BlackBerry Awarded $814.9 Million in Arbitration Against Qualcomm -- 2nd Update
April 12 2017 - 11:23AM
Dow Jones News
By Imani Moise
BlackBerry Ltd. said Wednesday that it will receive a $814.9
million refund from Qualcomm Inc. after entering into binding
arbitration to settle a licensing-agreement dispute.
The award is a big boost for BlackBerry: It amounts to
nearly-two thirds of the revenue the firm generated in 2016 and put
a charge into its stock early Wednesday, when shares climbed as
much as 18%. It ends a yearlong dispute over whether Qualcomm's cap
on royalty payments applied to an agreement it had with
BlackBerry.
A final award including interest and attorneys' fees will be
issued after a hearing next month.
"BlackBerry and Qualcomm have a longstanding relationship and
continue to be valued technology partners," BlackBerry Chief
Executive John Chen said.
Qualcomm said it doesn't agree with the decision, but it cannot
be appealed. The company said the arbitration decision is limited
to prepayment provisions unique to its license agreement with
BlackBerry and has no impact on any other license.
Qualcomm, which has developed technology deemed essential to
cellular communications, collects royalties on every mobile phone
sold. It generally charges royalties for its intellectual property
based on a percentage the average selling price of a device. The
company has said its royalty rate can be as much as 5%, but
reported its average royalty rate as 2.9% in its most recent fiscal
year, as implied by its total royalty revenue and internal research
on the number of devices shipped and their prices.
However, Qualcomm has also said that it caps the price basis on
which it calculates royalties. It has not disclosed the dollar
amount of the cap.
Qualcomm has come under fire from antitrust regulators in China,
Europe, South Korea and the U.S. Earlier this year, Apple Inc.
claimed Qualcomm abused its market position to impose costly terms
on customers. Qualcomm has since fired back, defending its business
model and seeking damages from Apple over withheld payments for
technology used in iPhones.
Qualcomm shares recently traded 2.5% lower.
Ted Greenwald contributed to this article.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
April 12, 2017 11:08 ET (15:08 GMT)
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