Qualcomm Says Apple Is $7 Billion Behind In Royalty Payments (bloomberg.com)

Last Friday in federal court, Qualcomm lawyer Evan Chesler said Apple is $7 billion dollars behind in royalties. "They're trying to destroy our business," he said. "The house is on fire and there is $7 billion of property damage right now." Bloomberg reports: Qualcomm wants as many as 56 patent-related claims and counterclaims cut from a lawsuit with Apple and its Asian manufacturers, arguing that these are just a sideshow to the broader licensing dispute between the companies. Apple, through its manufacturers, halted royalty payments to Qualcomm last year and the tech giants' showdown has escalated into some 100 legal proceedings around the world. Apple argues that Qualcomm is using its intellectual property to bully customers into paying excessive royalties even as it tries to duck scrutiny over whether its patents are valid. "You can't just let Qualcomm walk away from this," Apple's lawyer, Ruffin Cordell, told the judge at Friday's hearing.

Comments

Conflicted

[Anonymous Coward]

Hard to say which of these companies is more evil at this point.

Re:Conflicted

[JaredOfEuropa]

The right thing for the wrong reasons: Turkey is just taking a page from Putin's playbook and driving a wedge between the somewhat uneasy alliance between S.A. and the West.

Re:Conflicted

[mangastudent]

Hard to say which of these companies is more evil at this point.

Heh, although I'd put both at a lower tier of evil than a lot of the tech Left.

However, from what I've read elsewhere, this boils down to Apple claiming patent exhaustion. That is, when Intel makes chips based on Qualcomm's patents (and they did reduce a lot of the concepts to working technology), and pays them for that privilege, Qualcomm can't then try to extract further payments downstream. It's akin to the first sale doctrine with copyrights.

Re: Conflicted

[gnasher719]

I would say Saudi Arabia murdered a journalist, and Turkey squeezes their balls for it. As any country should in that situation.

Re: Conflicted

[funky_vibes]

Saudi was created by the west and is expected to act this way.
Not exactly an accident. This is what happens when you create dictatorships and monarchies.

Re: Conflicted

[Cmdln Daco]

Saud is a family name. It's a little like calling a country "Kennedy's Massachussets."

It wouldn't sail in a more civilized region.

Re:Conflicted

[stealth_finger]

Hard to say which of these companies is more evil at this point.

It's Apple.

Re: Conflicted

[RoccamOccam]

Or just Washington. Oh, wait ...

Re:Conflicted

[magusxxx]

So, it's kinda like...

A rancher charging a fee to sell his beef to a butcher.
The butcher charging a fee to sell it to a restaurant.
The restaurant charging a fee to sell it to the customer.

And all of those fees include a markup because an organized crime family wants protection money from all three.

And in this case the protection is from litigation.

Re:Conflicted

[MightyYar]

IP law is not a moral issue, it is one of law. Both companies are playing games with the law - trying to get what they can out of it. It's not about good vs. evil, it's about people responding rationally to the incentives they have in front of them. Ultimately, it's about whether the law is having the intended effect or not and - short of illegal behavior - that is where the remedy lay.

Re:Conflicted

[mrbester]

Definitely. There is a contract in place that says "pay the fucking royalties".

If I disputed how much tax I was to pay and refused to pay it, claiming that an ongoing case was going to sort it all out I'd get sent down because the current situation is "pay the fucking tax". If subsequently it turns out I paid too much, then I can use that ruling to get my money back.

Pay your fucking bills, Apple. You can afford it, and if you win the case then you can take Qualcomm to the cleaners.

Re: Conflicted

[Joce640k]

It's still the pot calling the kettle black.

Any self respecting country would break relations with both of them.

But The Donald likes the Saudis, he gets along well with them.

(Translation: He likes the way they spend money when he's around...)

So what are we gonna do?

Re:Conflicted

[Joce640k]

Fracking isn't the answer to everything and its get you gas not oil. Oh and earthquakes.

Don't forget the poisoned groundwater.

Re:Conflicted

[Joce640k]

Hard to say which of these companies is more evil at this point.

Heh, although I'd put both at a lower tier of evil than a lot of the tech Left.

However, from what I've read elsewhere, this boils down to Apple claiming patent exhaustion.

Yeah, wouldn't that be a wonderful business model if it was possible.

