Though there is a fierce competition among smartphone manufacturers, companies generally have a better relationship with their suppliers. But the relationship between Apple and Qualcomm over the last two years has been friendly. The two companies, along with one of Qualcomm's biggest designers, smartphone processors and modems, are stuck in a fierce legal battle that hit Apple, one of the world's largest smartphone retailers. The two have sued each other in the world claiming monopoly practices, patent infringement, theft and so on.
The key to conflict is one of the key questions. What is Qualcomm's technical value? Apple has demanded a hefty fee for Qualcomm to use its modems and patents, and Qualcomm claims that Apple intends to use legitimate systems for its technology. This is an important industry-wide question. Because we can not create modern smartphones without regard to Qualcomm's patents, the outcome of this litigation can have a profound impact on Qualcomm's revenues as well as on every company that manufactures mobile phones.
The battle has expanded in recent months. Qualcomm argued that Apple "stole massive information" about confidential information and trade secrets. A small but meaningful court victory has bruised Apple and banned the iPhone in part from Germany and China.
The main event has finally come. On Monday, Apple and Qualcomm face San Diego federal courts and Qualcomm must respond to Apple's claim that patent costs are unreasonable and license terms are unfair. If not, Qualcomm is now at risk of losing billions of dollars due to patent licenses.
Apple's core litigation is a patent covering patents, especially the design and function of mobile phones. modem. You can not create smartphones that are not connected to the Internet wirelessly. In other words, you can not make calls without obtaining a patent, many of which are owned by Qualcomm.
As Qualcomm recognizes, these patents pour billions of dollars in research and development costs, and it is reasonable to make billions of dollars now. Qualcomm does not sell hardware when selling modems. It also sells licenses that are bundled with hardware that is suspected of "no licenses and no chips". However, Apple is the dominant supplier of smartphone modems and has been able to charge more than Qualcomm has. If the manufacturer does not agree to the license fee, Qualcomm will have the power to disconnect power from the modem.
Apple filed this complaint in the first court case against Qualcomm, so the fight between the two companies is a global battle. At first Apple seemed to prevail. Regulators around the world, including the US, South Korea, Taiwan, the EU, and China, have tried to achieve varying degrees of success with Qualcomm in a manner similar to Apple's.
Recently, Qualcomm paid $ 975 million to settle the investigation in China, and Taiwan pays $ 833 million in antitrust violations. Chipping from Apple. Apple has chosen a judge to ban the iPhone from China and Germany. Apple had to temporarily bring iPhone 7 and 8 models. In the United States, the jury recently agreed that Apple violated three of Qualcomm 's patents.
Some of these results were dramatic, and they all had side-shows on major cases. The lawsuit drove it all out in court last Monday. In January 2017, Apple filed suit in the US, UK and China, accusing Qualcomm of imposing an "overly high" fee on patent access to telephone manufacturers. In addition to purchasing its hardware, Apple is "illegally double-clicking" when it is forced to license its patents, saying that Qualcomm agrees that it "cuts costs instead of securing additional anti-competitive advantages." did. Apple claims that "Qualcomm claims overpriced patents"
. Without Apple, modern smartphones can not be created. This is mandatory for industry-wide standards and must therefore be governed by a license known as the "FRAND" term ("fair, reasonable and non-discriminatory" abbreviation). Apple agrees to these Terms of Qualcomm's submission to the European Telecommunications Standards Institute (ETSI), but does not respect these commitments.
Both companies stuck to this condition from outside the courtroom for the first time since Apple began using Qualcomm modems on iPhone 4 in 2011. Apple has begun the call and has agreed that Qualcomm will refund a portion of Apple's royalty payments, but Apple has agreed to use its modem exclusively. Apple claimed to have "no choice" to reduce "excessive royalty burden", but to make this promise. "Qualcomm has used unreasonable terms to create more unreasonable terms," the court said.
Qualcomm said the case went in a different direction and that Apple had asked for a patent refund first. In return, Qualcomm says it can guarantee that Apple will be able to sell enough modems by asking it to use its modem exclusively.
