back to article One BEEELLION dollars: Apple sues Qualcomm, one of its chip designers

Following the lead of the FTC, Apple has filed suit against Qualcomm alleging it was charging excessive patent royalty fees for cellphone technology. The Cupertino maker of AirPods says in a lawsuit [PDF] filed with the Southern California District Court on Friday that Qualcomm has for years been gouging it with excessive …

  1. Tromos

    If Apple were to get the billion...

    ...would they be passing the money on to their customers? I suspect it would just add to their already bloated margins.

    1. Anonymous Coward
      Anonymous Coward

      Re: If Apple were to get the billion...

      It's gonna be great.

      Heck, it is great now.

      LOL...

    2. Flocke Kroes Silver badge

      Re: If Apple were to get the billion...

      This is not about Apple getting a billion from Qualcom. The important thing here is how much Apple's lawyers can increase their budget.

    3. Oh Homer
      Facepalm

      Wait...

      Did the champions of obscenely overpriced gadgets just accuse someone of overcharging?

      1. kmac499

        Re: Wait...

        In other news; There has been an outbreak of extreme name calling between cooking utensils in a local kitchen. The phrases "Kettle" ,"Pot" and "Arse" were overheard by our reporter.

    4. Wzrd1

      Re: If Apple were to get the billion...

      "...would they be passing the money on to their customers? I suspect it would just add to their already bloated margins."

      Yeah, because the fiducial duty to stockholders suddenly ceased to exist.

      Grow a brain, child.

      It just *might* grow some innovation, which I'll admit is as likely as Marvin the Martian becoming real. But, it may well be reflected in briefly lowered prices.

      And hence, more drones for crApple.*

      *I loved the MacBook Pro, until it was emasculated into a iBook.

      Along with the rest of the product line.

  2. Diogenes

    Que ?

    had been overcharging Apple and bribing the iPhone maker with lower licensing costs in exchange for an exclusive deal

    What concurrently and at the same time ?

    1. bazza Silver badge

      Re: Que ?

      Sounds like it was,

      "If you don't like this price, wait until you see what it's like if we don't get exclusivity...".

      Which would be a pretty good example of gouging.

      Qualcomm do seem to have been playing it pretty dirty, or at least dirty enough to attract a big fine in Korea and the attention of the FTC and the Chinese government. Qualcomm have a lot of patents, but a lot of them relate to CDMA2000 (and bits of UMTS), which is a dying and increasingly pointless technology.

      It's no surprise that Apple have gone and tried the CDMA2000-less Intel chips, just a pity that Intel don't seem to have got them quite right.

      1. Gene Cash Silver badge

        Re: Que ?

        Intel doesn't have them quite right because they can't use the Qualcomm patents. It's basically ILLEGAL to get them right w/o paying Qualcomm a HUGE chunk 'o change. And we're talking where Intel & Apple go "whew, dat's a lotsa munny!"

        Qualcomm are the 900lb gorilla of the cellphone world. They have all of the patents, they know it, and they're complete dicks about it.

        It's good to see someone has finally called them on their bullying, non-FRAND licencing, and shady tactics, and it's APPLE, who has the money and the lawyers to see it through.

        I'll have to go to the store for extra popcorn on this one. It's going 20 rounds.

    2. Mage Silver badge

      Re: Que ?

      Very possible with Qualcomm. Without the "exclusive deal" the "mark" gets charged even more royalty (protection money?) often a percentage of entire product as well as surcharge on chip.

      Even Intel only charges just for the chip (which no doubt partially explains the high cost), not a percentage on the entire product it's used in.

      Qualcomm is to manufacturers what some exploitive software companies are to retail or business end users. I don't think they are liked by any manufacturer.

      1. m0rt

        Re: Que ?

        Hell - does this mean we can sue apple for overcharging consumers?

  3. This post has been deleted by its author

  4. You aint sin me, roit Silver badge
    FAIL

    Fair and reasonable rates...

    Which Apple agreed to pay, and have paid for years. And now they are saying

    "You know that contract we had, the one where we agreed to pay those royalties? Well we want to rewrite it. Looks like you now owe us a billion."

    Qualcomm's response should be the time honoured "No backsies!"

    1. Anonymous Coward
      Anonymous Coward

      Re: Fair and reasonable rates...

