Back in January, we’d covered a lawsuit that had been filed against Qualcomm, by the Federal Trade Commission for unfair trade practices, as well as by Apple and other manufacturers for the inordinate pricing of it’s components.
Well, it looks like Qualcomm is finally geared up to fight back.
Qualcomm recently filed an Answers and Counterclaims suit against Apple. While the suit is a 139-page document, the company has five key complaints.
The main premise of Qualcomm’s suit is that Apple deliberately did not use the full potential of Qualcomm chipsets in it’s iPhone 7 and iPhone 7 Plus smartphones. Qualcomm states that Apple did so, so that the Qualcomm-powered iPhones wouldn’t perform better than the ones powered by Intel’s chips.
Qualcomm says that Apple “chose not to utilize certain high-performance features of the Qualcomm chipsets for the iPhone 7“. They also added that Apple tried to cover how much better the iPhones powered by Qualcomm perform than the ones powered by Intel. They added, “Apple falsely claimed that there was ‘no discernible difference’ between the two variants“.
The company also added that Apple prevented it (Qualcomm) from revealing to customers, the difference in the performance of the two processors. They say that Apple “threatened” them into keeping quiet about the matter, thus preventing Qualcomm from “making any public comparisons about the superior performance of the Qualcomm-powered iPhones“.
Amongst other noteworthy complaints in the countersuit are claims that Apple breached and mischaracterized agreements and negotiations with Qualcomm, that Apple also encouraged attacks on the company in markets outside of the U.S., by misrepresenting facts and making false statements, and that Apple interfered with Qualcomm’s existing agreements with other companies.
Qualcomm’s suit quite obviously comes as a response to Apple’s suit against them from back in January. “Apple could not have built the incredible iPhone franchise that has made it the most profitable company in the world, capturing over 90 percent of smartphone profits, without relying upon Qualcomm’s fundamental cellular technologies“, Qualcomm said. “Now, after a decade of historic growth, Apple refuses to acknowledge the well established and continuing value of those technologies“.
In the last few months, Qualcomm’s journey has been rocky; first, the FTC hit it with a lawsuit, in regards to Qualcomm’s use of its patents: specifically, how it wouldn’t sell modems to companies who didn’t also agree to pay royalties on phones that didn’t use Qualcomm modems. Then came three Apple lawsuits.
The first Apple lawsuit against was filed in USA and claimed USD 1 billion, stating that the chipmaker had been drastically overcharging for the use of patents. Two other Apple suits against the chipmaker were in China and in the U.K., focusing on the patents and the design.
All of this comes at a time that Qualcomm is working on rebranding itself. In the last couple years, Qualcomm has been hailed as the king of the mobile processor industry; most flagships carry Qualcomm chipsets now, and almost every manufacturer has their most prestigious devices running on Qualcomm.
However, they believe that the other hardware they supply for the devices – such as Qualcomm’s RF front-ends, Quick Charge, its digital-to-analog audio converters, Wi-Fi products, touchscreen controllers, and fingerprint readers, as well as the software and drivers used to make all of this stuff work – has been overlooked. To change precisely this Qualcomm recently started a rebranding campaign, ensuring that no one calls their processors “processors” anymore, but “platforms”, being inclusive of all the other products that Qualcomm is supplying for the devices.
This legal battle with Apple, which is certainly going to be a long-drawn one, might cause it to take a hit, at least where the goodwill element of business is concerned. What is noteworthy however is that Qualcomm has tried to keep things running smoothly still supplying Apple with the chipsets, as the two go for it in the courts.
As far as the lawsuits are concerned, it’s on the courts to see how substantial they are. All we can do is speculate if there is any actual reason for the lawsuits to happen, or if it is just two companies going toe-to-toe to pay less and charge more for their intellectual property.
Qualcomm’s CEO, Steve Mollenkopf, believes that “Apple’s complaint contains a lot of assertions, but in the end, this is a commercial dispute over the price of intellectual property. They want to pay less for the fair value that Qualcomm has established in the marketplace for our technology, even though Apple has generated billions in profits from using that technology”.
Qualcomm believes that their patents have “tangibly and meaningfully increased over time” but the company has never raised its royalty rates. “At the end of the day [then], they essentially want to pay less for the technology they’re using. It’s pretty simple“, Qualcomm President, Derek Aberle, added.
“We intend to vigorously defend our business model, and pursue our right to protect and receive fair value for our technological contributions to the industry“, added the chipmaker’s General Counsel, Don Rosenberg.
As far as Apple’s response to the chipmaker’s counterclaims is concerned, Apple recounted its stand from January, stating that “Qualcomm built its business on older, legacy standards but reinforces its dominance through exclusionary tactics and excessive royalties“.
To take a step back and look at this: the facts have not yet been established, and we are not yet sure if this indeed is what Apple is doing. But if it is, then to be honest, for a company that charges quite handsomely for its own products, and defends its intellectual property fiercely, this expectation that other brands not be allowed to do the same, does not set a good example.
As far as Qualcomm’s claim that Apple is sort of propping up Intel’s image, even though Qualcomm platforms perform better, all we can say is that that debate is not much different from Apple vs. Samsung; there are always going to be two teams, and each team is going to believe they are better.
Also published on Medium.