If Apple signed a contract they should honor it, not take the goods then welch on the deal when it's time to pay for them.

Re:Conflicted

[LynnwoodRooster]

Not really. It's Apple. There are alternatives out there (you can get completely Qualcomm-free cellphones). Apple wants the best (Qualcomm) but doesn't believe they have to pay what Qualcomm wants. I guess we could all "pull an Apple", walk into an Apple store, pick up a Macbook, offer $500, and when the "genius" doesn't accept - we walk out with it, and say we're going to sue to put it at a price that WE think is fair...

Re:Conflicted

[mangastudent]

An AC here covered it pretty well, but to directly address your analogy, the butcher and restaurant charge fees because they add value to what the previous entity in the chain sold to them. The restaurant is not selling me a whole cow, or a raw steak.

So in this instance, Intel pays Qualcomm for their special intellectual property sauce, but adds a whole lot of value by making a physical chip with firmware etc. Apple adds a whole lot of value by taking that chip, adding more chips, widgets, a body, more firmware and software, etc. and turns them into a complete, ready for the consumer phone.

Re: Conflicted

[Gavagai80]

There's nothing wrong with maintaining relations with any country. What's wrong is being their arms dealer, military trainer, UN proxy vote, and being silent or backing them up on every atrocity they commit.

(As Canada demonstrated, speaking up honestly may cause the Saudis to unilaterally break relations -- but that's their choice.)

Re: Conflicted

[robsku]

My country, Finland, thinks it's fun to sell weapons to Saudis. This is rich from so called "neutral" country. I want everyone to know this, because that crap has to stop!

Re: Conflicted

[UnknowingFool]

Well in this case, Apple's argument is saying that the rancher wants a fee from the restaurant even though the restaurant paid the butcher and the butcher paid the rancher.

Re: Conflicted

[UnknowingFool]

Except that's not exactly what is being claimed by Apple (and others). Qualcomm licenses their IP so that companies can make chips but other companies must pay Qualcomm directly if they buy chips from a licensee. What Apple is claiming is that Qualcomm wants licensing on chips even though Apple doesn't buy those chips from Qualcomm.

As an analogy if ARM licenses to Samsung to make chips, ARM doesn't require licensing from anyone who buys a Samsung ARM chip. Qualcomm's complicated licensing agreements involve all sorts of payments and rebates.

Re: Conflicted

[UnknowingFool]

Did Apple sign a contract with Qualcomm for this scenario or did Apple sign a contract with a 3rd party and Qualcomm is trying to include that contract into their generic contract?

Re: Conflicted

[LynnwoodRooster]

IP exhaustion is only in place if there is hard contracts that exhaust it. A lot of times vendors are licensed to make chips with IP in them - but NOT licensed to sell them without paying a use tax. Usually that use tax/license is passed to the purchaser to pay. In this case Apple - who doesn't want to pay what it is legally required to pay (and did pay for the better part of a decade, until it decided it was "too much").

Re:Conflicted

[Anubis IV]

If Apple signed a contract they should honor it, not take the goods then welch on the deal when it's time to pay for them.

1) Apple actually is honoring the contract inasmuch as they should, given that they're contesting the legality of it in court. With the court's permission, they've been setting the money aside in an escrow account, with interest, pending the case's outcome.

2) This whole case started because Qualcomm was breaking the terms of the contract by failing to pay Apple $1 billion in rebates that were owed in the year prior to the case being launched. Qualcomm was contractually obligated to make rebate payments to Apple to cover the manufacturers' licensing fees, that way Apple wouldn't have to pay to license IP that had already been licensed. Qualcomm stopped making those payments (for no apparent reason, I'll add), so Apple sued.

3) If a contract contains illegal, illicit, or invalid terms, it's (at least in part) not binding. Given that recent US case law came down fairly clearly on Apple's side with regards to patent exhaustion (and that regulatory bodies around the world have been nailing Qualcomm to the wall for this practice), it seems likely that this part of their contract will be invalidated and will need to be reworked or removed.

4) Regardless of the legality of the contract, Apple was seemingly content to abide by it so long as the rebate payments kept coming in (i.e. so long as Qualcomm's illicit behavior didn't affect their bottom line), but with Qualcomm failing to make those rebate payments and the courts setting strong precedent against behavior like Qualcomm's around that time, Apple wasn't about to let Qualcomm's lack of payments slide.