      Fair reasonable and NON DISCRIMINATORY. Meaning they can't charge more for integrating the same patents into a device based on its sales price - how does Apple going from 32 GB to 256 GB in the top end iPhone that sells for more entitle Qualcomm to more money for its patents?

      This is something that's been upheld by courts in multiple jurisdictions around the world. Sure, Apple agreed to pay those royalties, as did Samsung and everyone else - that's the nature of monopoly power. You can force others to take bad deals because you have all the power in the relationship. Apple may wield a lot of power due to their size and the amount of components they buy for all the phones they sell, but when it comes to "we want to support Verizon and Sprint in our phones, so we need CDMA technology" they are at the mercy of Qualcomm, just like everyone else.

  5. JeffyPoooh
    Pint

    Find the idiots that wrote the code in the baseband chipset

    Probably some slob at Qualcomm or similar...

    1) Phones that go insane in areas of weak signal. Literally getting extremely hot and draining their battery flat in two hours. As if the stupid phone is trying to wake up a cell tower that it has assumed is napping. Daft.

    2) Phones that, when emerging into an area of very strong signal, refuse to even consider noticing for several minutes. Smells like a Work Around to problem 1. Exasperated folks holding their phone up to the office window for several minutes, then it finally connects to LTE or 4G at perfect five bars. Happens all the time. Minutes waiting for an internal timer to go ding.

    Somebody needs to be fired.

  6. Magani
    Trollface

    Guess I got it wrong

    "Qualcomm built its business on older, legacy standards but reinforces its dominance through exclusionary tactics and excessive royalties.

    Oops. Here's me thinking that it was Apple that was the one who used "exclusionary tactics and excessive royalties". How silly of me.

    1. Anonymous Coward
      Anonymous Coward

      Re: Guess I got it wrong

      Unfortunately this is the dream of every dominant tech company. And that doesn't make it right.

  7. Steve Davies 3 Silver badge

    Excluding the parties in this case

    Would you not be at least a bit peeved to find that burried deep in your bill was a charge for something that you have never used?

    Would you not complain?

    If the company charging you said 'No. You ain't gonna get your money back' be :-

    1) looking for an alternative supplier

    and/or

    2) looking to the regulator and then the law for compensation.

    So without looking at the minute details of this case which you probably won't understand unless you were a patent lawyer is Apple's move that wrong?

    That is not to pre-judge the outcome of this case it might be true that the patents that Apple don't use are actually needed to make some other function work that it is fair to charge a licensing fee for.

    Us Commentards can speculate all we like and take sides but as I said above unless you are a patent lawyer the details are literally gobbledegook to the rest of us.

    There is an upside though.

    Apple didn't file suit in East Texas where the patent trolls live by the thousand.

    1. razorfishsl

      Re: Excluding the parties in this case

      LOL you need to wake up.......

      IBM

      HP

      Fujitsu

      All sell servers full of hardware you pay for but cannot use.

      you have to pay for enable codes.......

    2. Anonymous Coward
      Anonymous Coward

      Re: Excluding the parties in this case

      "Would you not be at least a bit peeved to find that buried deep in your bill was a charge for something that you have never used?"

      Yes, but I don't have a team of contract lawyers who should be checking for this sort of stuff. Or is that the problem, a thousand patent lawyers and Dave in accounts who looks at the contracts on a Friday afternoon if not to busy.

  8. Anonymous Coward
    Anonymous Coward

    The Forbes article on this suit

    Mentioned Apple saying that Qualcomm required higher royalties for a phone with 256GB of storage versus one with 128GB. So basically the claim (or one of them) is that Qualcomm is charging royalties based on the sales price of the phone, which has been held by courts in multiple jurisdictions to be against FRAND licensing (i.e. they are discriminating against more expensive phones, as though CDMA patents were somehow worth 5x as much in a phone that sells for $500 versus one that sells for $100)

    Even if the new administration shitcans the FTC suit against Qualcomm, they have no control over Apple's, since the executive branch exercises no control over the federal courts beyond appointments of new members as existing ones retire.

    1. Anonymous Coward
      Anonymous Coward

      Re: The Forbes article on this suit

      I once interviewed for a job at Quallcomm. After about 10 minutes, I realised that I'd have to sell my soul to the devil.

      TBH, if their business practices are anything like the employment restrictions they wanted to impose on me then I hope they get stuffed royally. One was giving them the right to view ALL my private emails on my own non company acount without them notifying me or getting a warrant. Another was them owning the rights to everything I created in any field while I was employed by them. This included any royalties from my two existing patents (in a field that had nothing to do with them) any royalties on any publications even if it was a work of fiction.

