Apple and Qualcomms patent war: You die, you live litigation battles are all for one purpose

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 Apple and Qualcomms patent war: You die, you live litigation battles are all for one purpose


The patent lawsuit between Qualcomm and Apple, which lasted nearly two years, has made new progress recently.

Yesterday (Dec. 10), Qualcomm announced that the Fuzhou Intermediate Peoples Court had approved Qualcomms request for two preliminary bans on four Chinese subsidiaries of Apple, demanding that Apple immediately stop the import and sale of two Qualcomm patented mobile phones in China, involving products including Apple from 2014 to 2017. All mobile phones launched between the two.

We attach great importance to the relationship with our customers and rarely resort to the courts for help, but we have always firmly believed in the need to protect intellectual property rights. In the statement, Don Rosenberg, Qualcomms executive vice president and general legal adviser, said, Apple has been benefiting from our intellectual property rights while refusing to compensate for the related costs. These court orders further confirm the strength of Qualcomms huge patent portfolio.

It is reported that one of the patents involved in the lawsuit is related to adjusting the size and appearance of the photos on the mobile phone, and the other is suspected to be related to the ForceTouch function in the iPhone.

Later, in a tit-for-tat response, Apple said, Another desperate attempt by Qualcomm to ban our products is that its violations are being investigated by regulators around the world.

Apple stressed that Chinese consumers could still buy all models of the iPhone. Qualcomm is proposing three patents they have never proposed before, including one that has expired, and Apple will continue to resolve them through legal channels.

Origin of disputes

Since 2017, the two companies, also from California, have filed lengthy lawsuits and counterclaims around the world over patent disputes. Apple accuses Qualcomm of charging unfair high patent licensing fees to mobile phone manufacturers, while Qualcomm claims that Apple stole its patent property.

The decision of Fuzhou Intermediate Court is just one example.

In the field of mobile communications, Qualcomm is a well-deserved hegemony. It not only occupies todays high-end smartphone chip market, but also continuously gains high profits from the market through huge patent licensing. Its business model based on patent licensing has been questioned, and many countries and regions around the world have launched a large-scale anti-monopoly investigation.

Although Apple has been using self-developed A-series processing chips in its products, modem chips cant bypass Qualcomm. Modem (modem) chip is the core part of the whole mobile phone. It is responsible for processing the analog signals and communications sent by the mobile phone. The mobile phone can make calls and access the Internet all depend on it.

In the early days, Apple mainly used modem chips provided by Infineon. Since 2011, Apple has started to use Qualcomm modem chips in the 4S of the iPhone.

The iPhone has long dominated the high-end mobile phone market, making more than 90% of the profits in the global mobile phone industry. In order to seize Apple as a big customer, Qualcomm signed a secret agreement with Apple to give Apple a high discount to ensure that it only buys Qualcomm products.

In the rapid development of smartphones, the cooperation between Qualcomm and Apple has been very solid. But as the global smartphone market has gradually saturated in recent years, sales of the iPhone have also declined, relying on rising pricing to cover up the decline in sales.

The problem arises here. Qualcomms patent licensing fee for each mobile phone is not a quota, but a price benchmark to determine the licensing fee. Usually, mobile phone manufacturers need to pay Qualcomm a patent licensing fee of about 3.25% of the total price. Not only Apple, but also most mobile phone brands such as Huawei, Samsung and Millet. All fees must be paid to them.

As Apple continues to raise the price of its iPhone, patent licensing fees paid to Qualcomm are also rising. Take the iPhone 7 sold in 2017 as an example. The initial price of the device was 5388 yuan, and each one had to pay a patent fee of 175.11 yuan to Qualcomm. From this year, the price has been upgraded to 8699 yuan, while the patent fee to Qualcomm has changed to 282.7 yuan.

Apple believes that the rise in its average price is due to its ongoing innovations in mobile screens, touch IDs, cameras and other areas, which have nothing to do with Qualcomm. Qualcomm insists on charging patent fees for technologies unrelated to them. Apple CEO Cook said.

After that, Apple began to try to bypass Qualcomm and choose the modem chips offered by other manufacturers. In 2017, Apple began using Intels modem chips on some parts of the iPhone 7.

However, Intels technology was not yet mature at that time. In order to make up for the differences in the use of different models of the iPhone, it was reported that Apple limited the performance of the iPhone using Qualcomm baseband. (Qualcomm pointed this out in its lawsuit against Apple in January 2017.)

On the latest version of the iPhone launched this year, Apple has fully adopted Intels modem chip.

Thats why the two former partners began to fight against each other. In earlier disputes, the two companies also competed over the legitimacy of patent licensing. With Apple completely turning to Intel this year, Qualcomm began suing for Apple to steal Qualcomms technology and share it with Intel.

