Apple filed a lawsuit against a $ 1 billion chip supplier for the iPhone

Apple just did something incredible: the technology giant sued Qualcomm, which manufactures processors for smartphones on the iPhone, demanding one billion dollars from it.

Unexpected lawsuit

The suit represents Qualcomm as an extortionist, which requires huge sums for basic technology for smartphones, and also charges the company with a delay in payments as a "retaliation" for the fact that Apple launched an investigation into this matter.

Apple is not the first company

The Apple step is connected with one more legal action, committed in January. Previously, FTC filed an antitrust lawsuit against Qualcomm, accusing the company of using its patents to force competitors to transfer huge royalties even for devices that do not use processors or any other Qualcomm products.

What is the problem?

Apple was featured in the text of the FTC lawsuit. There it was stated that the company had exerted pressure on Apple in several ways at once, so that it would use only the products of this manufacturer for a five-year period, from 2011 to 2016. This agreement actually deprived the work of every second processor manufacturer for the world's most popular smartphone. In a lawsuit, this is referred to as an unfair embarrassment to the development of competitors. With the launch of the iPhone 7 and iPhone 7 Plus, Apple began manufacturing smartphones that also use Intel's architecture.

Details on Apple's lawsuit

As for the lawsuit filed by Apple, its representatives issued an official statement stating that Qualcomm required licensing fees for technologies that had nothing to do with it. Apple represents Qualcomm as a lazy company that no longer engages in innovation, as its business is built around old technologies from which it collects royalties, with many of these payments having no basis. Simply put, Apple accused the process manufacturer of becoming a patent troll.

Accusations against Qualcomm

In particular, Apple accuses Qualcomm of failing to pay the amount of about one billion dollars, representing it as an act of corporate revenge by Apple for the fact that the company cooperated with law enforcement agencies, which were tasked with investigating the activities of the processor manufacturer. These investigations, most likely, became the basis for the subsequent lawsuit from the FTC.

Excessive amounts of royalties

Apple also provided some details about how large the royalties were, which Qualcomm had to transfer. According to the company, licensing fees that Qualcomm received from Apple, five times higher than the licensing fees of other patent licensors, with which Apple cooperates together.

A look behind the scenes

Apple's lawsuit provides an opportunity to look behind the scenes of how things are going in the field of intellectual property, when it comes to manufacturers of the most popular and common high-tech products in the world. While lawsuits on design and patents happen quite often, the fact that the most expensive company in the world will stand in court against one of its partners, especially such important as Qualcomm, hardly anyone could predict.

Consequences of legal action

This claim will definitely have echoes in the wireless industry for many years, it can also lead to major changes in the cellular market, as 5G technology will gradually appear on the market, taking the place of its predecessor, 4G technology. In 2016, Qualcomm owned 65 percent of the market for mobile modems (and 50 percent of revenue from their sales). These figures can significantly decrease as the proceedings on this claim are conducted, and competitors who previously had no chance will come into play.

Refusal of cooperation

In addition, given the fact that Apple has already started using mobile modems from Intel in smartphones iPhone 7 and 7 Plus, the harsh tone of the official statement of the company may mean that by the time of the release of the eighth model of the smartphone, which is scheduled for the fall of this year, the largest producer Smartphones and other equipment will fully indicate Qualcomm on the door, abandoning all components supplied by this company.

Reply to claim

Qualcomm responded to Apple's claim almost immediately. Executive Vice President of the company, Don Rosenberg, called Apple's accusations groundless. He also said that he would be happy to bring this case to court, as this will lead to the full discovery of all Apple practices, which looks like a thinly veiled threat from the processor manufacturer.

Full official statement from Apple

Here is the full text of Apple's statement: "For many years, Qualcomm has unfairly insisted on charging royalties for technologies that it had nothing to do with." The more Apple works with innovations such as TouchID, advanced displays and cameras, Qualcomm receives more money for no reason, and the harder it is for Apple to finance these innovations.C Qualcomm built its business on old, now obsolete standards, but continues to strengthen its dominance through restrictive tactics and Despite the fact that this company is one of many dozens who have contributed to the establishment of cellular standards, Qualcomm continues to demand from Apple five times more money than all other patent licensees with which we have agreements combined In order to protect its current scheme, Qualcomm has taken rather radical steps, recently delaying about one billion dollars of payments intended for Apple, as retribution for the truthful information provided by Apple law enforcement The authorities that conducted the investigation. Apple deeply believes in innovation and is always happy to pay honest and reasonable prices for the patents that it uses. We are very upset about how Qualcomm conducts its business with us and, unfortunately, after years of disagreement and conflicts on the basis of honest and reasonable royalties, we have no choice but to go to court. "