      1. HmmmYes

        Re: The Forbes article on this suit

        Oh one of those employment contracts.

        Iv been to a couple of places where they wanted me to sign something along those lines.

        I was happy too -providing the company paid me double time for the hours when I was not at work as, I read the contract, they were contracting me for the full 7x24.

    2. Anonymous Coward
      Anonymous Coward

      Re: The Forbes article on this suit

      > they are discriminating against more expensive phones, as though CDMA patents were somehow worth 5x as much in a phone that sells for $500 versus one that sells for $100

      Or as though a piece of software is somehow more valuable when run on a CPU with 8 cores rather than 4...

      1. Anonymous Coward
        Anonymous Coward

        Re: The Forbes article on this suit

        In that case the software can do 2x the work, so there's an argument to be made that it is more valuable in that case.

        In any event, when you are licensing an Oracle DB or whatever, you are licensing the use of copyright software, which is not covered by FRAND terms. If they wanted, a company could choose to charge 5x as much to license their software on a Mac because they hate Apple, and it would be perfectly legal.

      2. Paul

        Re: The Forbes article on this suit

        Well, yes it is. If you're a business and want things to run faster, it costs more money. You either make it faster or wider (more parallel operations). Oracle chose to charge more if you do the latter.

    3. MR J

      Re: The Forbes article on this suit

      The thing is that buying a $40 droid phone every 6 months that does everything you want is okay.

      Buying a $600 iPhone means you want to hold it for a few years if you can - so you can feel you have some value for money.

      Where it becomes fair under FRAND is if a 256GB iPhone incurs one charge while a 256GB Droid incurs a different charge.

      If they were seeking to charge EVERYONE based on the value of the finished product (or a specific set of features) then it is non-discriminatory and as such is okay.

      Under FRAND Apple would need to show that Qualcomm was seeking to disadvantage one supplier or the other. And I think more specifically FRAND has to do more with the "Terms" than the "Pricing" anyhow. That is, everyone should have to follow the same licence restrictions.

      Perhaps if Apple, Samsung, Nokia, and other handset designers out there would have been giving some praise to the origins of their systems then there would be more love in the world.

      The Argument from apple is that Qualcomm has not provided the innovation that they are paying for, Apple is saying that THEY are the ones who should own the patents to all of this stuff - thus they (Apple) are paying QC for things that (Apple) invented. That is why it's not going to a Patent Troll state. Because Apple doesn't want a state that sides with patent holders!..

      Sauce

      ""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""

      1. Anonymous Coward
        Anonymous Coward

        Re: The Forbes article on this suit

        Apple is arguing that those features cost money to develop, and money to put in the phone, and are part of the reason why the phone costs what it does, instead of getting cheaper if they weren't improving it. If it were getting cheaper, they'd be paying Qualcomm less and less every year because of how they charge - discriminating based on the price of the phone.

        That fact that the wifi standards committees are explicitly requiring participants to acknowledge that they can't charge based on price of the overall device, but only on the chip shows that people are getting wise to this scam.

      2. Mark 65

        Re: The Forbes article on this suit

        <quote>If they were seeking to charge EVERYONE based on the value of the finished product (or a specific set of features) then it is non-discriminatory and as such is okay.

        Under FRAND Apple would need to show that Qualcomm was seeking to disadvantage one supplier or the other. And I think more specifically FRAND has to do more with the "Terms" than the "Pricing" anyhow. That is, everyone should have to follow the same licence restrictions.</quote>

        Hmmm, I'm pretty sure that charging more for a more expensive model in the same lineup of any brand would also count as discriminatory. I believe FRAND licensing is supposed to end up with pricing based upon the number of units of product you which to purchase rather than where in your product lineup it gets used.

  9. SkippyBing

    'Apple said in a statement to El Reg.'

    Wait what?

  10. MatsSvensson

    How.... DARE they intrude on Apples patent for excessive fees!

  11. Chronos
    Flame

    I, for one,

    ...hope all of these nutters trying to destroy Qualcomm are left with Mediatek as their sole supplier. Good luck with that.

    1. KjetilS

      Re: I, for one,

      Why? Do you have any vested interest in Qualcomm being able to gouge their customers, and by extension us consumers?