If you want to make an argument that Apple is acting unethically, the better place to look at isn't their contract with Qualcomm, but rather how they're handling their manufacturers. Apple ordered its manufacturers to withhold their licensing payments from Qualcomm until the case is resolved, and added some teeth to their order by withholding those funds from their manufacturers. Those funds aren't being held in escrow (so far as I know), and their manufacturers aren't paying those funds to Qualcomm, meaning that Qualcomm is doubly put out, since they're not getting licensing fees from either the manufacturers OR Apple until this case is resolved.

That's Apple playing hardball there, and if you want to object to some aspect of their behavior with regards to this case, that's where I'd start.

Re: Conflicted

[mysidia]

So Apple is a 1 Trillion $$$ company and Qualcom is a 90 billion$ company.
Why doesn't Apple just fork over the 90 Billion to Buy out Qualcomm and thus (1) Make their problem go away, and
(2) Create a problem for competing phone makers by increasing IP license costs at every opportunity.

Re: Conflicted

[LynnwoodRooster]

Because that is $90 billion, and Apple is cheap. They could just pay the $7 billion in back royalties (royalties that Apple customers ultimately already paid for), and be done with it, too. But that's not the Apple way. The Apple way is to extort every penny you can out of the entire supply chain, let the rest of the industry do all the R&D/innovation, and then gallop in on unicorns and claim they invented it all for the betterment of all mankind at shockingly low prices (never mind they are over priced), because their legion of followers will accept whatever comes down the pipe as the Latest Greatest Thing.

Re: Conflicted

[mrbester]

Which Apple has already agreed to, hence "stopping payments", which means they had been making them before. Thus there is a contract.

Re: Conflicted

[UnknowingFool]

Cite your evidence

Re: Conflicted

[edi_guy]

I hope it's a very, very clever stealth bomber Finland is selling. "Yes it is invisible to RADAR, infrared, visible, basically the entire EM spectrum. It also works through a quantum tunnel cloak so that you can't even touch or feel it. The price...only $300 million each, less than an F-22! sure sign here, and we'll personally fly them to your base!"

Re: Conflicted

[pgmrdlm]

http://time.com/5187074/fracki...

Re: Conflicted

[Darth]

under the agreement apple had with qualcomm, qualcomm gave apple rebates on those payments. however, qualcomm stopped giving the rebate as a punitive measure for apple cooperating in the korean fair trade commission's investigation into qualcomm's licensing practices. so, it sounds like qualcomm was in breach of that agreement first and apple stopping payments under the agreement was appropriate.

the korean fair trade commission ultimately fined qualcomm $853 million. the ftc has also sued qualcomm for the same practices.

Re: Conflicted

[Cmdln Daco]

Washington is not run by a dynasty of Washington family members.

Re: Conflicted

[funky_vibes]

Yes, but democracy is a direct result of education. That's why the world hasn't experienced it for 2300 yrs.
It is also why fascist governments now push legalisation of marijuana and education only creates factory workers and bureaucrats.
The right ignores what the people want and the far right feeds the stupid people with what they want to hear. There is no meritocracy, technocracy, or left, but people still imagine they have a choice.

Re:Conflicted

[stealth_finger]

It's the gift that keeps on giving...

Re: Conflicted

[RoccamOccam]

Sure. This falls under the category of "If I had made a different point, then your rebuttal would be wrong." Also, look at Moving the Goalposts Fallacy.

Re: Conflicted

[UnknowingFool]

Then it's an unproven assertion.

Apple says they owe nothing

[gnasher719]

Actually, the matter is in court and a court will decide how much Apple owes. $7bn is not what Apple owes, itâ(TM)s what Qualcomm would want in their wildest dreams.

Re:Apple says they owe nothing

[quenda]

well, to Apple, $7b *is* nothing. They could probably raise it by looking under the cushions at Apple Park.

