Apple (NASDAQ:AAPL) Sues Qualcomm for $1 Billion

Qualcomm, naturally, denies Apple’s allegations, just as it denied the validity of the FTC’s case.

When you look through notes on Qualcomm, “it’s pretty clear” just how important Apple is for the chipmaker, Cramer continued. Despite the legal rhetoric, however, Qualcomm doesn’t plan to let business between it and Apple be affected, according to a new report from Recode.

In 2015, Qualcomm made an “offer” to Apple to license Qualcomm’s Chinese 3G/4G declared-essential patents on terms purportedly “consistent” with those that resolved an inquiry by Chinese regulators into Qualcomm’s licensing practices, called the “National Development and Reform Commission resolution” (“NDRC resolution” or “rectification plan” for short).

Early this month it seemed the China deal was opening up vast new markets for Qualcomm, after it signed patent deals with other Chinese cellphone makers, most recently with Meizu and Gionee.

This is not the first time that the company is facing a problem with the court. It typically sources the same component from several suppliers, which helps secure lower prices by forcing the manufacturers to compete on price. The company even says it welcomes these claims being heard in court, where Apple’s practices will be up for robust examination as well.

Qualcomm says that Apple has been “actively encouraging regulatory attacks” on the business that Qualcomm does in various regions around the world. It all started when the mobile chipmaker company has required the latter to pay another percentage of iPhone selling prices for constantly using Qualcomm chips from 2011 until 2016 and for constantly asking for royalty share from iPhone’s memory upgrade from 128GB to 254GB.

The complaint also challenges the validity of some key Qualcomm patents for wireless technologies. “Qualcomm built its business on older, legacy standards but reinforces its dominance through exclusionary tactics and excessive royalties”. Qualcomm have already been fined for $854 million in the month of December past year for unfair patent licensing. This decision is being fought by Qualcomm.

In response to the suit, the General Counsel of Qualcomm, Don Rosenberg dismissed the claims as being baseless.

Due to Apple’s participation in this latter investigation, the company alleges that Qualcomm tried to punish it by withholding a massive $1 billion rebate, the sum Apple wants back.

The FTC alleged that Qualcomm has barred competitors from getting a foothold in the baseband chipset market by using unfair means to secure business, thereby harming consumer choice. This lawsuit against Qualcomm is for more than $1 billion, which Apple claim has been withheld as punishment by Qualcomm because Apple collaborated with South Korean authorities in a recent anti-competitive case.