  12. Mage Silver badge
    Devil

    Business Model

    Qualcomm's main business model is NOT selling chips, that's a means to an end. They licence.

    Thus they lobby to have their IP in standards (which is why 3G was much less good than it could have been), buy up small companies and shutter them and buy larger ones and kill almost all products that don't have a per handset or per chip (or both) royalty.

    They not only charge you for a chip, but want a slice of the product that uses it. They epitomise what's wrong with patents.

    Of course they charge too much. Apple though should take care, most of Apple's patents shouldn't have been awarded, nor the excessive awards against those deemed to be breaking their patents, both "inventive" (= supposed real patents) and "design" (=Registered Design, a kind of copyright)

    People in glass houses.

    Kettle & Pot.

    1. Anonymous Coward
      Anonymous Coward

      Re: Business Model

      Mage mentioned "...buy up small companies and shutter them..."

      Sounds like Cobham. They went around killing off companies making emergency beacons, one after the other.

      I was trailing after them trying to do a market survey. I counted seven companies or product lines that they'd killed.

      Crazy.

      1. P. Lee Silver badge

        Re: Business Model

        >"...buy up small companies and shutter them..."

        Sounds like you have a business opportunity!

      2. I am the liquor Silver badge

        Re: Business Model

        Adobe have considerable form in that area too. Seems to be a common tactic.

  13. Trollslayer
    Thumb Up

    Not the first time

    They may have blocked competitors (including those trying to break into the market) using similar tactics.

    Well their patent library is expiring fast and the likes of Mediatek are doing it much better and more efficiently.

  14. Unicornpiss Silver badge
    Meh

    Hmm..

    I wonder if Android manufacturers are paying the same premium for these chips?

    The interesting thing about lawsuits like this is while the companies are viciously pursuing their litigation, that they're still buying chips and placing orders for more, negotiating contracts for same, with the same companies they're bitterly fighting. It's great sport.

    It's kind of like that old cartoon with "Ralph E. Wolf" and "Sam Sheepdog" where they do everything they can to thwart each other, then when it's quitting time they punch the clock and go have a beer together or whatever.

    1. Steve Davies 3 Silver badge

      Re: Hmm..

      My guess is that Apple are happy with Intel as their supplier and that can bear the loss of Qualcomm as a supplier. IF they hadn't then why would they have sued Quallcomm... unless Quallcomm decided to up the rate the get per device and Apple said, "Nope, enough is enough".

      If it is the latter then QC might come to rue the move.

      As we don't know the reason why, anything we cn come up with is pure speculation.

    2. Steve Hersey

      Re: Hmm..

      Well, the handset manufacturers basically have no business if they don't continue to buy those chips, as the chips embody standards-essential tech. The manufacturers don't have anywhere else to go until Intel becomes a viable alternative. Consequently, it's no surprise that they continue to place orders...

  15. Doctor Syntax Silver badge

    "the enormity and value of the technology we have invented"

    Was "enormity" really what they meant?

  16. Anonymous Coward
    Anonymous Coward

    Oh the irony, fuck off Apple and your rounded corners.

  17. Anonymous Coward
    Anonymous Coward

    "Apple believes deeply in innovation"

    err ... is that why they keep using proprietary connectors on stuff? I though that was to do with protecting the excessive pricing on products ....

    1. Steve Davies 3 Silver badge

      Re: "Apple believes deeply in innovation"

      Is USB-C proprietary?

      Is USB-3 the same?

      Is USB Propietary? Apple dropped Apple only stuff to adopt USB with the original iMac.

      Come on now, Apple isn't squeaky clean but a statement like that needs qualification. IMHO, like many companies, they do some good and some bad in this area.

      As the current MacBook range uses ONLY USB-C I think you might like to revise your opinion, but I could be wrong.

      1. Anonymous Coward
        Anonymous Coward

        Re: "Apple believes deeply in innovation"

        @SD3

        Apple puts DRM chips in their Lightning charging cords. The only purpose is revenue.

        Apple updated their codes with each minor iOS update, locking out aftermarket cables that weren't using genuine DRM chips. In other words, their hidden Apple Tax hadn't been paid. Their only purpose is revenue.

        The above, combined with unexpected cable wear out, forced me to purchase an overpriced genuine Lightning cable at short notice. It was Cdn $40. That's the revenue they were after.

        Apple are scum. Nice products. But make no mistake, they're sleezy scum. The problem is, they don't even bother to hide it. They depend on willful blindness.