Re:Apple says they owe nothing

[Anonymous Coward]

They behave a lot as if they didn't actually have money to pay with. They declare that they have a humongous mountain of cash, yet they are not really doing much with it. They are not expanding their product portfolio that much, they are not paying bills if they can help it, they are not acquiring companies, they are not doing some insane R&D, they are not branching out to new directions, nothing, except building a shiny spaceship headquarters and that was just 5 billion. Not the most sensible use of money in the world, but then again not that much in relation to how much they say they have. What exactly are they keeping such a sum for, just for it to rot away from inflation? Is it possible they are fudging the numbers and they in fact don't have nearly as much cash as they say they do? Wouldn't be the first company in the world to pull something like that.

The thing with cash is, it's for using, not for sitting on. Nobody sits on 250+ billion in cash, except Apple apparently.

To me, things don't add up. I see perhaps only one way it could make sense, if Apple was expecting iFad to eventually die out and they were preparing to rebuild their business from scratch if it did. That would require having a ridiculous sum of cash in reserve, because cash is the only thing that would not lose value along with everything else connected to their company should this actually happen.

Re:Apple says they owe nothing

[rkordmaa]

Investing in what though, nothing in what their core business is doing reflects towards massive investments under the table. The amount of money they should have to throw around should buy them some really swanky R&D to put towards their core business. But it doesn't show. Are they investing in things unrelated to their own business? That wouldn't make much sense, that's just not in "how to build your megacorp" handbook. Maybe they have the regular expenses just ridiculously high and it eats up all the margins, could be, wouldn't be first corporation to fail in this way. It's easy to spend oodles of money and get very little done.

I obviously don't know, but something stinks, this is not how successful megacorps operate, ever. Look at Google in comparison, what are they doing with their money. They stuff it down every hole that looks even remotely promising, some of it has been very successful indeed, most less so. But the main thing is they are constantly looking for their next big break on every front they can think of. That's what you do if you are swimming in money and plan to stay around long term, unless your core business is so cushy that you can just rest on your laurels. Basically anyone who is not an oil giant, military contractor, power company or some-such is constantly bending over backwards to find their next big cashcow. Apple just keeps milking their old one and stuffs the leftover money under mattress. Makes no sense whatsoever.

Re:Apple says they owe nothing

[Orrin Bloquy]

> itâ(TM)s
Does your browser automatically try to convert the apostrophe character to the curly-quote version and if so, what browser is it? I do web dev and this seems unusual behavior.

Good comment

[Futurepower(R)]

Steve Jobs was good at presenting Apple and Apple products in a sensible manner.

The present Apple CEO, Tim Cook, apparently does not have much ability to direct communication about a company.

(Jobs was very abusive in other ways. For example: The memoir by Steve Jobs' daughter makes clear he was a truly rotten person whose bad behavior was repeatedly enabled by those around him) (Aug. 26, 2018)

Re:Good comment

[Uberbah]

RE Steve bing a dick:

1) Women have a preeeetty good idea who they give birth to. Men - not so much. Before reliable DNA testing, rejecting the idea that you are someone's father when you really don't think you are isn't so unreasonable.

2) It's funny how these "Steve is a dick" anecdotes always seem to go back to the Reagan Administration - or earlier. If the guy was such a ragging shitheel, you'd think he would have give his hate club more material to work with since he went back to Apple in the late 90's.

Re: Good comment

[Uberbah]

What the fuck are you talking about?

It was easy enough to understand the first time. Maybe ask a first grader to help you understand it?

Grandparent comment is sensible, it seems.

[Futurepower(R)]

Mistake: I should have been more clear when I titled my parent comment, "Good comment". I think the comment, the grandparent to this one, is sensible: "$7bn is not what Apple owes, it's what Qualcomm would want..."

A more detailed story: Qualcomm Says Apple Owes It $7bn In Royalties. (Oct. 29, 2018)

Re:Qualcomm is screwed

[psmears]

Apple can drag out any lawsuit until Qualcom runs out of money. Doesn't matter who's right and who's wrong.

Plus, a foreign company suing a US company in a US court? Even Samsung can't win that.

Are you saying that US courts are biased? Even if they are - Qualcomm and Apple are both US companies, right?

... Qualcomm refused to answer [Apple] questions..

[Futurepower(R)]

An earlier story: Qualcomm accuses Apple of stealing its secrets to help Intel. (Sept. 25, 2018)

Quote: "Apple has cast doubt on Qualcomm's claims. Last month, it alleged that Qualcomm refused to answer its questions about which specific confidential information it had improperly shared with Intel. Apple has also alleged that it gave Qualcomm the chance to verify that Qualcomm's software had been used properly."

