Apple Says Qualcomm Has Overcharged Billions of Dollars By 'Double-Dipping' on iPhone's Innovation

Apple has expanded its lawsuit against Qualcomm, accusing the wireless chipmaker of "double-dipping" by way of unfair patent licensing agreements, according to an amended complaint filed with a United States federal court in San Diego today.

qualcomm iphone
The complaint broadens the claims Apple made in its original lawsuit against Qualcomm in January, when it sued the chipmaker for $1 billion in alleged unpaid royalty rebates. Apple also accused its longtime supplier of the iPhone's wireless chip of engaging in anticompetitive licensing practices.

Since the original iPhone, Qualcomm has supplied Apple with modems that enable the smartphone to, for example, connect to a Wi-Fi or LTE network. But as the iPhone has gained more features, Apple argues that Qualcomm has been unfairly "levying its own tax" on those innovations through "exorbitant royalties."

Apple said Qualcomm wrongly bases its royalties on a percentage of the entire iPhone's value, despite supplying just a single component of the device.

As Apple innovates, Qualcomm demands more. Qualcomm had nothing to do with creating the revolutionary Touch ID, the world’s most popular camera, or the Retina display Apple’s customers love, yet Qualcomm wants to be paid as if these (and future) breakthroughs belong to it. Qualcomm insists in this Court that it should be entitled to rely on the same business model it applied over a decade ago to the flip phone but while that model may have been defensible when a phone was just a phone, today it amounts to a scheme of extortion that allows Qualcomm unfairly to maintain and entrench its existing monopoly.

The licensing agreements are in addition to paying for the wireless chips themselves. Apple said Qualcomm's "double-dipping, extra-reward system" is precisely the kind that the U.S. Supreme Court recently forbade in a lawsuit between Lexmark and a small company reselling its printer cartridges.

If that were not enough, the U.S. Supreme Court’s recent landmark decision in Impression Products, Inc. v. Lexmark International, Inc., condemned Qualcomm’s business model as a violation of U.S. patent law. The Supreme Court flatly rejected Qualcomm’s business model, holding that a patent holder may demand only “one reward” for its patented products, and when it has secured the reward for its invention, it may not, under the patent laws, further restrict the use or enjoyment of the item. Qualcomm, by its own admission, will not sell chips to manufacturers who do not also pay separate royalties and enter Qualcomm licenses at usurious rates. This is precisely the kind of double-dipping, extra-reward system that the Court’s decision in Lexmark forbids.

Apple said it has been "overcharged billions of dollars" due to Qualcomm's so-called "illegal scheme," including the $1 billion in unpaid royalty rebates that led Apple to sue Qualcomm in January.

In its countersuit, Qualcomm accused Apple of failing to engage in good faith negotiations for a license to its 3G and 4G standard essential patents on fair, reasonable, and non-discriminatory (FRAND) terms.

Apple, however, argues that Qualcomm's monopolistic licensing demands violate its FRAND obligations.

By tying together the markets for chipsets and licenses to technology in cellular standards, Qualcomm illegally enhances and strengthens its monopoly in each market and eliminates competition. Then, Qualcomm leverages its market power to extract exorbitant royalties, later agreeing to reduce those somewhat only in exchange for additional anticompetitive advantages and restrictions on challenging Qualcomm’s power, further solidifying its stranglehold on the industry.

Apple also claims that Qualcomm has never made it a worldwide offer on FRAND terms for a direct license to its patented technologies.

Apple said Qualcomm subsequently filing lawsuits against iPhone manufacturers Foxconn, Pegatron, Wistron, and Compal reveals "its true bullying nature," calling it "a blatant attempt to exert pressure on Apple to acquiesce to" its "non-FRAND royalty demands" by attacking its smaller contract manufacturers.

Qualcomm knows that these are companies who have been effectively coerced by its monopoly practices in the past. Qualcomm knows that these companies merely pass through the usuriously high royalty demanded by Qualcomm and so have little incentive to resist its monopolistic tactics.

Apple has called for the court to declare Qualcomm's patents in the lawsuit unessential to 3G/4G standards used in the iPhone and its other products, and to prevent Qualcomm from taking any adverse or legal action against Apple's contract manufacturers related to the allegations in today's amended complaint.

Top Rated Comments

keysofanxiety Avatar
48 months ago
Oh I dont know, only allowing there own apps as default.
On their own hardware AND own software?! God forbid!

I don't think you know what anti-competitive means. In fact, I'm sure of it after what you've just said.
Score: 28 Votes (Like | Disagree)
Michael Goff Avatar
48 months ago
Oh I dont know, only allowing there own apps as default.
Would you argue McDonalds is anti competitive for not sellling whoppers?
Score: 22 Votes (Like | Disagree)
keysofanxiety Avatar
48 months ago
Apple talking anti competitive practices is pretty ironic..
Oh? Don't leave us hanging. What are you referring to?
Score: 19 Votes (Like | Disagree)
Zaft Avatar
48 months ago
Apple talking anti competitive practices is pretty ironic..
Score: 13 Votes (Like | Disagree)
Steve.P.JobsFan Avatar
48 months ago
They both make good points. I'm a bit tired of the constant lawsuits involving Apple, but hopefully this doesn't take years (à la Samsung) to wade through, and the courts can issue a ruling reasonably quickly.

EDIT: Having re-read the other MR article about Qualcomm's counter suit, I think I side more with Apple on this, instead of being neutral. Qualcomm's arguments don't really seem to be arguments, more or less just going on about how "iPhone wouldn't have been possible without us!" and claiming Apple didn't try to come to fair agreements, but there is no evidence provided (at least in the MR article).

