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Apple Sues Qualcomm for $1 Billion Over iPhone Patent Royalties

Apple Sues Qualcomm for $1 Billion Over iPhone Patent Royalties

CNBC on Friday reported that Apple is suing chip supplier Qualcomm for around $1 billion in patent royalties.

Apple Sues Qualcomm for $1 Billion Over iPhone Patent Royalties
Apple says Qualcomm overcharged them for royalties on many of these parts.

Apple is suing Qualcomm for roughly $1 billion, saying Qualcomm has been “charging royalties for technologies they have nothing to do with.” The suit follows the U.S. Federal Trade Commission’s lawsuit against Qualcomm earlier this week over unfair patent licensing practices.

Shares of Qualcomm, which had been up 1 percent earlier in the day, were were down nearly 2.5 percent by the closing bell.

The lawsuit comes hot on the heels of an FTC complaint that alleges Qualcomm engaged in monopolistic practices to prevent Apple from purchasing key device components from its competitors.

Apple also alleges that Qualcomm has taken “radical steps,” including “withholding nearly $1 billion in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.”

Until the release of the iPhone 7, Qualcomm was the sole supplier of cellular modems in Apple’s iPhone and iPad mobile devices. Apple says Qualcomm charged it “at least five times more in payments than all the other cellular patent licensors we have agreements with combined.”

CNBC reached out to both Apple and Qualcomm for comment. Only Apple has replied with a statement:

“For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. The more Apple innovates with unique features such as TouchID, advanced displays, and cameras, to name just a few, the more money Qualcomm collects for no reason and the more expensive it becomes for Apple to fund these innovations. Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties. Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.

To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding nearly $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.

Apple believes deeply in innovation and we have always been willing to pay fair and reasonable rates for patents we use. We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts.”

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