Apple having 'no meaningful discussion' with Qualcomm about iPhone modem settlement, trial imminent

Apple's iPhone XS, which uses only Intel modems.

Even with the time, money, and legal pitfalls at stake, Apple isn't talking to Qualcomm about resolving the businesses' worldwide legal battle, a report claimed on Wednesday.

No discussion is happening "at any level," a source informed Reuters. "There is absolutely no meaningful discussion taking place between us and Qualcomm, and there is no settlement in sight. We are gearing up for trial."

The language of the quote suggests a person within Apple or a hired legal team.

Any wall of silence appears to be a recent development. As recently as July, Qualcomm CEO Steve Mollenkopf told investors that talks were ongoing.

Apple first filed a $1 billion lawsuit against Qualcomm in January 2017, arguing that the latter was withholding money as retaliation for cooperation with antitrust investigations. The battle quickly escalated, resulting in suits and countersuits around the world. In September, Qualcomm accused Apple of delivering trade secrets to Intel to improve the performance of cellular modems.

A recurring theme is the accusation that Qualcomm has abused its market dominance to make chip buyers sign unfair patent deals. This claim has in fact been the subject of separate government antitrust investigations, conducted by the U.S., Taiwan, and South Korea. An August settlement saw Qualcomm pay $93 million in fines to Taiwan and promise to invest $700 million in the country over five years.

The U.S. Federal Trade Commission's lawsuit actually precedes Apple's, and reached a critical turning point on Tuesday when District Judge Lucy Koh issued a preliminary ruling against Qualcomm, calling on it to license technology to rivals like Intel. Qualcomm and the FTC have been pursuing a settlement.

To put pressure on Qualcomm, Apple has been directing its manufacturers to withhold royalty payments, potentially in excess of $7 billion.

Apple was for years in an exclusive agreement with Qualcomm for iPhone modems. Though Qualcomm modems are still thought to be technically superior, Apple began using Intel chips with some versisons of the iPhone 7, and transitioned completely for the iPhone XS and XR.

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7 Comments

seanismorris

said about 5 years ago

What happens if QC loses the U.S. Federal Trade Commission's lawsuit? Can QC challenge the ruling for the next decade? Can it be kicked up to a higher court? Is there a higher court?

There are some pretty fundamental IP rights questions being asked...

I’m not a fan of patent trolls, but QC actually does make things...

Forcing QC to license their IP is extreme considering there are viable competitors, as Intel has shown.

“Reasonable and non-discriminatory (RAND) terms, also known as fair, reasonable, and non-discriminatory (FRAND) terms, denote a voluntary licensing commitment that standards organizations often request from the owner of an intellectual property right (usually a patent) that is, or may become, essential to practice a ...”

The words “voluntary” and “request” stands out. The FTC’s preliminary ruling uses the words “calling” rather than “ordering”.

I’m in no way defending QC’s business model, which resembles “blackmail” to doubledip but there’s a reason QC was able to essentially buy forgiveness outside the US.

Very interesting case...

williamh

said about 5 years ago

seanismorris said:
“Reasonable and non-discriminatory (RAND) terms, also known as fair, reasonable, and non-discriminatory (FRAND) terms, denote a voluntary licensing commitment that standards organizations often request from the owner of an intellectual property right (usually a patent) that is, or may become, essential to practice a ...”

The words “voluntary” and “request” stands out. The FTC’s preliminary ruling uses the words “calling” rather than “ordering”.

I really only have questions and no answers, but my understanding is that an ip owner agrees to license on FRAND terms in order for a standards body to agree to include that ip in a standard. If an ip owner essentially says "I refuse to license my ip on fair terms," presumably some alternative might be selected for the standard.

You are right that Qualcomm does make stuff, they're not a troll. But Qualcomm is offensive when they claim that the success of the iPhone is due to their ip. It's really the opposite as the Qualcomm ip is what all types of cell phones have in common, and not what sets the iPhone apart. Not sure why I should be offended on behalf of Apple but anyway . . . .

melgross

said about 5 years ago

This is a dangerous game for all involved. It’s impossible to predict what the court will decide.

melgross

said about 5 years ago

seanismorris said:

What happens if QC loses the U.S. Federal Trade Commission's lawsuit? Can QC challenge the ruling for the next decade? Can it be kicked up to a higher court? Is there a higher court?

There are some pretty fundamental IP rights questions being asked...

I’m not a fan of patent trolls, but QC actually does make things...

Forcing QC to license their IP is extreme considering there are viable competitors, as Intel has shown.

“Reasonable and non-discriminatory (RAND) terms, also known as fair, reasonable, and non-discriminatory (FRAND) terms, denote a voluntary licensing commitment that standards organizations often request from the owner of an intellectual property right (usually a patent) that is, or may become, essential to practice a ...”

The words “voluntary” and “request” stands out. The FTC’s preliminary ruling uses the words “calling” rather than “ordering”.

I’m in no way defending QC’s business model, which resembles “blackmail” to doubledip but there’s a reason QC was able to essentially buy forgiveness outside the US.

Very interesting case...

The talk is about necessary patents. Qualcomm has been refusing to license them unless companies license a swath of other non FRAND patents that they may not need, or want. FRAND licensing is at a very low cost, and Qualcomm wants far more than allowed, hence the bundling.

sflocal

said about 5 years ago

melgross said:

This is a dangerous game for all involved. It’s impossible to predict what the court will decide.

“Dangerous” is a little over-dramatic don’t you think?

I’ve been in court enough times on my life to know that’s a chess game, being more about money than actual justice.

Apple has the advantage and QC knows it. QC will do anything and everything to get Apple to sit down and settle, while Apple will simply sit back, play chicken and enjoy watching QC sweat.

Perhaps Apple will, at the 11th hour decide that settling is best, presuming QC grabs it’s ankles and hope that Apple is gentle, but I truly hope that Apple takes it all the way and sends a message to others about nefarious behavior. QC will then be in the history books as another befallen company where management’s incompetence truly creates its demise.