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

[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

[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

[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

[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

[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

[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

[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.

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.

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)

... 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."

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?

[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.