Apple Sues Qualcomm Over Licensing Practices
January 20 2017 - 4:11PM
Dow Jones News
By Tripp Mickle
Apple Inc. is suing Qualcomm Inc., alleging the smartphone-chip
supplier demanded onerous terms for its technology and that it
sought to punish Apple for cooperating in a Korean regulatory probe
into Qualcomm's licensing practices.
The suit, which Apple said it filed Friday in federal district
court in the Southern District of California, claims that Qualcomm
leveraged its position as a manufacturer of a critical chip used in
cellphones to seek "onerous, unreasonable and costly" terms for
patents and blocked Apple's ability to choose another supplier for
chipsets.
The complaint seeks $1 billion in rebate payments that Apple
says Qualcomm has withheld as retribution for Apple's participation
in an investigation by South Korea's antitrust regulator. The
Korean agency last month announced a roughly $853 million fine on
Qualcomm for alleged anticompetitive patent licensing practices --
a decision Qualcomm also vowed to fight.
Apple's suit comes three days after the U.S. Federal Trade
Commission sued Qualcomm alleging it engaged in unlawful tactics to
maintain a monopoly on a type of chip used in cellphones.
That suit highlighted Qualcomm's dealings with Apple.
Qualcomm said earlier this week that it will fight the FTC's
suit, which it says is based on inaccurate information and was
rushed out ahead of the change in presidential administrations.
Qualcomm said it has never withheld or threatened to withhold its
chips to gain unfair licensing terms.
According to the Apple complaint, Qualcomm's terms required
Apple to pay a percentage of the average selling price of an iPhone
to use Qualcomm patents and to exclusively use Qualcomm chips in
iPhones from at least 2011 to 2016. Apple received what it called
quarterly rebates from Qualcomm under terms of the agreement, but
Qualcomm began withholding those last year after Apple met with
Korean regulators, the suit says.
The suit says that Qualcomm told Apple the iPhone maker had
forfeited the nearly $1 billion in rebates by responding to the
Korea Fair Trade Commission. The suit also says that Qualcomm "then
attempted to extort Apple into changing its responses and providing
false information to the KFTC in exchange for Qualcomm's release of
those payments."
In a statement, Apple said, "We are extremely disappointed in
the way Qualcomm is conducting its business with us and
unfortunately after years of disagreement over what constitutes a
fair and reasonable royalty we have no choice left but to turn to
the courts."
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
January 20, 2017 15:56 ET (20:56 GMT)
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