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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.
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.
Deadbeat Apple won't pay its bills.
Talk about both Offtopic and Caustic...
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.