Apple Slaps Qualcomm With $1B Antitrust Suit

SAN DIEGO (CN) – Two days after being sued by the Federal Trade Commission, chipmaker Qualcomm was hit with another antitrust complaint from one of its biggest customers – Apple.

The nation’s largest smartphone seller sued Qualcomm in federal court Tuesday, claiming the chipmaker uses “monopoly power” to collect “tributes” on every iPhone improvement and that it withheld nearly $1 billion owed to Apple because it cooperated with antitrust investigators in South Korea.

In December, the Korean Fair Trade Commission fined Qualcomm $853 million for unfair licensing practices and coercive deal-making. Qualcomm vowed to appeal the penalty.

On Wednesday, the FTC sued Qualcomm for withholding standard-essential patent licenses from competitors and abusing its position to make Apple exclusively use its chipsets in iPhones and iPads in exchange for billions of dollars in royalty rebates.

Apple followed that suit with a complaint of its own, claiming it’s been overcharged by billions due to Qualcomm’s “illegal scheme” and refusal to live up to its commitments of licensing standard-essential patents on fair, reasonable and non-discriminatory terms.

“For years, Qualcomm has abused its business relationship with Apple and blocked competitors from selling chipsets,” Apple says in its 99-page complaint. “Qualcomm’s recent effort to cover its tracks – by punishing Apple for providing truthful testimony at the request of government regulators – underscores the lengths to which Qualcomm will go to protect its extortion scheme.”

Apple says Qualcomm “illegally double-dips” by selling chipsets that connect mobile phones to cellular networks and then separately licensing the necessary intellectual property, “but never to competitors.”

In an emailed statement, Qualcomm’s executive vice president and general counsel Don Rosenberg called Apple’s claims “baseless,” saying the Cupertino-based tech giant intentionally mischaracterized its agreements and negotiations with Qualcomm, along with the value of technology it has “ invented, contributed and shared with all mobile device makers.”

He added, “Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, by misrepresenting facts and withholding information. We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.”

Apple hurled 35 claims against the San Diego-based chipmaker, including breach of contract, bad faith, patent non-infringement, recovery of patent royalties, monopolization and unfair business.

The Cupertino-based tech giant seeks damages for missed payments and an injunction compelling Qualcomm to license its patents on fair terms and to stop engaging in anticompetitive conduct.

The Apple lawsuit was filed in the Southern District of California.

Qualcomm was also hit with another class action by cellphone purchasers in the Northern District of California on Thursday.

The company, which earned $6.5 billion in profit last fiscal year, saw its stock dip 2.42 percent on Friday after news of the Apple lawsuit was reported.

 

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