After many ups and downs in a legal battle between Apple and Qualcomm, US federal judge Gonzalo Curiel has issued a preliminary judgment in Apple’s favor.
According to the ruling, Qualcomm Inc owes Apple nearly $1 billion in patent royalty rebate payments. However, it is most unlikely Qualcomm will pay Apple because of other developments in the disagreement.
Apple Wins Patent Battle Against Qualcomm
In his ruling, the judge of the U.S. District Court for the Southern District of California noted that Qualcomm was indebted to pay approximately $1 billion in rebate payments to Apple.
Notably, Qualcomm is the world’s biggest supplier of smartphone chips, and Apple has used modem chips to connect its iPhones to wireless data networks.
Both companies have signed a business cooperation agreement to follow patent licensing practices of the consumer electronics industry.
It was understood that contract manufacturers that build iPhones for Apple would pay the amount to Qualcomm for using patented technology in iPhones.
At the end of the year, Apple would pay the amount back to contract factories. Outside this understanding, Qualcomm would pay Apple a rebate on the iPhone patent payments if Apple agreed not to attack in court or with regulators.
Two years ago, Apple filed a lawsuit and sued Qualcomm for breaching cooperation agreement by not paying around $1 billion in patent royalty rebates.
Qualcomm argued that Apple had broken the agreement by urging other smartphone makers to complain to regulators and making “false and misleading” statements to the Korean Fair Trade Commission. Following this, Qualcomm stopped paying the rebate payments to Apple.
The judge held that Qualcomm owed the missed rebate payments.
In a statement to Reuters, Don Rosenberg, executive vice president and general counsel of Qualcomm, said, “Although the Court today did not view Apple’s conduct as a breach of Apple’s promises to Qualcomm in the 2013 Business Cooperation and Patent Agreement, the exposure of Apple’s role in these events is a welcome development.”
Since the trial of this case is pending (begins next month), the decision will not come into effect. It appears that Qualcomm will be exempted from making a new payment to Apple.
As mentioned above, the contract manufacturers of iPhones pay Qualcomm for patent royalties. During the case trials, those contract factories have withheld approximately $1 billion in payments to Qualcomm. Rosenberg said that the withheld iPhone payments had been accounted for in Qualcomm’s current financial statements.
Rosenberg told Reuters that “Apple has already offset the payment at issue under the agreement against royalties that were owed to Qualcomm.”
Apple made the relationship bitter by helping South Korean regulators investigating Qualcomm’s business. This has given birth to other legal issues between the two technology giants. This victory can be good news for Apple for this moment, but this will not bring new cash flow to Apple.
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