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Apple $7B behind in royalty payments to Qualcomm

Apple is now $7 billion behind in patent royalty payments to Qualcomm after directing contract manufacturers to withhold further remittance on grounds that the chipmaker participates in unfair licensing practices, according to testimony presented in court Friday.

iPhone X
Apple's iPhone X used both Qualcomm and Intel modems.


Qualcomm commented on Apple's unpaid royalties in a court hearing in California, reports Reuters.

Apple does not directly license Qualcomm patents, though money from the tech giant does end up in the chipmaker's coffers through reimbursements made to partner manufacturers that do pay royalties.

The $7 billion figure, and a number of other major details surrounding the sprawling legal battle, are in dispute. Apple for its part argues Qualcomm's royalty rates are unfair and amount to price gouging and extortion.

Last year, Apple filed suit against Qualcomm, claiming the chipmaker participates in monopolistic practices and other nefarious business strategies including withholding nearly $1 billion in rebates as retribution for participating in a South Korean antitrust investigation. The initial case ultimately spawned some 100 separate suits and countersuits around the world.

As it applies to royalties, Apple alleges Qualcomm flouts FRAND (fair, reasonable and nondiscriminatory) patent commitments to charge customers, including suppliers, exorbitant rates on standard-essential patents. The chipmaker further restricts sales to buyers who agree to license its SEPs, a practice Apple refers to as "double-dipping."

When Apple halted royalty payments, so too did partner suppliers using Qualcomm IP.

During today's proceedings, Qualcomm also attempted to forward a motion to render moot Apple's patent validity challenges, reports Bloomberg. The company filed the motion earlier this month and presented its case in court on Friday.

At issue are nine Qualcomm patents "handpicked" by Apple to illustrate weak spots in the chipmaker's portfolio of mobile technology IP. Apple is attempting to invalidate the inventions that Qualcomm asserts is essential to current mobile standards. Qualcomm is attempting to avoid scrutiny of the patents by saying it has no plans to leverage them in infringement assertions against Apple and its contract manufacturers.

Apple in its own filing opposed the request, saying Qualcomm is attempting to deflect allegations of double-dipping. Specifically, Apple argues that Qualcomm should not be able to demand a license on patented technology if that same technology is built into its baseband chips sold to smartphone makers.

In addition to the California court action, Qualcomm lodged a complaint with the U.S. International Trade Commission that seeks to halt the import of iPhones powered by Intel modems.

For its part, Qualcomm on multiple occasions has said the legal battle comes down to favorable IP pricing, and that it expects the fight to end in a settlement.