A U.S. federal judge has issued a preliminary ruling that Qualcomm owes Apple nearly $1 billion in patent royalty rebate payments.
Judge Gonzalo Curiel of the U.S. District Court for the Southern District of California on Thursday ruled that Qualcomm was obligated to pay nearly $1 billion in rebate payments to Apple, which for years used Qualcomm’s modem chips in iPhones.
The payments were part of a business cooperation agreement between the two companies.
In general, the contract factories that built Apple’s iPhones would pay Qualcomm billions of dollars per year for the use of Qualcomm’s patented technology in iPhones, a cost that Apple would reimburse the contract factories for. Separately, Qualcomm and Apple had a cooperation agreement under which 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 sued Qualcomm, alleging that the chip supplier had broken the cooperation agreement by not paying nearly $1 billion in patent royalty rebates.
Qualcomm alleged that it stopped paying the rebate payments because 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, which was investigating Qualcomm over antitrust allegations. Apple responded that it was making lawful responses to regulators in an ongoing investigation.
Judge Curiel sided with Apple, ruling that Qualcomm owed the missed rebate payments.
The decision will not become final until after the trial in the case, which begins next month.
Apple’s contract factories have already withheld the nearly $1 billion in payments to Qualcomm.
Meanwhile, in the separate Qualcomm versus Apple patent infringement case ongoing in San Diego, the jury left today without a decision.
Japan Fair Trade Commission Revokes Order, Finds Qualcomm Licensing Program Lawful
In relate dnews, the Japan Fair Trade Commission (JFTC) has reversed a 2009 cease-and-desist order affecting Qualcomm licensing in Japan.
Following a nine-year evidentiary proceeding, the JFTC concluded that Qualcomm’s cross-licensing provisions and non-assertion covenants that were the subject of the cease-and-desist order did not violate Japanese antimonopoly law.
In 2010, the Tokyo High Court had issued a stay of the JFTC cease-and-desist order pending this proceeding. This week’s JFTC decision, the result of a process that included 37 separate hearings, rejected an initial finding related to cross-license agreements between Qualcomm and Japanese manufacturers.
“We are very gratified to learn that after years of considering the evidence and applicable legal authority, the Japan Fair Trade Commission has concluded there was nothing improper about Qualcomm’s cross-licensing program,” said Don Rosenberg, general counsel and executive vice president of Qualcomm. “Today’s decision affirms our confidence that once Qualcomm was afforded a full hearing, and actual evidence was considered, the JFTC would find that our cross-licensing program was completely lawful and the product of arms-length, good-faith negotiations with our Japanese licensees. The JFTC is now the second antitrust agency after the Taiwan Fair Trade Commission to have revoked its ruling against Qualcomm.”