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PC_Advisor_Issue_264_July_2017

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News: Analysis<br />

Qualcomm says Apple using its power<br />

to pay less for a patent licence<br />

Qualcomm is demanding damages and withheld payments from Apple writes John Ribeiro<br />

Q<br />

ualcomm is seeking damages from<br />

Apple, alleging that the iPhone<br />

maker interfered with long-term<br />

agreements between the chip company and<br />

licensees that manufacture the iPhone and<br />

iPad, and encouraged actions by regulators<br />

against the company by giving government<br />

agencies “false and misleading information”.<br />

Apple did not use certain highperformance<br />

features of the Qualcomm<br />

chipsets for the iPhone 7, claims the<br />

chipmaker. When iPhones with the<br />

Qualcomm processor still outperformed<br />

iPhones that used a chipset from key rival<br />

Intel, Apple is said to have publicly claimed<br />

that there was “no discernible difference”<br />

between iPhones using Intel chipsets and<br />

those using Qualcomm processors, when it<br />

knew the opposite to be true, according to<br />

a recent filing by Qualcomm.<br />

Apple warned that if Qualcomm were to<br />

make or sponsor public comparisons of the<br />

Intel and Qualcomm-based iPhones, Apple<br />

would use the marketing resources at its<br />

disposal to “retaliate” against Qualcomm<br />

and its standing as an Apple chipset<br />

supplier would be jeopardised.<br />

The filing in the US District Court for the<br />

Southern District of California is in response<br />

to a lawsuit Apple filed against the company<br />

in January, accusing the chip supplier of<br />

charging “exorbitant” licensing fees for its<br />

cellular technology.<br />

Apple is seeking nearly $1 billion in<br />

compensation for paying excessive royalties<br />

to Qualcomm. The company said in its filing<br />

in January that Qualcomm’s licensing model<br />

is based on the final selling price of a device,<br />

so that the royalty paid for its standardessential<br />

patents by makers of high-value<br />

phones will be higher than that paid by<br />

makers of basic mobile phones.<br />

The smallest saleable unit for a cellular<br />

SEP license should be no greater than the<br />

baseband processor chipset, Apple argued. It<br />

also wants Qualcomm to negotiate singlepatent<br />

licenses rather than offer a license to<br />

its patents as a single portfolio.<br />

Both companies have a lot at stake. Apple<br />

would like to find ways to lower the cost of<br />

its iPhones, particularly in newer, pricesensitive<br />

markets, while Qualcomm makes<br />

a significant portion of its revenue from<br />

licensing its intellectual property.<br />

In its response, Qualcomm portrays<br />

Apple as using its considerable power to<br />

try to get lower royalty rates from the chip<br />

company. After filing the lawsuit in the court<br />

in California, Apple also sued Qualcomm<br />

in China, the UK and Japan as part of<br />

“its aggressive strategy of constructing<br />

commercial disputes and then claiming it has<br />

been victimised,” according to the filing.<br />

When asked for comment, a spokesman<br />

for Apple referred back to the company’s<br />

statement in January in which it claimed<br />

that Qualcomm had insisted on charging<br />

royalties for technologies they have<br />

nothing to do with.<br />

“The more Apple innovates with unique<br />

features such as TouchID, advanced displays,<br />

and cameras, to name just a few, the more<br />

money Qualcomm collects for no reason and<br />

the more expensive it becomes for Apple to<br />

fund these innovations,” the iPhone maker<br />

said in that statement, when filing the suit<br />

against Qualcomm in the California court.<br />

Apple said that Qualcomm has taken<br />

“increasingly radical steps”, including most<br />

recently by withholding nearly $1 billion in<br />

payments from Apple as retaliation for its<br />

PHOTOGRAPHY: Ann SinGeR<br />

12 www.pcadvisor.co.uk/news <strong>July</strong> <strong>2017</strong>

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