According to Bloomberg, there are more than 100 lawsuits between Apple and Qualcomm worldwide, and analysts say that Apples unpaid patent fees may range from $2.5 billion to $4 billion.

Litigation warfare

Around the lawsuit dispute between Qualcomm and Apple, almost a whole chronicle can be written. The two sides continue to file lawsuits everywhere, and the secret agreements previously made for close cooperation are now weapons of attack against each other.

In December 2016, the Korea Fair Trade Commission (KFTC) announced that Qualcomm had unfair business practices in patent licensing and modem chip sales, and issued an anti-monopoly fine of 1.03 trillion won ($854 million).

In January, the Federal Trade Commission (FTC) also announced that it would launch an anti-monopoly investigation into Qualcomm. Qualcomm takes advantage of its dominance as a supplier of certain baseband processors to impose cumbersome and anti-competitive supply and licensing terms on mobile manufacturers and weaken competitors. The Federal Trade Commission said.

It was reported that Apple was behind the investigation. Since then, Apple has said to the outside world that Qualcomm withheld $1 billion in patent licensing fees in retaliation, but Qualcomm calls Apples claim groundless.

Three days after the FTC announced its investigation into Qualcomm, Apple launched a $1 billion lawsuit against Qualcomm in the United States, and subsequently filed similar lawsuits in China and the United Kingdom in a few months.

In May 2017, Qualcomm began to fight back against Apple, filing lawsuits against four Apple manufacturers in the United States, including Foxconn, saying they refused to pay patent licensing fees for their Apple products. We cannot allow these manufacturers and Apples to use our valuable intellectual property without paying the fair and reasonable patent fees they have agreed to. Don Rosenberg, executive vice president and general counsel of Qualcomm, said.

In July, Qualcomm filed an anti-sale lawsuit against Apple in the United States, pointing out that Apple infringed on six patents owned by Qualcomm that related to the performance of mobile phones and extended the duration of mobile phones, and even provided a sketch map for five of them. Qualcomm believes these inventions are at the heart of every iPhone.

At the end of 2017, Qualcomm also filed a lawsuit against Apple in China. Yesterday, the Fuzhou Intermediate Courts decision came from the lawsuit.

Thats why the Fuzhou Intermediate Courts ban did not include Apples latest mobile phones, the iPhone Xs, the iPhone Xsmax and the iPhone XR, which were not released at that time.

negotiation

Although Qualcomm and Apples lawsuit battles are killing you and killing you, in fact, neither company wants to kill the other. Many analysts believe that the purpose of the two sides is to force the other side to return to the negotiating table and compete for bargaining chips.

Until now, Apple had been Qualcomms biggest customer source. After losing Apple, Qualcomms earnings data have fallen sharply in recent years.

Since the second quarter of 2017, Apple has refused to pay patent licensing fees to Qualcomm, with revenue of $22.3 billion in fiscal year 2017, down 5% from $23.6 billion in fiscal year 2016, and net profit of $2.5 billion, down 57% from $5.7 billion in fiscal year 2016.

In its earnings report, Qualcomm said that the decline in revenue and net profit was mainly due to the refusal of patent licensing fees by Apple and its contract suppliers.

In fiscal year 2018, Qualcomms annual revenue was 22.732 billion US dollars, an increase of 2% over the previous year, but its net profit lost 4.864 billion US dollars, which is the first loss since Qualcomm went public. Patent revenue also declined, with total revenue of $5.163 billion in 2018, down 20% from a year earlier.

In addition, it is reported that after Apple, Android mobile phone manufacturers Samsung and Huawei have joined the ranks of refusing to pay Qualcomm patent licensing fees in order to force Qualcomm to change its patent licensing model.

On the other hand, Qualcomm has to deal with anti-monopoly investigations from all over the world. In January, the European Commission announced that it had decided to impose a fine of 977 million euros ($1.229 billion) on Qualcomm.

The latest version of the iPhone released this year has been frequently complained by users because of its poor signal quality. Some people believe that the poor signal quality of the iPhone is due to the adoption of Intels modem chip.

Following the Fuzhou Intermediate Courts decision to ban the sale of some models of the iPhone, the latest news shows that Apple has appealed to the court to overturn the sales ban.

Earlier, Li Junhui, a special researcher at the Intellectual Property Research Center of China University of Political Science and Law, said in an interview with the Beijing News that Apple could reconsider the application for a ban, but it would not affect the implementation during the reconsideration period. It can be understood that once it has been made, it will take effect. Li Junhui said that if the ban had been made, it would be illegal for Apple to import, sell and promise to sell the mobile phones involved.

At present, the banned iPhone 7 and the iPhone 7Plus are still available on Apples official website.

Source: Wang Zheng_N7526, responsible editor of Beijing News