Apple has hurled another missile at Qualcomm in their escalating patents war. In a submission to the court, seen by Reuters, Apple is arguing that the licensing deals which provide Qualcomm with a fee for every iPhone are invalid.
If accepted by the court, that argument would undermine Qualcomm’s whole business model on the licensing side, which provides the largest share of its profits.
According to Reuters, Apple is claiming its antagonist’s business model is “illegal” and “burdens innovation”, that some of its patents are invalid or do not belong to it, and that it has failed to fulfill its obligation to charge for patents under Frand (fair reasonable and non-discriminatory) guidelines.
Qualcomm currently sells modem chips to Apple, but under the licensing agreement, also receives a patent fee for every iPhone sold, whether or not it contains one of the company’s chips. Apple is arguing that this constitutes double dipping for the chip giant in cases where it has collecting revenues for a chip.
Apple filed its initial $1bn lawsuit against its modem provider earlier this year, claiming that Qualcomm sets excessive royalties and even demands fees for technologies it did not develop, like Apple’s Touch ID. The iPhone maker claimed in that suit that it “has been overcharged billions of dollars on Qualcomm’s illegal scheme.”
Qualcomm filed a countersuit in April, claiming – among other accusations – that Apple “breached” and “mischaracterized” agreements with the chipmaker; interfered in deals with Qualcomm licensees (many of Apple’s payments are actually made by its manufacturers, such as Foxconn); and stirred up trouble for Qualcomm in antitrust proceedings such as one in South Korea.
Apple is currently withholding patent licensing payments to Qualcomm until the issue is resolved.
Qualcomm is also embroiled in a US Federal Trade Commission probe into alleged anti-competitive practices including charges that it imposed “onerous and anti-competitive supply and licensing terms” on hardware manufacturers.
It is also being sued in London by Nvidia, which claims Qualcomm forced it to shut down the Icera modem business it bought in 2011. The GPU maker lodges its suit in April 2016, saying that it was forced to exit the modem market because of Qualcomm’s “unlawful abuse of dominance”. It claims Qualcomm’s tactics resulted in “unexplained delays in customer orders, reductions in demand volumes and contracts never being entered into, even after a customer or mobile network cooperating with a prospective customer has agreed or expressed a strong intention to purchase” its chips.