While the legal fight between Apple and Qualcomm has been raging for years, Apple’s newest complaint fires the latest salvo in the ongoing war between the two technology giants. In its newest filings against Qualcomm, Apple appealed to the federal district court in San Diego to intervene in its favor against Qualcomm. Among their many grievances, Apple particularly takes issue with Qualcomm’s licensing agreements and practices, labeling them illegal and abusive. Specifically, Apple argues that Qualcomm’s licensing practices and agreements enforce and encourage detrimental and monopolist activities. Even if a party discovers the illegal business practices, Apple further claims that Qualcomm prevented public disclosure and whistleblowing through ironclad legal agreements that essentially prohibited any aggrieved parties from reporting such illegal conduct.

At the heart of the issue is the fact that Qualcomm was one of the founding contributors that helped create many of the standards and technology that controls how cellular phones connect to voice and data networks. Unsurprisingly then, Qualcomm controls the rights to several significant patents, such as the patents that apply to the 3G/UMTS and 4G/LTE cellular network standards. And as is common with such intellectual property rights, Qualcomm is therefore entitled to a certain amount of royalties proportionally equal in terms of the “value” of the contribution they made.

In the technology field, however, standardization of technologies is not only common and beneficial, but it often becomes a necessity as well. When certain technologies become so ubiquitous or such a fundamental part of everyday technology, the technology field often argues that the technology become subject to fair, reasonable, and non-discriminatory (“FRAND”) terms; or reasonable and non-discriminatory (“RAND”) terms. While these licensing commitments are voluntary, and in no way required by law, big players in the technology field often adhere by these commitments and practices as a gesture of goodwill and as a means of ensuring fair play and further innovation.

Apple alleges, however, that Qualcomm not only fails to abide by FRAND/RAND licensing practices, but it also consistently raises the amount of royalties it charges to correspond with new technological advances made on cellular phones, despite having no hand in the advancement or innovation of the technological advances. For example, Apple specifically notes that once Apple created the new touch-id sensor for its new line of iPhones, it was required to pay Qualcomm higher royalty payments even though the inclusion of Qualcomm’s technology in Apple’s new iPhones was incidental at best. As another example of Qualcomm’s unsavory licensing practices, Apple notes that the mere introduction of increased memory storage capabilities in its phones also triggered a rise in royalties charged by Qualcomm, even though there was no change in the actual technology licensed from Qualcomm for use in connection with cellular phone memory.

In its complaint, Apple, among other things asks the court to intervene, apply injunctive relief, and allow Apple to recoup billions of dollars they claimed to have lost as a result of having to pay Qualcomm’s unfair royalties. While the landmark legal fight rages on, law enforcement agencies have also stepped up their efforts in investigating Apple’s claims and Qualcomm’s business and licensing practices.

For more information on this topic, please visit our Technology Transactions service page, which is part of our Technology & Data Practice.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  Additional information about the technology law firm and its technology attorneys may be found at www.klemchuk.com.

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