Qualcomm 4, Apple 1: the legal verdicts mount up, but no knock-out blow

Like most major legal battles in the smartphone industry, Qualcomm’s war with Apple looks set to drag on for years, with points scored on both sides, but no knock-out blow.

Last week, a US federal judge ruled that the chip provider owes Apple, one of its biggest modem customers, almost $1bn in licensing-related fees. But Qualcomm responded by highlighting its victories in four markets, including one just announced in Japan.

The antitrust case in Japan had gone on for almost nine years before the decision was made, in Qualcomm’s favor, last week.  The Japanese proceedings started in 2009 when the Japan Fair Trade Commission (JFTC) started an investigation into Qualcomm’s licensing practices in the country, and whether they violated antitrust laws. It has taken 37 separate hearings to decide that the chip giant did nothing wrong. The JFTC said it would reverse the ‘cease-and-desist’ order issued in 2009 (which did not take effect while the proceedings were still ongoing).

Relieved at the outcome, Rosenberg said: “We are very gratified to learn that after years of considering the evidence and applicable legal authority, the Japan Fair Trade Commission has concluded there was nothing improper about Qualcomm’s cross-licensing program.”

Meanwhile, a US federal judge has issued a preliminary ruling that Qualcomm owes Apple $1 billion in patent royalty rebate payments. Judge Gonzalo Curiel of the US District Court for Southern California ruled that these were owing under a cooperation deal between the two companies, which he deemed Qualcomm to have broken. Under that deal, the manufacturers which build iPhones paid Qualcomm royalties for the use of its patented modem technology, and Apple would reimburse them.

In a separate contract, Qualcomm agreed to pay Apple a rebate on those patent fees if Apple agreed not to attack the chip provider in court or through regulators. Two years ago, Apple sued Qualcomm, arguing that the San Diego firm had broken the cooperation agreement by not paying $1bn in royalty rebate payments.

But Qualcomm claimed Apple had already broken the agreement by urging other smartphone makers to complain to regulators and making “false and misleading” statements to the Korean Fair Trade Commission, which recently investigated Qualcomm’s business practices.

Qualcomm now says the two sets of damages effectively cancel one another out. “Apple has already offset the payment at issue under the agreement against royalties that were owed to Qualcomm,” said Dan Rosenberg, Qualcomm’s general counsel, told Reuters.

Despite its win in the USA, Apple has lost IP-related cases against Qualcomm in China and Germany, and in another US-based proceeding in San Diego. This last one ruled that the iPhone 7, 7 Plus, 8, 8 Plus and X models infringe a number of  Qualcomm patents, and has awarded $31m in damages, equivalent to a premium of $1.41 per unit sold in the USA since Qualcomm filed the lawsuit on July 6 2017.

“Today’s unanimous jury verdict is the latest victory in our worldwide patent litigation directed at holding Apple accountable for using our valuable technologies without paying for them,” said Rosenberg.

“The technologies invented by Qualcomm and others are what made it possible for Apple to enter the market and become so successful so quickly. The three patents found to be infringed in this case represent just a small fraction of Qualcomm’s valuable portfolio of tens of thousands of patents. We are gratified that courts all over the world are rejecting Apple’s strategy of refusing to pay for the use of our IP.”

The ruling in China led to the banning of sales of all iPhones from the iPhone 6 to the iPhone X on the Chinese mainland, though that is going through the appeals process. Meanwhile, the German decision introduced an injunction against sales of iPhone 7 and iPhone 8 models in any of Apple’s retail outlets in Germany. Apple has said that it intends to appeal against that outcome, and will continue to sell its most recent models (iPhone X, XS and XR).