        Round 2 is the iPhone 7 headphone socket. Way too obvious.

        Round 3 is that laptop with hardly any I/O ports.

        The trend is too obvious.

        1. Anonymous Coward
          Anonymous Coward

          Re: "Apple believes deeply in innovation"

          No, the only purpose is not revenue. You can argue the main purpose is revenue, but that's rather silly as it isn't like they make a lot of money on charging cables. And they will license it under the made for iPhone program at very cheap rates - considering you can buy licensed cables for only a couple bucks they can't be making much - it probably barely pays the cost of running the program.

          A very good reason to do this is to make it possible for them to cut cheap clones off the market, which have led to devices catching on fire during charger in some cases. Admittedly, these cases are rare, but they do unjustified damage to Apple's reputation (see Reg articles from years past about an iPhone 4 catching fire and injuring someone in China or whatever)

          That would be one downside of Apple switching to USB-C as there is no similar program to insure USB-C cables are properly made and fit for purpose. Remember the Chromebook Pixel that was completely fried by a dodgy USB-C cable that didn't have the proper resistors in it? The Google engineer who first reported that even had his USB power delivery analyzer fried by that cable! Granted, that problem was caused by Google not putting a fuse in there, but with a fuse you protect the laptop but not the port which would then become useless - a problem on a phone which would have only one USB-C port.

          I don't think Apple will ever switch to USB-C on the iPhone, I think they'll just do away with the port entirely before long...

  18. Bruce Ordway

    China, CDMA

    Seems like I remember an old story about the Chinese and TDSCDMA development to avoid Qualcomm? Makes me wonder if we'll ever reach a point where the telecommunications industry needs to be nationalized/internationalized? A bigger, badder "Ma Bell"?

    1. Anonymous Coward
      Anonymous Coward

      Re: China, CDMA

      Qualcomm makes most of their money off CDMA. As that's replaced by LTE and someday 5G, which they have much weaker patent portfolios in, the problem will solve itself. In the US we just need Sprint and Verizon to retire their 2G/3G networks. Verizon has stated they'd shut down all their 2G by 2019, and their 3G by 2021. Not sure about Sprint, but assuming similar timing the CDMA problem solves itself in 3-4 years.

      Qualcomm will probably get more and more aggressive about trying to extract licensing revenue as the clock runs down, so they will fight against these cases with all their might.

  19. Anonymous Coward
    Anonymous Coward

    All Apple needs to do...

    Is build everything in house on American soil, using American workers, using goddam American silicon.

    And then pay some American taxes.

    1. wolfetone Silver badge
      Coat

      Re: All Apple needs to do...

      Ah yes, Apple: The All American Company.

      Built using British technology.

      1. Loyal Commenter Silver badge

        Re: All Apple needs to do...

        ...In China

        1. wolfetone Silver badge

          Re: All Apple needs to do...

          *Chyna

  20. BinkyTheMagicPaperclip

    So torn

    ..on the one hand it's clear that Qualcomm aren't exactly the nice guys.

    On the other hand, Apple shows contempt for its customer base, and has a loooong history of trying to squash companies by legal means, so excuse me if I don't shed a tear.

  21. A. Coatsworth
    Facepalm

    Apple denounces use of patents as a blunt weapon...

    ... claims to have patented that idea itself.

  22. Sp0ck
    Facepalm

    So....is it all the fault of QC for the fact that Apple (have to) charge an extra £100 for 96gig of memory rather than the fiver it probably really costs them?

  23. mIRCat
    Coat

    Irony and lite starch... It's how I keep my collars stiff.

    "Apple has filed suit against Qualcomm alleging it was charging excessive patent royalty fees for cellphone technology."

    'Allo kettle, it's me pot!

    Most of the quotes from Apple's lawyers are so funny they could have been taken out of a lawyers joke book. Seriously though hypocrisy is no laughing matter.

  24. jelabarre59 Silver badge

    So that explains...

    So I guess this must explain a question I've had for a long time:

    If a 10" tablet from a particular manufacturer costs you $250-$300, why does the equivalent 4"-screen cellphone (in the same product line, so equivalent chipsets and probably the same system board) cost you well over twice the price? The screen is significantly smaller, so you're getting so much less for that doubled price.

    I would always joke that the cellular modem *can't* cost THAT much more than everything else. I guess it DOES after all...

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