Qualcomm Countersues Apple in Escalating Chip Royalty Dispute
Legal Clash Over iPhone Technology Royalties Intensifies
Qualcomm has launched a vigorous legal counteroffensive against Apple, filing claims for unspecified damages while seeking dismissal of Apple’s January lawsuit. The semiconductor giant alleges Apple harmed its business and violated contractual agreements between the two tech titans.
The Core of the Conflict
- Apple’s Allegations: Claims Qualcomm abused its market dominance by imposing excessive royalties, even when compe*****s’ modem chips were used
- Qualcomm’s Defense: Maintains its royalty structure complies with global laws and represents decades of industry practice
“We’ve negotiated hundreds of bilateral license agreements establishing clear market value for our extensive patent portfolio in cellular technology,” Qualcomm General Counsel Don Rosenberg told Fortune.
Global Implications for Qualcomm’s Business Model
This legal battle threatens Qualcomm’s most profitable segment:
- Licensing Division: Generated \(6.5B pretax profit on \)7.6B revenue (2016)
- Chip Business: Earned \(1.8B pretax profit on \)15.4B sales
Investors have reacted strongly, with Qualcomm’s stock dropping 12% since Apple filed suit.
International Regulatory Pressure
Qualcomm faces parallel challenges worldwide:
- South Korea: $1B fine from antitrust regulators
- China: $975M settlement in 2015 over monopoly concerns
Qualcomm’s Counterclaims Against Apple
In its detailed response, Qualcomm alleges:
- Contract Interference: Apple disrupted Qualcomm’s agreements with Asian manufacturers
- Technology Suppression: Apple allegedly restricted Qualcomm from publicizing its modem’s superior capabilities in iPhone 7 models
- Agreement Violations: Apple breached cooperation terms including patent litigation clauses
“Intel’s modem lacked capabilities present in our chips,” Rosenberg stated, suggesting Apple opted for a “lowest common denominator” approach.
The Rebate Dispute
- Apple’s Position: Claims Qualcomm stopped paying agreed royalty rebates
- Qualcomm’s Response: Payments were for technical cooperation, not royalty discounts
The outcome of this high-stakes legal battle could reshape patent licensing practices across the tech industry, with billions in revenue hanging in the balance.
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