Apple and Qualcomm have been embroiled in a bitter legal battle since the beginning of the year, and though the fight has escalated in recent weeks, Qualcomm CEO Steve Mollenkopf today told Fortune that an out of court settlement is not out of the question.
"There's not really anything new going on," Mollenkopf said speaking at the Brainstorm Tech conference in Aspen. About the Apple dispute, he explained "those things tend to get to resolved out of court and there's no reason why I wouldn't expect that to be the case here."
Mollenkopf went on to say that he has no specific news of a settlement and that nothing new has happened in the case. "I don't have an announcement or anything so please don't ask, he told Fortune. Mollenkopf made a similar statement back in February, but that was before the legal battle between the two companies intensified. At that time, he also said he didn't expect a public fight, something Apple and Qualcomm have not been able to avoid.
Today's interview suggests Qualcomm is still open to settlement talks, but whether that will happen remains to be seen. If Apple and Qualcomm do not settle, we can expect a legal battle that will continue on for several years.
The fight between Apple and Qualcomm started in January, after the FTC complained that Qualcomm had engaged in anticompetitive patent licensing practices. Apple sued Qualcomm for $1 billion just days later, accusing the company of charging unfair royalties for "technologies they have nothing to do with" and refusing to pay quarterly rebates.
According to Apple, Qualcomm has overcharged it by billions of dollars by "double-dipping" with unfair patent licensing agreements, while Qualcomm claims its innovations are "at the heart of every iPhone" and that the royalties are fair.
Qualcomm went on to countersue Apple in April, accusing the company of breaching licensing agreements, making false statements, and encouraging regulatory attacks against Qualcomm, which prompted Apple to stop making royalty payments to Qualcomm entirely until a court can determine the proper amount due.
Apple in late June expanded its lawsuit against Qualcomm, and at the beginning of July, Qualcomm filed a separate patent lawsuit against Apple and asked the International Trade Commission to block imports of select iPhone and iPad models.
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Top Rated Comments
(View all)Erm No I think they are about right in their summary of it.
What exactly is wrong?
That Apple are accusing Qualcomm of charging them twice?
Apple is accusing, but there's no evidence of this. Apple is claiming that paying for the modem's and then paying a CDMA license is "paying twice". they're attempting to conflate two seperate QualCom products into 1 to make it look like they're double dipping. In reality, QualComm charges for the Modems (as a piece of hardware), and charges license fees to use QualComms' patents and ownership over CDMA (which they invented)
That the FTC are accusing Qualcomm of bad practises?
Conflating the FTC and Apple cases isn't good here. Bad business practices doesn't mean illegal business practices. If Apple doesn't like Qualcomm's business practices, than Apple is more than welcome to invent their own infrastructure built on their own technologies.
That Qualcomm states they should receive a % of total iPhone sale price as their tech is fundamental to how the iPhone works?
Yes. This is how any licensing works. It's just like Apple's asking for portions (based on % of total retail price) of Samsung devices that violated their patents. Or how Apple charges % of all purchases from the App store. or.. well, that's business. Apple has clearly demonstrated that QualComms CDMA technologies are required for the iPhone to exist, especially as it is today. They can either choose to keep paying, or pick a new network technology which isn't owned by someone else.
That Qualcomm therefore thinks that does not qualify as FRAND when that is what FRAND is therefore(in part)?
the Patents are already FRAND. What Apple is claiming is that they believe QualComm's existing rates are too high. Apple should be more than welcome to raise a case to have that investigated. The question remains, what does the rest of the industry say? If Apple is the ONLY company that is saying that their fees under FRAND are too high, than it's not much of an argument. the point of FRAND is so that everyone who needs access to essential technologies can get it for reasonable pricing, but that also means that all people paying the licenses pay the same percentage.
That Qualcomm is counter suing Apple in return for being sued ?
Qualcomm is counter suing because of how Apple has addressed this. Instead of filing with FRAND and waiting on the outcome, they turned around and charged QualComm over 1 billion dollars and called it a "rebate". And then they went to their manufacturing partners (FoxConn and Pegatron) and made them stop paying their license fees. Remember, APPLE HAS NOT PAID QUALCOMM directly for the license. it is FoxConn and Pegatron who pay QC the license, and then passes the fees on to Apple.
That all seems wrong doesn't it (end sarcasm).
So yes. It all seems wrong. While Apple has every right to argue for lower FRAND fees, Apple overstepped their business agreements by demanding the rebate and then having their own suppliers withold their payments. Apple has now forced FoxConn and Pegatron to violate their contractual agreements (That were in place prior to the iPhone) by witholding payment, while at the same time demanding Qualcomm pay Apple directly for any fees Apple paid to Foxconn / Pegatron.
Apple might be right that the prices are too high. But Apple has basically used their size and power to extort pressure on their manufacturers to violate their contracts and break the laws. Now Apple is essentially selling their devices, using CDMA technology invented by QualComm without paying.
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Why would he talk about settlement when the matter is still on-going? Smelling defeat?
or an Olive branch to avoid years of stupidly expensive litigation.