Again, I guess we just need to let the courts do their job and listen to both parties before making a ruling.
Score: 12 Votes (Like | Disagree)
keysofanxiety Avatar
48 months ago
If Tim Cook wasn't so busy playing world police officer and politician, maybe he could have focused on this instead of loosing 1Billion. Pretty sure anyone on this forum would loose their job over that neglect of oversight.
Where exactly did Apple "loose" 1 billion? Or even lose, for that matter?

If you're referring to the $1 billion dollar lawsuit, then I hate to be the first one to tell you, but that's not how lawsuits work. You don't put that money on the table and then ask the defendant to square you up.
Score: 10 Votes (Like | Disagree)

Top Stories

2021 mbp sd slot feature2

Kuo: New MacBook Pro Models With HDMI Port and SD Card Reader to Launch Later This Year

Monday February 22, 2021 8:52 pm PST by
Apple plans to release two new MacBook Pro models equipped with an HDMI port and SD card reader in the second half of 2021, according to analyst Ming-Chi Kuo, who outlined his expectations in a research note obtained by MacRumors. The return of an SD card reader was first reported by Bloomberg's Mark Gurman last month. "We predict that Apple's two new MacBook Pro models in 2H21 will have...
m1 mac mini

M1 Mac Users Report Excessive SSD Wear

Tuesday February 23, 2021 7:07 am PST by
Over the past week, some M1 Mac users have been reporting alarming SSD health readings, suggesting that these devices are writing extraordinary amounts of data to their drives (via iMore). Across Twitter and the MacRumors forums, users are reporting that M1 Macs are experiencing extremely high drive writes over a short space of time. In what appear to be the most severe cases, M1 Macs are sai...
iphone 12 pro display video

BOE Rumored to Supply iPhone 13 Display Panels After iPhone 12 Failures

Monday February 22, 2021 9:54 am PST by
Display manufacturer BOE will be one of the main suppliers of OLED panels for iPhone 13 models, according to a new report today from Taiwan's Economic Daily News. BOE is said to be working with touch panel manufacturer General Interface Solution (GIS), part of the Hon Hai Group to develop OLED panels. Multiple iPhone 12 rumors suggested that BOE would supply some panels for the devices,...
mac security privacy

Apple Takes Step to Prevent Further Spread of 'Silver Sparrow' Malware on Macs

Monday February 22, 2021 6:13 am PST by
Over the weekend, we reported on the second known piece of malware compiled to run natively on M1 Macs. Given the name "Silver Sparrow," the malicious package is said to leverage the macOS Installer JavaScript API to execute suspicious commands. After observing the malware for over a week, however, security firm Red Canary did not observe any final payload, so the exact threat to users remains a...
jon prosser imac 2021colors

Prosser: 2021 iMac to Come in Five Colors, Apple Silicon Mac Pro to Resemble 'Stacked' Mac Minis

Wednesday February 24, 2021 7:26 am PST by
Hit-and-miss leaker Jon Prosser has today alleged that the upcoming 2021 iMac models will offer five color options, mirroring the colors of the fourth-generation iPad Air, and revealed a number of additional details about the Mac Pro with Apple Silicon. In a new video on YouTube channel FrontPageTech, Prosser explained that the redesigned iMacs will come featuring options for Silver, Space ...
whatsapp privacy banner

WhatsApp Reveals What Happens to Users Who Don't Agree to Upcoming Privacy Policy Changes

Sunday February 21, 2021 1:11 am PST by
WhatsApp has revealed how it will gradually limit the features available to accounts held by users who do not accept the platform's impending privacy policy changes, due to come into effect on May 15. WhatsApp's new banner explaining the privacy policy changes According to an email seen by TechCrunch to one of its merchant partners, WhatsApp said it will "slowly ask" users who have not yet...
new airpods leaked image 52audios

Alleged Leaked Image Claims to Show Third-Generation AirPods and Case

Sunday February 21, 2021 2:49 am PST by
A new image claims to offer our first real world look at Apple's next-generation AirPods. The image, shared by 52audio, showcases both AirPods and the charging case for what the site claims to be the third iteration of the wireless earbuds. 52audio has in the past shared images claiming to showcase different parts of the third-generation AirPods. Most notably, the site in November shared...
anker magsafe powercore battery pack

Anker Releases MagSafe-Compatible Battery Pack for iPhone 12 Lineup

Tuesday February 23, 2021 7:49 am PST by
Following rumors that Apple is working on a MagSafe battery pack for iPhone 12 models, popular accessory maker Anker has beaten Apple to the punch with the release of its PowerCore Magnetic 5K Wireless Power Bank. First previewed at CES 2021, the PowerCore battery pack magnetically attaches to the back of any iPhone 12 model and provides 5W of wireless charging. With a 5,000 mAh capacity,...
iPad Pro Mini LED

New iPad Pro and MacBook Models With Mini-LED Displays Again Rumored to Launch This Year

Monday February 22, 2021 9:32 pm PST by
Taiwanese company Ennostar will begin production of Mini-LED backlight units for an upcoming 12.9-inch iPad Pro in the late first quarter or second quarter of this year, according to industry sources cited by DigiTimes. Ennostar is a holding company that was jointly established in January 2021 by LED-related manufacturers Epistar and Lextar Electronics. Apple is expected to unveil the new ...
14

iOS 14.5 to Make Zero-Click Attacks 'Significantly Harder'

Monday February 22, 2021 9:05 am PST by
Apple's impending iOS and iPadOS 14.5 update will make zero-click attacks considerably more difficult by extending PAC security provisions, according to Motherboard. Apple has made a change to the way in which it secures its code in the latest betas of iOS 14.5 and iPadOS 14.5 to make zero-click attacks much harder. The change, spotted by security researchers, has now been confirmed by...