“Incensed over Apple Inc.’s decision to stop paying it billions of dollars in licensing fees for smartphone chips,” the report notes, “Qualcomm Inc. plans to retaliate by asking a U.S. trade agency to ban the imports of iPhones, according to a person familiar with the company’s strategy.”
As for the root of the dispute, Apple maintains that Qualcomm’s royalty demands are beyond excessive. Whereas Apple believes the royalty payments it owes Qualcomm should be strictly based on the value of technology provided, Qualcomm has been basing its royalty rates on the overall selling price of the iPhone itself.
There’s no denying that Qualcomm’s technology comprises an integral part of the iPhone, but Apple earlier this year claimed that Qualcomm wants to charge “Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.” As a result, Apple began withholding upwards of $1 billion in royalty payments to Qualcomm, a move that eventually prompted Qualcomm to file a countersuit against Apple just a few weeks ago.
Promising to “vigorously defend” itself, Qualcomm general counsel Don Rosenberg added: “Over the last ten years, Apple has played a significant role in bringing the benefits of mobile technology to consumers with its popular products and services. But Apple could not have built the incredible iPhone franchise that has made it the most profitable company in the world, capturing over 90 percent of smartphone profits, without relying upon Qualcomm’s fundamental cellular technologies.”
Interestingly enough, Tim Cook addressed the company’s legal spat with Qualcomm during Apple’s earnings conference call this past Tuesday. When asked if Apple was worried about the possibility of Qualcomm witholding iPhone components or seeking an injunction against the iPhone, Tim Cook responded.
With insane amounts of money on the line, and with neither company seemingly willing to budge an inch, it will be extremely interesting to see how this all plays out.
