Qualcommotion: Sueball return alleges Apple 'pay-to-play' deal

Would-be irresistible force meets immovable object

Qualcomm has hit back at Apple over claims it overcharged the fruity firm for IP licensing, revealing that it had a pay-to-play deal to get its chip technology into iThings.

The claim comes as part of a 139-page court filing made as part of the ongoing worldwide legal dispute between the two tech titans.

“Qualcomm seeks, among other things, damages from Apple for reneging on its promises in several agreements and to enjoin Apple from further interference with Qualcomm’s agreements with the companies that manufacture iPhones and iPads for Apple,” said a clearly hurt Qualcomm in a statement.

The $1bn lawsuit revolves around Apple trying to slash its spending on IP licensing. The fruity firm has accused Qualcomm of charging royalties on patented technology that wasn’t actually used in iThings, overcharging for tech it did actually use, and withholding payments due in retaliation for a Korean regulatory probe where Apple’s co-operation led to Qualcomm being hit with an $853m fine. "For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with," Apple said in a statement to El Reg in January.

Qualcomm’s latest court filing describes as “baseless” an offer from Apple to pay reduced royalties for using Qualcomm IP in iPhones and iPads. Exact amounts were redacted from the filing but they will easily break into the tens of millions of dollars.

Details of a so-called “transition agreement” also came to light, where Qualcomm alleges that Apple strong-armed it into a pay-to-play deal for the use of Qualcomm IP in Apple products.

Apple and Qualcomm signed the Transition Agreement on February 11, 2011. Under the terms of the Transition Agreement, Apple required Qualcomm to commit to pay Apple up to [redacted] as an incentive for Apple to procure Qualcomm’s chipsets for use in its devices. Qualcomm made that payment commitment without any guarantee of how many Qualcomm chipsets would be procured by Apple. This arrangement required Qualcomm to make substantial investments (in addition to the in incentive payments) in product development just to secure Apple’s business—without any guarantee of a return on that investment.

“Apple claims that Qualcomm forced Apple ‘to deal exclusively with Qualcomm on the purchase of chipsets’. But, in fact, it was Apple’s draft of the Transition Agreement that included the term about which it now complains,” alleged Qualcomm in its filing. It added that a later addendum increased Qualcomm’s payments.

Qualcomm exec veep and general counsel Don Rosenberg raged, in a statement: “Apple could not have built the incredible iPhone franchise that has made it the most profitable company in the world, capturing over 90 per cent of smartphone profits, without relying upon Qualcomm's fundamental cellular technologies.”

Apple had not responded to Qualcomm’s allegations by the time of writing. ®


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