A week after the Federal Trade Commission sued Qualcomm alleging that the company essentially shook down its clients for buying competitors baseband chips, Apple is chaining on with a lawsuit of its own. The maker of the iPhone is demanding about $1 billion over withheld royalties from the semiconductors company.
Infinite Loop claims that Qualcomm was holding the cash at ransom after the company responded “truthfully to law enforcement agencies investigating them” and that the San Diego-based firm “insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.”
One of the law enforcement agencies was the Korean Fair Trade Commission, which has fined Qualcomm $865 million for similar anticompetition concerns.
In response to the suit, Qualcomm states that “Apple’s claims are baseless” and that its counterpart in Cupertino, California, “has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, bu misrepresenting facts and withholding information.”
Here’s the full statement from Apple to CNBC:
“For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. The more Apple innovates with unique features such as TouchID, advanced displays, and cameras, to name just a few, the more money Qualcomm collects for no reason and the more expensive it becomes for Apple to fund these innovations. Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties. Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.
To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding nearly $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.
Apple believes deeply in innovation and we have always been willing to pay fair and reasonable rates for patents we use. We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts.”
Here’s word from Qualcomm’s general counsel and executive vice president, Don Rosenberg:
“While we are still in the process of reviewing the complaint in detail, it is quite clear that Apple’s claims are baseless. Apple has intentionally mischaracterized our agreements and negotiations, as well as the enormity and value of the technology we have invented, contributed and shared with all mobile device makers through our licensing program. Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, by misrepresenting facts and withholding information. We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.”
Qualcomm is contesting claims that it is boxing out its competitors by charging higher patent licensing fees to clients doing business with them and supposedly notching a deal with Apple to be the exclusive provider of baseband chips. It counters by saying that accusers are misrepresenting the company’s practices which have been in use by the wireless industry “for decades.”