What seems reasonable to Qualcomm isn’t to Apple: Royalty dispute ultimately affects iPhone prices

Apple’s patent dispute with Qualcomm “turns out to be a pretty big deal,” Nocera writes. “If Apple wins, it could change one of the most prevalent practices in Silicon Valley — while wreaking havoc on the business model of not only Qualcomm, but also Nokia Oyj, Ericsson AB and other companies that rely on patents for their profits. If Apple loses, patent licensing practices will continue to throw sand in the wheels of commerce — and cost consumers money.”

Qualcomm “licenses its technology to smartphone makers even when they don’t use its chips; indeed its patents are so vital that the Institute of Electrical and Electronics Engineers — the body that sets standards in the electronics industry — has labeled a number of them ‘standard-essential patents.’ That means that if you’re a phone maker, you have no choice but to pay Qualcomm to license its patents. Because those patents are indispensable, however, the institute also mandates that Qualcomm set a licensing fee that is ‘fair, reasonable, and non-discriminatory,'” Nocera writes. “The dispute is over how much Apple — and all the other companies that make smartphones — should pay.”

“Because Qualcomm had the right to go to court to seek an injunction against companies that refused to pay its fees, most companies tended to pay up, however grudgingly,” Nocera writes. “In February 2015, however, the institute made several critical policy changes that seemed to give the smartphone makers the upper hand. It ruled that patent fees should no longer be paid as a percentage of the entire price of the phone, but rather as a percentage of the component that used the technology.”

Read more in the full article here.

MacDailyNews Take: Qualcomm’s FRAND abuse must not stand.

Qualcomm’s licensing scam — charging a percentage of the total cost of all components in the phone, even non-Qualcomm components — is unreasonable, illogical, and irrational.

Qualcomm to seek U.S. ITC import ban for Apple iPhones – May 3, 2017
Qualcomm slashes profit forecasts as Apple ceases paying iPhone royalties – April 28, 2017
BlackBerry awarded $815 million in arbitration with Qualcomm over royalty overpayments – April 13, 2017
Qualcomm countersues Apple – April 11, 2017
Qualcomm wants FTC to drop their antitrust suit, but it doesn’t mater because Apple’s isn’t going anywhere – April 5, 2017
Apple’s dispute with Qualcomm could last two years – March 3, 2017
Apple widens global patent war, files lawsuit against Qualcomm in the United Kingdom – March 2, 2017
Apple may have paid Qualcomm $40 per iPhone; accounting for 1/3rd of Qualcomm’s revenue – February 10, 2017
Conservative groups ask President Trump to terminate FCC lawsuit over Qualcomm patent licensing – January 27, 2016
Qualcomm CEO fires back at Apple: Bring it on – January 26, 2017
Apple sues Qualcomm in China seeking 1 billion yuan – January 25, 2017
Qualcomm comments on Apple’s lawsuits in China – January 25, 2017
Apple’s rebellion against the ‘Qualcomm Tax’ – January 24, 2017
Despite lawsuit, Qualcomm wants to keep doing business – January 24, 2017
Why Apple, the FTC, and others are attacking Qualcomm’s royalty model – January 24, 2017
Here are the most damning parts of Apple’s blockbuster lawsuit against Qualcomm – January 23, 2017
Apple’s legal assault on Qualcomm part of iPhone margin grab – January 23, 2017
Qualcomm says Apple’s claims are ‘baseless’ in response to Cupertino’s $1 billion lawsuit – January 21, 2017
Apple sues Qualcomm for $1 billion over onerous licensing practices – January 20, 2017
Qualcomm exec says FTC ‘rushed’ antitrust lawsuit before President-elect Trump’s inauguration – January 19, 2017
FTC alleges Qualcomm forced Apple into iPhone LTE chip deals – January 18, 2017
FTC charges Qualcomm with monopolizing key smartphone chip; alleges extracted exclusivity from Apple in exchange for reduced patent royalties – January 17, 2017
After eating Intel’s mobile lunch, Apple could next devour Qualcomm’s Baseband Processor business – January 20, 2015
Analyst: Apple’s going to dump Intel modems if they keep lagging Qualcomm – December 5, 2016
Yes, Apple is throttling download speeds for iPhone 7 and 7 Plus Verizon and Sprint versions – November 19, 2016
Apple’s modem choices may leave Verizon iPhone users feeling throttled – November 18, 2016
Tests show iPhone 7 Plus models with Qualcomm modem perform significantly better than those with Intel modem – October 20, 2016


  1. It should be neither. Price should be set for each device at time the patent is submitted for use in a standard, and should be the same for each device no matter the manufacturer. Otherwise a company like Qualcomm could limit a companies ability to complete by charging 1 company $100 for the patent use and another company $1 for the same use.

  2. Can we say extortion. That is what Qualcomm seems to be doing here. It’s like the Mafia, forcing you to pay protection money or else ‘they’ will burn your business down. How can the government let them get away with that?

    1. It is the government that gave them a monopoly by issuing them a software patent. The nature of a patent is absolute ownership, and the nature of that is exclusive control. If these patents were not standards-essential, Qualcomm could charge whatever they liked, no matter how ridiculous. Those who disliked the offered price could (and would) do without and would have no recourse.

      The fact that these particular patents are embedded in the basic protocols of the cellular data system means that device manufacturers do not have the choice of doing without (if they want their phones to talk to phones from any other manufacturer).

      For that reason, the government does not let the owners of standards-essential patents charge whatever they like, but limits them to offering “fair, reasonable, and non-discriminatory terms.”

      Whether Qualcomm’s offer in this case complies with that standard will be determined by the courts (if the case is not settled first). The judicial system is how the government makes sure that they can’t “get away with that.”

      1. Governments issue patents; the FRAND requirements come from standards bodies. FRAND is not a government requirement; it is a contractual obligation with a standards committee.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.