iPhone modem supplier Qualcomm is countersuing Apple in the U.S. District Court for the Southern District of California, saying the Cupertino company could not have “built the incredible iPhone franchise” without its fundamental cellular technologies. The chip maker accused Apple of contributing “virtually nothing” to the development of core cellular technologies.
Don Rosenberg, Qualcomm’s executive vice president and general counsel, accused Apple of launching “a global attack” on Qualcomm.
The Cupertino company, he continued, is attempting to use its “enormous market power” to coerce unfair and unreasonable license terms from Qualcomm, which has promised to “vigorously defend” its business model.
Here’s his statement in full:
Over the last ten years, Apple has played a significant role in bringing the benefits of mobile technology to consumers with its popular products and services.
But Apple could not have built the incredible iPhone franchise that has made it the most profitable company in the world, capturing over 90 percent of smartphone profits, without relying upon Qualcomm’s fundamental cellular technologies. Now, after a decade of historic growth, Apple refuses to acknowledge the well established and continuing value of those technologies.
Apple is the world’s most profitable seller of cellular devices.
But as a late-comer to the cellular industry, Apple contributed virtually nothing to the development of core cellular technology. Instead, Apple’s products rely heavily on the cellular inventions of Qualcomm and others.
Apple’s iPhones and other products enjoy enormous commercial success, but without lightning-fast cellular connectivity—enabled in large part by Qualcomm’s inventions—Apple’s iPhones would lose much of their consumer appeal.
Qualcomm is seeking compensatory and punitive damages from Apple while at the same time insisting that it doesn’t owe Apple a dime.
They’re accusing Apple of, among other things:
- Refusing to negotiate a royalty license for Qualcomm’s 3G and 4G wireless standard essential patents on fair, reasonable and non-discriminatory terms
- Breaching Qualcomm’s license agreements
- Making false statements
- Encouraging regulatory attacks on Qualcomm’s interests
- Deliberately throttling the performance of its LTE modem in iPhone 7/Plus
Qualcomm is indeed being probed by the U.S. Federal Trade Commission over basically bribing Apple and other smartphone vendors to use its baseband modem chips.
The iPhone maker denied any wrongdoing.
Chart via Bloomberg
It is true that Apple and Qualcomm have not been able to agree on what constitutes a fair and reasonable royalty. Furthermore, Apple does dual-source cellular baseband modems for the iPhone 7 series from Intel and Qualcomm.
Qualcomm was the exclusive supplier of 3G and LTE modems for iPhones until 2016.
Tests have shown that Intel’s modem in some iPhone 7 devices is slower than Qualcomm’s LTE chip although Apple later said there was no discernible difference in download speeds between the two chips.
Three months ago, Apple filed a lawsuit against Qualcomm for $1 billion in alleged unpaid royalty rebates which Qualcomm allegedly withheld as retaliation because the iPhone maker dared cooperate with the Korea Fair Trade Commission in a legal investigation involving Qualcomm’s patent practices.