The agreement continued through 2016, and Apple said Qualcomm eventually holds $ 1 billion in payouts. This was a catalyst that Apple filed against Qualcomm in January 2017. According to Apple, Qualcomm has done this because it has truly testified to Korea's Fair Trade Commission on Qualcomm's licensing practices.
In a preliminary ruling, the judge has taken steps with Apple in this part of the dispute. Under the terms of the agreement between the two companies, Apple ruled that the court or regulator can not attack Qualcomm, but Apple's action did not give Qualcomm the right to discontinue payment and owes Apple $ 1 billion I decided. Outstanding royalties.
On the same day that the US Federal Trade Commission filed a lawsuit against Qualcomm's patent practice, Apple's lawsuit for remittance began. The lawsuit, which was brought to trial in January, is now awaiting a judge's decision.
Apple has put pressure on Qualcomm since the legal dispute began. In 2017, Apple ordered suppliers such as Foxconn and Compal to hold all royalty payments to Qualcomm. Qualcomm sued Apple's suppliers and Apple's suppliers decided to compete with Apple's chip maker. Qualcomm will confront Apple to notify vendors of discontinuance of payment, so winning in this case could lead to further damage.
Qualcomm did not commit Apple's aggression. In the past two years, Apple has been successful in raising complaints in the US, Germany, and China, accusing Apple of infringing on patents. German and Chinese judges have found that Apple responded by infringing some of Qualcomm's patents and banning certain iPhone sales. Reuters pointed out that the Chinese ban did not seem to be seriously enforced. Apple claimed patent infringement due to patent infringement, and patent infringement caused patent infringement.
Qualcomm hopes to demonstrate that its patent portfolio is worth more than it has in the past. claim. While this will not disprove Apple's claim that Qualcomm is inadvertently forcing unfair licensing, it can disrupt the company if it appears that a legitimate battle ultimately can lead to an increase in costs.
In a recent San Diego trial, Qualcomm successfully claimed that Apple violated three patents for $ 1.41 per iPhone. If QUALCOMM's patent is part of $ 7.50 of the amount paid by Apple for the iPhone, but the court decides that other patents of QUALCOMM are similarly valued, QUALCOMM may raise the price further and charge a significant sum to Apple.
Qualcomm also reiterated Apple's claim to steal its confidential modem technology and pass it on to a fiercely competitive Intel. According to Qualcomm, Apple steals "vast information about Qualcomm's confidential information and trade secrets" and uses it to improve Intel chips. Qualcomm is currently suing Apple separately from these allegations. Qualcomm has demonstrated in its recent court proceedings with the FTC that the ability of Apple to use Intel chips exclusively still has significant competition in the industry.
Apple claims Monday's case is an end to Qualcomm's monopoly and anti-competitive practices. Apple wants to be willing (or in-house) to buy a modem chip without having to consider a large royalties payment.              Qualcomm says protecting IP is "important"  The fight with Qualcomm is somewhat existential. While licensing agreements with Apple continue in 2016, three-quarters of Qualcomm's revenues came from licensing. If the judge agrees with Apple, Qualcomm can lower the price of the patent, potentially reducing the largest revenue source. Apple sold about $ 1.7 billion in revenue in the first half of 2017. It may also be cheaper to open up the market to competitive chipmakers while making calls.
Steve Mollenkopf, CEO of Steve Mollenkopf, commissioned Qualcomm to speak on a recent revenue call backed by the company's license. stratagem. He said it was "important" for Qualcomm to protect its intellectual property and "verify" that the company was "properly compensated for inventions and investments."
Apple's attorney said in a previous comment that Qualcomm practices are "harmful to Apple and the entire industry," and patent litigation against Apple is just an attempt to "spread the big problems" around the world's regulators.
The trial of Apple and Qualcomm will finally begin on Monday. From jury selection. Over the coming weeks, we expect lawyers to focus their attention on executives from two of the world's largest technology companies. The revelation and outcome of this struggle will not only create headlines, but will also affect the smartphone market for many years.