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Apple Not in Settlement Talks 'at Any Level' With Qualcomm, Report Says (reuters.com)
Apple is not in talks "at any level" to settle its wide-ranging legal dispute with mobile chip maker Qualcomm, Reuters reported Wednesday, citing a source familiar with the matter. From the report: In the past, Apple used Qualcomm's modem chips in its flagship iPhone models to help them connect to wireless data networks. But early last year, Apple sued Qualcomm in federal court in San Diego, alleging that the chip company's practice of taking a cut of the selling price of phones as a patent license fee was illegal. The case is to go to trial early next year and has spawned related legal actions in other courts around the world. In July, Qualcomm's chief executive, Steve Mollenkopf, told investors on the company's quarterly earnings call that the two companies were in talks to resolve the litigation.
They don't want most of Qualcomm's business, just the wireless baseband technology. Apple already has their own chip design team that does a vastly better job than Qualcomm and they'd have no interest in taking over a business that sells SoCs to third party manufacturers. I would be much less expensive for them to buy up a small company specializing in the part they care about or to just start their own internal team from scratch.
Just FYI, AMD and Intel have full cross-licensing on patents..and have since the 1970s.
Good-bye
And who would that small company be? I only know of Qualcomm, Intel, MediaTek and Samsung as suppliers of mobile basebands. If you know of any others, please do tell.
Broadcom. But they are only slightly smaller than Qualcomm ($17B vs $22B in annual revenue).
Apple's best option is to win their lawsuit, and force Qualcomm to give them a better deal. If they lose, they may decide to build or buy.
Apple's cash pile is over $290B, so they can certainly afford to do either. But Apple tends to do far fewer acquisitions than other big tech companies.
Apple sued Samsung with its design patents, requesting a percentage of each Samsung device's selling price as a royalty for licensing their patents. Meanwhile most of Samsung's patents were FRAND - included in a standard so licensed at just a few cents per device. Apple refused to do a patent cross-licensing deal with Samsung for this reason, claiming their patents were much more valuable. Apple also exploited the inability of Samsung to get an injunction based on its FRAND patents (an injunction forces a patent violator to stop selling). Apple basically sold devices containing Samsung's patented tech without paying Samsung any royalties during the negotiations and litigation, claiming they were FRAND and the royalty rate just hadn't been negotiated yet.
The natural response to this type of caustic approach to patent negotiations is to dilute the value of FRAND patents. Companies won't want to license their patents under FRAND anymore because of how limited they are when it comes to cross-license negotiations. Which is exactly what Qualcomm is trying to do. You piss on patent holders licensing under FRAND, you everyone from licensing under FRAND. They'll request a percentage of your device's selling price instead.
I'm actually on Apple's side on this one - patents like Qualcomm's which are required to implement an industry-standard tech should be licensed as FRAND. But this is a bed Apple themselves made, and I'm not crying over them being made to lie in it.
Not quite.
To summarize:
Apple is not buying from Qualcomm directly. They are buying components from other manufactures that use Qualcomm chips. They then use those components in their product they sell. Qualcomm licensees state that this kind of indirect sale requires a fee.
Now while that seems sleazy on Qualcomms part to double charge, Apple doesn't have to buy those modules and pay indirect fees. They could for example make the components themselves and buy the chips from Qualcomm outright, but I bet they would pay a higher price. But in the end if they built their own chips or bought modules that didn't use Qualcomm parts then they would owe Qualcomm nothing.
Of course even if Apple wins, Qualcomm can just raise the direct price of their chips to recover the costs. Apple would have a few choices; pay the higher component price, build their own, or find a different module that doesn't use Qualcomm chips. In the end if Apple doesn't want to pay the fee, then stop using their chips. Apple sounds like a whinny customer who bought a meal with a 80% off coupon, didn't like the meal and now wants a refund.
don't know, Apple makes a fair point .. they bought from someone else, the licensing agreement between Qualcomm and that someone else is entirely between them.
Qualcomm doesn't get to attach a rider that says "and you have to pay us too". Whomever is selling to Apple is already paying Qualcomm, and Qualcomm isn't a party to this sale.
To me this sounds more like buying a hamburger at McDonald's and the beef supplier demanding that you have to pay them too.
You are exactly right!
In fact, doesn't the doctrine of first-sale apply? Or is that only for a sale to an end-consumer?
But you are correct; Apple is not a party nor in privity of an Agreement between Qualcomm and the module-manufacturer that Apple DID buy from.
I wouldn't settle either.
Deadbeat Apple won't pay its bills.
Talk about both Offtopic and Caustic...
Blunt maybe, but hardly offtopic. Say, you have issues with intellectual honesty. But why should anybody be surprised that an Apple swallower is intellectually dishonest.
*I* have issues with intellectual honesty?!?
That's really rich, coming from YOU.
You are missing the part that Apple isn't telling you. They are buying the chips from a third party, not the intellectual IP that goes along with it. When the third party built the modules they didn't intend to use the IP themselves. They just wanted to make the module and sell a convenient module at a slight markup. So Qualcomm didn't charge the third party for the IP, just the cost of the chip. Which is why the third party can sell it for a very low cost. But now Apple wants to use that IP so Apple is being asked to pay Qualcomm for the IP. It would be awesome if Qualcomm approached this from another end in which they required an activation process per chip. Each chip could still be tested when assembled into a module by the third party, but it wouldn't function until activated. They then just charge Apple to activate each chip.
To put it another way think of games with DLC. You pay a set price for the game, but if you want additional content (or IP) you have to pay for that. You don't get that content just because you paid for the disc (and in most cases the DLC is already on the disc or at least most of the assets are). If you don't want to pay the additional cost, no problem you can still have the basic game (or in this case you can have the chip, but you can't use the features of it).
By the way, yes the McDonald's that sold you that hamburger is paying an indirect cost per hamburger (well ultimately you are paying because the McDonald's just rolls that into the price of the hamburger). They know that it is part of the business they are in. They pay their fee in the form of franchise licenses in which they must buy the packaging and the product from corp at a markup. So no, a McDonald's store isn't allowed to just run to the Costco and grab some beef, some wrappers and sell it as McDonald's. Nor are they allowed to contact the manufactures and buy the beef and branded wrappers at wholesale. Franchise owners have sued for being forced to do this and lost.
And pompous, ever hear people using that word when you're in the room?
When all you have is a hammer, every problem starts to look like a thumb.