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Qualcomm Claims Apple Owes It $7 Billion in Royalty Payments – Latter Accuses Chipmaker of Using Unfair Licensing Practices

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Oct 27
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After a torrent of lawsuits and legal proceedings between Qualcomm (NASDAQ:QCOM) and Apple (NASDAQ:AAPL), the chipset manufacturer claims that the California giant is behind $7 billion in royalty payments. The company commented about these unpaid royalties in a court hearing in California. While Apple (NASDAQ:AAPL) doesn’t directly license Qualcomm (NASDAQ:QCOM) patents, the latter still gets paid in the form of reimbursements made to partner manufacturers that do end up paying royalties.

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The $7 billion royalty figure, as well as other details, are currently in dispute, with Apple (NASDAQ:AAPL) stating that Qualcomm’s charges unfair royalty rates. Even last year, the iPhone maker filed a lawsuit against Qualcomm (NASDAQ:QCOM), detailing that the latter participates in unfair business strategies that prevent competition. This included withholding nearly $1 billion in rebates as retribution for participating in a South Korean antitrust investigation. That event led to several suits and countersuits around the world.

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After Apple (NASDAQ:AAPL) halted royalty payments, so did partner suppliers using Qualcomm (NASDAQ:QCOM) IP. Apple (NASDAQ:AAPL) has said that Qualcomm (NASDAQ:QCOM) is forcing it to pay for the same patents twice. According to the Cupertino tech company, it states it has to pay once when Apple (NASDAQ:AAPL) uses Qualcomm’s chips in iPhones, and then again through patent royalties. Qualcomm (NASDAQ:QCOM) has argued that its practices are legal and that Apple (NASDAQ:AAPL) is seeking to destroy its business model after agreeing to it for years.

“They’re trying to destroy our business. They’re now $7 billion dollars behind in royalties. The house is on fire and there is $7 billion of property damage right now.”

Apple’s lawyer, Ruffin Cordell stated that Qualcomm (NASDAQ:QCOM) is using its IP to force customers into paying excessive amounts of royalties, while at the same time, it is able to avoid scrutiny of its patents through these ongoing events.

“You can’t just let Qualcomm walk away from this.”

Though Qualcomm (NASDAQ:QCOM) states that its patents are essential to current mobile standards, Apple (NASDAQ:AAPL) intends on discrediting that claim. Qualcomm (NASDAQ:QCOM) might be attempting to avoid scrutiny of the patents by saying it has no plans to leverage them in infringement assertions against Apple (NASDAQ:AAPL) and its contract manufacturers.

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Apple (NASDAQ:AAPL) in its own filing, states that Qualcomm (NASDAQ:QCOM) is attempting to deflect allegations of double-dipping. Also, the tech behemoth argues that Qualcomm (NASDAQ:QCOM) 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.

Qualcomm (NASDAQ:QCOM) has attempted to strike the heart of Apple’s revenue; it has lodged a complaint with the U.S. International Trade Commission, seeking to halt the import of iPhones powered by Intel modems. The chipset manufacturer has also said that this ongoing legal battle comes down to favorable IP pricing and that these legal proceedings are expected to end in a settlement.

So far, there is no verdict from the court, but we’ll continue to update you, even though the battle appears far from over.

Source: Bloomberg

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