The biggest legal battle between Apple and Qualcomm officially begins today and seems destined to be the largest patent case ever.
Apple and four of its suppliers are asking for a figure of $30 billion for the damage caused by Qualcomm’s behavior over the last few years. This is an amount that dwarfs any other previous cause relating to company patents.
On the other hand, Qualcomm instead asks for $7 billion in arrears payments never received from Apple and from the suppliers that will participate in the cause.
In the past, Apple and Qualcomm have faced each other in several legal battles, but the one that opens today in San Diego can be considered the most important of all. It is now, in fact, Apple to sue Qualcomm for incorrect practices related to the way the modem chip manufacturer charged its fees for the production of each individual iPhone. Even Tim Cook, Apple’s CEO, will testify in this process that it will last four weeks.
In the center of the case, there are two problems. First, Qualcomm’s policy of applying a patent license fee calculated as a percentage of the sales price of the device in which it is used. Apple claims that this practice is unfair, as Qualcomm benefits from the full price of an iPhone which, however, is made up of many other advanced technologies not realized by the company and which contribute to increasing the sales price.
Secondly, Apple accuses Qualcomm of “double-digging”: charging a first cost for the supply of the chip and a second place for the payment of royalties on those same chips.
For a couple of years, Apple has forced its suppliers to discontinue royalty payments to Qualcomm, while at the same time guaranteeing the payment of all legal costs in the various consequent processes.
According to experts, losing this case would be devastating for Qualcomm, both immediately and in the long term. The mere payment of damages would amount to four times the revenues generated throughout 2016. Moreover, the revenues from patent licenses represent 64% of all the company’s revenues. If Apple were to win, even the other Qualcomm licensees would do the same, seriously questioning the company’s survival.
The stakes are high even for Apple, given that Qualcomm is currently the only supplier able to sell 5G modem chips respecting the high requirements of the Cupertino company.