Apple Attacks Qualcomm’s “No License, No Chips” Business Model

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The legal tussle between Apple and Qualcomm is just getting interesting as the days pass by. The iPhone maker is now attacking Qualcomm’s business model, claiming it has “mounting evidence” of Qualcomm’s “illegal business model.”

Apple attacks Qualcomm’s business model

Apple sued Qualcomm in January, claiming that the San Diego-based company withheld $1 billion in rebates because the iPhone maker cooperated with Korean regulators who were investigating the chip maker. Initially, Apple’s lawsuit was pretty narrow, as it focused only on the chip maker’s alleged violation of the contract.

However, Apple’s new filing takes aim at Qualcomm’s business model using a past ruling as the basis. In a May ruling, the U.S. Supreme Court limited the power of patent owners to control how their products are used after being sold so that they are not paid twice for the same innovation.

In brief filed on Tuesday, Apple attacked the chip maker for following “no license, no chips” policy. Under this, the chip maker asks  customers to sign patent license agreements before buying chips. Such an agreement allows the company to take a cut from iPhone sales in exchange for modem chips that allow phones to connect with data networks, notes Reuters.

“This is precisely the kind of double dipping, extra-reward system that the court’s decision” sought to eliminate, the iPhone maker argued. Further, the company said that the chip maker should be allowed to get paid once, either in the form of a patent license or a chip, but not both times.

Further, the brief read that Apple has “continuing — and mounting — evidence of Qualcomm’s perpetuation of an illegal business model that burdens innovation.” The iPhone maker claims that some of Qualcomm’s patents are invalid and the company is not charging fair and reasonable rates on patents related to industry standards.

Qualcomm must not be paid twice

Qualcomm, on the other hand, claims that it is Apple that is operating unfairly. A couple of months ago, the chip maker accused the iPhone maker of breaching contractual pledges, lying to regulators to spur investigations, and misrepresenting facts. Meanwhile, in its filing with the Supreme Court, the chip maker tried to distance itself from the ruling that Apple based its argument on.

Qualcomm said it does force companies to buy chips, but it should get paid for the technology used as part of the industry standard. The chip maker referred to itself as the “research and development engine for the entire mobile industry.”

There is no doubt that Qualcomm has revolutionized the way mobile devices communicate, but the issue here is how much it should be paid. Apple also seems right in its argument that phones are much more than the transmission of data or phone calls, but still the chip maker wants a cut, as if its technology has helped improve or create the latest camera technology or touchscreen, notes Bloomberg.

Apple also asked the court to stop the lawsuits that Qualcomm filed against iPhone suppliers that buy Qualcomm’s chips.  These suppliers include Foxconn Technology and three more contract makers that assemble the iPhone. The U.S. firm argues that the legal fight should be between Qualcomm and Apple, notes Reuters.

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