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
45 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
45 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
45 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
45 months ago
Apple talking anti competitive practices is pretty ironic..
Score: 13 Votes (Like | Disagree)
Steve.P.JobsFan Avatar
45 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
45 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

0 Deals Hero

Black Friday 2020: Best Apple Deals to Plan For

Saturday November 21, 2020 10:00 am PST by
In the lead-up to Black Friday next week, we've been putting a spotlight on the best deals coming from various retailers like Best Buy and Walmart. In an effort to further prepare our readers for the best Black Friday deals, we're breaking down what we think should be on your radar for Black Friday in 2020. Note: MacRumors is an affiliate partner with some of these vendors. When you click a...
2020 apple shopping event

Apple Offering Up to $150 Gift Card With Select Products on Black Friday Through Cyber Monday

Monday November 23, 2020 2:53 am PST by
Apple has announced its annual four-day shopping event, offering customers up to a $150 Apple Store gift card with the purchase of select products between Black Friday and Cyber Monday in the United States. The gift card values in the United States are as follows: $150 for 16-inch MacBook Pro $150 for 21.5-inch iMac $50 for 13-inch MacBook Pro $50 for MacBook Air $50 for iPhone SE,...
m1 mac mini vignette

Apple Lists M1-Based Mac Mini Logic Boards With 10 Gigabit Ethernet in Internal Parts Ordering System

Friday November 20, 2020 9:32 am PST by
While the new Mac mini with the M1 chip is only available with Gigabit Ethernet, Apple has listed multiple M1-based Mac mini logic boards with 10 Gigabit Ethernet in an internal parts list for Apple Authorized Service Providers. For every Mac mini logic board with Gigabit Ethernet in the parts list, obtained by MacRumors, there is a corresponding logic board with 10 Gigabit Ethernet:...
ipad pro 2020 display

Black Friday Week Kicks Off With Up to $150 Savings on 2020 iPad Pro

Sunday November 22, 2020 2:37 pm PST by
As we head into Black Friday week, we're seeing some of the best deals of the season so far, with Amazon and Best Buy today discounting the latest iPad Pro models by up to $150 at the lowest prices we've ever tracked on these models. Note: MacRumors is an affiliate partner with some of these vendors. When you click a link and make a purchase, we may receive a small payment, which helps us keep ...
macos big sur m1 macs restore issue

Apple Provides Instructions to Fix macOS Reinstallation Errors on M1 Macs

Sunday November 22, 2020 3:30 pm PST by
Shortly after the launch of Apple's new M1 Macs, we saw reports that attempts to restore and reinstall macOS on those machines right away could result in an installation error that would leave your Mac non-functional. Specifically, the error message would read: "An error occurred preparing the update. Failed to personalize the software update. Please try again." Over the weekend, Apple p...
iPhone 6s main

Rumor Claims iOS 15 to Drop Support for iPhone 6s and Original iPhone SE

Sunday November 22, 2020 9:25 am PST by
Apple will drop support for the iPhone SE, iPhone 6s, and iPhone 6s Plus in next year's release of iOS 15, according to a rumor shared today by Israeli site The Verifier. If the rumor is accurate, that would mean iOS 15 will be compatible with the following Apple devices: 2021 iPhone series iPhone 12 Pro Max iPhone 12 Pro iPhone 12 mini iPhone 12 iPhone 11 iPhone 11 Pro iPhone 11 Pro ...
new m1 chip

Craig Federighi: Native Windows on M1 Macs is 'Really up to Microsoft'

Friday November 20, 2020 11:57 am PST by
Following the release of the M1 Macs Apple executives have been doing interviews with a range of publications, and today, Ars Technica published another interview with software engineering chief Craig Federighi, hardware technologies lead Johny Srouji, and marketing VP Greg Joswiak. Much of the interview focuses on topics that the three have already covered in prior discussions, but there is ...
Walmart November Deals Hero

Black Friday Spotlight: Walmart Will Have AirPods Pro Down to Lowest Price of $169, and More Apple Deals

Thursday November 19, 2020 8:05 am PST by
We've been tracking early Black Friday deals in our dedicated Black Friday Roundup, and in an effort to prepare our readers for the big shopping event we're highlighting sales store-by-store in the lead-up to November 27. Note: MacRumors is an affiliate partner with Walmart. When you click a link and make a purchase, we may receive a small payment, which helps us keep the site running. Next ...
xlK6MS4MLqVFaskl

iFixit Shares iPhone 12 Pro Max Teardown Revealing L-Shaped Battery and Bigger Camera Module

Sunday November 22, 2020 2:53 am PST by
In the last of its iPhone 12 series teardowns, iFixit has published its iPhone 12 Pro Max disassembly, which reveals some unique differences in the design of the internals, including the full extent of the larger camera system responsible for the improved low-light performance on Apple's largest iPhone to date. On opening the iPhone 12 Pro Max, the first obvious difference compared to the...
apple leather sleeve

Leather Sleeve for iPhone 12 Models Now Available From Apple

Friday November 20, 2020 12:16 pm PST by
Apple today began selling the Leather Sleeve for the new iPhone 12 models, with the accessory having first been announced alongside the updated iPhones in October. Priced at $129, the Leather Sleeve is not a case and is designed to be removed when the iPhone is in use. It features a cutout at the front that displays the time, and it comes with a matching leather strap. According to Apple, it ...