Re:Who gives a crap about stinking apple

[Megol]

Idiot.

Who to believe?

[reanjr]

Do you believe the company who essentially invented wireless technology or do you believe the company that invented rounded corners?

Re:Who to believe?

[mangastudent]

Do you believe the company who essentially invented wireless technology

Except Qualcomm was hardly the only company "inventing wireless technology". Their biggest claim to fame is reducing code-division multiple access (CDMA) to practice, but there are many other ways to split up spectrum. E.g. GSM started out with time-division multiple access (TDMA), a frequently slot is divided into time slots, each user gets one.

Re:Who to believe?

[drinkypoo]

Do you believe the company who essentially invented wireless technology or do you believe the company that invented rounded corners?

Neither. You have to be a useful idiot to believe any corporate PR.

Re:Who to believe?

[brennz]

Marconi is spinning in his grave

Re: Who to believe?

[houghi]

How about neither?

Re:Who to believe?

[Shatrat]

At how many herz?

Re:Who to believe?

[Anubis IV]

How about believing both sides? It's an uncontested fact that Apple is withholding payments. Both sides will tell you that. What the reporting here is creatively omitting, however, is any mention of the fact that Apple received permission from the court to place the contested payments, with interest, in an escrow account until the case is resolved, which is standard practice in situations such as these.

Keep in mind how this case started: Qualcomm failed to pay Apple $1 billion in rebates that were owed, seemingly for no reason at all. Those rebates were supposed to cover the fact that Qualcomm was double-dipping with their licensing fees by charging Apple's manufacturers a licensing fee (which then got passed on to Apple) for the right to manufacturer, then charging Apple a licensing fee for the right to sell the exact same IP. So long as Qualcomm kept making those rebate payments, Apple didn't complain. It was only when Qualcomm stopped making those payments that Apple sued for what they were owed and petitioned the court to let them keep the funds in escrow until the conclusion of the case. When Qualcomm pushed back, Apple raised the stakes by using recently-established precedent regarding patent exhaustion to assert that Qualcomm never had the right to demand those payments from Apple in the first place.

But hey, don't let me stop you from relying on logical fallacies to make up your mind. Appeals to authority can be fun. Loaded questions too. To each their own.

Re:Who to believe?

[maestroX]

Don't know about the wireless but the rounded corners is invented by your mommy!

Re:Who to believe?

[thegarbz]

Given how the matters being decided don't have to do with wireless technology or rounded corners but rather boring arse legal contracts, I'll go with whomever the courts tell me to believe.

Re:Qualcomm is screwed

[Anonymous Coward]

Yea, looks like I confused them with some other company.

I would say it looks like you are a "make murica great again" idiot... can't see past your belly button, no wonder the confusion.

Re:Qualcomm is screwed

[Anonymous Coward]

Huh, I thought Qualcomm was Taiwanese or something thereabouts. Looks like I was wrong. They might actually have a fighting chance ... until they run out of money.

They won't. Qualcomm has a healthy business on the Android side of things too. You should refrain to comment about things you know nothing about.

Re:Who gives a crap about stinking apple

[butchersong]

Well technically it is the case that jihadi groups are on both facebook and twitter and Apple does not allow the Gab app on their ecosystem so I don't think the AC said anything factually incorrect.

Coming from Apple...

[robsku]

This coming from Apple is so rich that it could be hilarious, if it wasn't so totally not hilarious.

Re:Fuck apple

[robsku]

It's very disturbing that it's legal to do so.

Re:Who gives a crap about stinking apple

[Megol]

Free speech version of twitter - is that correct? Is stormfront the free speech version of slashdot? No.
Attacked because some guy posted something? Not exactly correct given the attitude against Gab before that.
    But (not stated by the AC) is Gab "attacked" now because some guy not only posted something but also did something? It sure accelerated the banning.
Was that posted "very conveniently"? No, that type of messages are posted all the time. The weak implication/hint of conspiracy is laughable.
Are "jihadis" openly swarming all over twitter? Not exactly, depends on how it is defined though.
Are the "jihadis" part of the "left"? Only in a very uneducated and/or confused brain. Neither left or right (politics) are synonyms with "everything I hate".

All in all I think my assessment of the AC is correct.