Last week, the U.S. Fair Trade Commission (FTC) filed suit in Federal Court against Qualcomm (NYSE:QCOM) alleging that certain monopolistic business practices of the company were in violation of Fair Trade Commission Act of 1914, in which basic United States patent law was first set down.
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(APPL) than earnings results. Apple is withholding from its ODMs such as Foxconn the billion dollars listed in its suit against Qualcomm.
Qualcomm said it has been calculating royalties based on the full price of phones because its patents covered far more mobile features than just those encompassed by the mobile communications chips. “So that’s an interesting comparison to their claiming in terms of the portfolio that we have”. Company president Derek Aberle explained that Qualcomm follows common, long-standing licensing principles (specifically, licensing at the device level), and noted the company has been continuing to sign up licensees – over 200 in the past year – with the same terms and royalty amounts it’s been negotiating for years.
Qualcomm is a major supplier to both Apple and Samsung Electronics Co Ltd, with the two accounting for 40 percent of its 2016 annual revenue.
Apple told CNET that it is a firm believer in innovation and has always been willing to pay fair and reasonable rates for the patents it uses.
“To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding almost $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them”, Apple told Mashable. It wants to only be charged royalties for the price of the modem chip. Responding to this request, the lawyers of Qualcomm claimed that Apple was given deals consistent with others in the industry. Qualcomm did not comment specifically on the approval processes, but did say that it is moving forward with the acquisition.
Besides modems, Qualcomm has an huge arsenal of intellectual property that also covers technologies like real-time tracking and mapping, which forms the basis for companies like Uber.
A larger issue is with Qualcomm’s licensing model. Apple alleged that because of Qualcomm’s practices, they weren’t able to source key components anywhere else other than the company.
I’m confident we’ll address and get through the legal challenges underway, as we have done many times in the past.
“Historically we have had a strong relationship with Apple”, he said “We intend to remain a supplier to Apple”.
On Saturday, Qualcomm accused Apple of “actively encouraging regulatory attacks. around the world”.
Net income for Q4 was $1.9 billion, up from Q3’s $1.7 billion but that was hit by an $868 million fine from the Korean FTC. Revenue of $6 billion fell slightly short of a Zack’s survey consensus of $6.12 billion, but was up a hair from $5.8 billion the year prior.
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The company’s stock is down more than 4% in after-hours trading.
