In the latest in the face-off between Apple Inc. and Qualcomm Inc., the latter has filed two patent infringement complaints related to six of chipmaker Qualcomm's patents covering key technologies that enable certain features in the iPhone.
Apple has gone after Qualcomm in court, instigated regulatory actions and interfered with relationships with contract manufacturers, said Don Rosenberg, executive vice president, general counsel and corporate secretary at Qualcomm, in an interview with Corporate Counsel. "Apple has basically started a worldwide challenge with us," he said. "So why now? Because we are not only defending ourselves, but we have decided to take some affirmative action in response to this."
Qualcomm filed one complaint with the U.S. International Trade Commission, alleging that Apple has engaged in unlawful importation and sale of iPhones that infringe on six patents in question. The company is requesting that the federal agency ultimately bar importation and halt further sales of infringing products in the United States, according to the July 7 complaint.
In a parallel action, the telecommunications giant filed a patent infringement complaint against Apple in the U.S. District Court for the Southern District of California. "While Apple built the most successful consumer products in history by relying significantly on technologies pioneered by Qualcomm, Apple refuses to pay for those technologies," the complaint stated. "Rather than pay Qualcomm for the technology Apple uses, Apple has taken extraordinary measures to avoid paying Qualcomm for the fair value of Qualcomm's patents."
Such measures have included a Jan. 20 lawsuit Apple brought against Qualcomm, alleging "excessive royalties" and withholding of payments. Just days later, Apple also filed suit in China, premised on similar claims.
The six patents at issue are just a small part of Qualcomm's robust patent portfolio, which includes patents on fundamental technology that ensures phones function properly. While Qualcomm's patents enable and enhance certain iPhone features, Rosenberg said "we are in the background," meaning many may not know what the company has contributed. "Apple has tried to capitalize on that by creating this false narrative that they're the innovator," Rosenberg explained.
In response to request for comment, Apple referenced a statement issued on June 20. "Qualcomm's illegal business practices are harming Apple and the entire industry," the statement said. "They supply us with a single connectivity component, but for years have been demanding a percentage of the total cost of our products—effectively taxing Apple's innovation. We believe deeply in the value of intellectual property but we shouldn't have to pay them for technology breakthroughs they have nothing to do with."
In an earnings call earlier this year, Apple CEO Tim Cook likened Qualcomm's business practices to "buying a sofa" from someone who is charging "a different price based on the house it's going into."
Rosenberg countered that this is "just a lot of nonsense" Apple has used as a distraction and added that it's a well-established industry practice to charge a percentage of an item's selling price in exchange for use of intellectual property. "[It's] simply an easy and proportionate way to say we will take a small percentage of the selling price of the device and that will pay for the intellectual property use," he said. "It's a combination of both the accepted methodology and the fact that our intellectual property is all over the [iPhone] that justifies the process we use."
In addition to the ongoing legal battle with Apple, Qualcomm has also been sued by the Federal Trade Commission for using anti-competitive tactics to maintain its monopoly in the supply of a key device used in cellphones. This followed a more than $800 million fine by the Korea Fair Trade Commission and a nearly $1 billion fine for violating China's anti-monopoly law.