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Qualcomm Sues Apple Contract Manufacturers (reuters.com)
Qualcomm on Wednesday sued the manufacturers that make iPhones for Apple for failing to pay royalties on the chip maker's technology, widening its legal battle with the world's most valuable company. Qualcomm's lawsuit, filed Wednesday in a federal district court in San Diego, accuses Compal, Foxconn, Pegatron, and Wistron of breaching longstanding patent-licensing agreements with Qualcomm by halting royalty payments on Qualcomm technology used in iPhones and iPads. From a report: Apple sued Qualcomm in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates. Qualcomm said in the complaint that Apple is trying to force the company to agree to a "unreasonable demand for a below-market direct license." Qualcomm said last month that Apple had decided to withhold royalty payments to its contract manufacturers that are owed to the chipmaker, for sales made in the first quarter of 2017, until the dispute is resolved in court. "While not disputing their contractual obligations to pay for the use of Qualcomm's inventions, the manufacturers say they must follow Apple's instructions not to pay," Qualcomm said in a statement on Wednesday.
Qualcomm probably has sold billions of chips. So it is not true that they don't make anything. This dispute is about Qualcomm using their patents to prevent anyone else in the world from making chips for cell phones without paying huge royalties (rumored at $10 a chip) to Qualcomm for patent licenses. Qualcomm has made about $6B/yr profit from these licenses over the last two decades. I view $120B in royalties as excessive compensation for a some patents.
My personal solution to this is for the FCC to use some of the proceeds from 5G spectrum sales to buy the necessary patents to enable royalty free 5G phones to be built. This could be done through an auction process and patent holders would not be forced to participate. But... those licenses to 5G spectrum will come with a restriction that only technology covered by the government owned patent pool can be deployed in that spectrum. Of course the government will have to buy decent patents or no one is going to buy the 5G spectrum. This scheme fairly compensates the patent holders at the lowest cost to the public and participation is voluntary. If Qualcomm wants to hold out for $120B they can find spectrum elsewhere.