surrounding its patents. The company is currently facing an FTC lawsuit in the United States for utilizing anticompetitive tactics in order to remain the dominant supplier of baseband processors for smartphones.
As of right now, the claims have not been made public in China. Apple believes Qualcomm’s assertions are meritless and will fail in China, as they have in other theaters, including the United States.
Juli Clover, Qualcomm Asks China to Stop Manufacturing and Selling iPhones via New Lawsuits, Mac Rumors, (Oct. 13, 2017, 10:28 PDT), https://www.macrumors.com/2017/10/13/apple-qualcomm-china-lawsuits/.
Christian de Looper, Apple vs. Qualcomm: Everything you need to know, Digital Trends, (Oct. 13, 2017, 1:24 PM), https://www.digitaltrends.com/business/apple-vs-qualcomm-news/.
Luke Dormehl, Apple sues Qualcomm for charging massive licensing fees, Cult of Mac, (Jan. 23, 2017, 5:00 AM), https://www.cultofmac.com/463631/apple-sues-qualcomm/.
Mike Freeman, Qualcomm sues Apple in China to ban assembly and sale of iPhones, The San Diego Union-Tribune, (Oct. 13, 2017, 3:25 PM) http://www.sandiegouniontribune.com/business/technology/sd-fi-china-iphoneapple-20171013-story.html.
David Lumb, Qualcomm files lawsuit in China to stop production of iPhones, Engadget, (Oct. 13, 2017), https://www.engadget.com/2017/10/13/qualcomm-files-lawsuit-in-china-to-stop-production-of-iphones/.
Qualcomm files lawsuits in China to ban iPhones, Reuters, (Oct. 13, 2017, 1:13 PM), https://www.reuters.com/article/us-apple-qualcomm-china/qualcomm-files-lawsuits-in-china-to-ban-iphones-idUSKBN1CI2E9.