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Apple-NOM

For the by few years, Qualcomm has been the undisputed king of premium smartphone SoCs. While non every company uses Qualcomm'due south Snapdragon processors, its LTE modems have been extremely successful. Other companies have begun to take more market share, but for several years, Qualcomm about owned the entire LTE market.

Other companies and governments have declared Qualcomm'due south meteoric success in the 4G/LTE infinite may have had more than to do with its willingness to abuse its de facto monopoly in LTE modems, as opposed to unilaterally building the best product. Apple has already filed suit confronting Qualcomm, just now the company is broadening the scope of its assault.

The Story So Far

In January, Apple sued Qualcomm, challenge that the SoC and modem manufacturer had improperly withheld $1B in rebate payments in retaliation for Apple working with the Korean FTC. The KFTC's investigation ultimately resulted in an $850 million judgment against Qualcomm (our own FTC is besides investigating). At the time, Apple alleged that Qualcomm had refused to brand its agreed-upon rebate payments "every bit retaliation for responding truthfully to law enforcement agencies investigating them."

LTE market share

Prototype by StrategyAnalytics. Qualcomm's market share has shrunk in recent years, though information technology still commands a great deal of the LTE market.

At present, Apple has widened the telescopic of its allegations and case against Qualcomm, thanks to a Supreme Court decision issued last month in the instance Impression Products Inc. v Lexmark International Inc. In that case, Lexmark argued that it had the right to control whether its printer cartridges could be refilled past third parties once the original ink ran out. Impression Products, in contrast, argued Lexmark's patents on its ink cartridges were no longer applicable (the term used in the case is "exhausted") once the auction was made, even if the customer had signed an understanding proverb they would non refill the cartridges. In an viii-0 conclusion, the Supreme Court ruled that Lexmark had no right to enforce the terms of this understanding, writing:

When a patentee chooses to sell an item, that product is no longer inside the limits of the monopoly and instead becomes the private, individual property of the purchaser, with the rights and benefits that come along with buying. A patentee is free to set up the price and negotiate contracts with purchasers, but may not, by virtue of his patent, control the employ or disposition of the product afterward ownership passes to the purchaser. The sale terminates all patent rights to that item.

So how does this chronicle to Qualcomm?

Apple's New Argument

According to Apple, it currently pays Qualcomm both a per-chip fee and a patent license fee. Apple is hoping information technology can use the contempo Supreme Court case to forcefulness a reconsideration of this consequence. If, every bit SCOTUS wrote, the patent holder has no right to control the use or disposition of a product in one case it's purchased, than Apple tree may be able to dodge the ongoing royalty rate.

Alternatively, Qualcomm tin can choose to sell fries to Apple at any royalty rate the ii companies agree on. Merely Apple would then (it hopes) be released from having to buy each and every chip outright. Apple is asking the court to end requiring it to pay Qualcomm a fee on each and every iPhone sold, and to halt the lawsuits Qualcomm has filed against Foxconn, the smartphone manufacturer that builds Apple tree'southward devices.

Patent maneuvers betwixt large corporations are nothing new. Six years agone, a persistent rumor fabricated the rounds that Microsoft actually fabricated more money off Android devices than it did from its own smartphones. As for whether Apple or Qualcomm comes out on meridian in this dispute, information technology'll largely depend on whether judges in lower courts agree the new precedent established by Impression Products Inc. v Lexmark International Inc. should apply in this case.

There's no give-and-take on how this may affect the antitrust cases filed by other companies, or the threats lobbed by Intel over x86 emulation broiled into upcoming versions of Windows ten intended to run on the Snapdragon 835.