“Monopoly power”
Qualcomm has told ETSI, a standard-setting organization for telecommunications, that it has more than 30,000 global patents that are “essential” to modern cell phones. Submitting those patents to ETSI obligates Qualcomm to license them on a “fair, reasonable, and non-discriminatory” (FRAND) basis.
By refusing to sell chipsets to customers who don’t license their patents, Qualcomm “forced purchasers of its chipsets to take a license to its SEPs at extortion-level royalties,” Apple claims. “And by foreclosing competitors from dealing with Apple, a key purchaser of chipsets, Qualcomm facilitated the marginalization and exit of many of those competitors, enhancing its own monopoly power.”
In Apple’s view, Qualcomm has “monopoly power” in the market for both CDMA and LTE-enabled chipsets. That lets the company extract payments from Apple that are “anticompetitive” on both its products and its patent licenses.
The lawsuit also states that Qualcomm “double-dips” royalty payments. Apple’s contracted manufacturers buy Qualcomm chips and take a patent license, and then Apple must take a separate license.
Apple claims that Qualcomm’s strategy is to gouge it on royalty rates, then offer billions in royalty rebates for “exclusivity or de facto exclusivity” from Apple. “It was only with the iPhone 7, released in September, that Apple was able to use a competitor’s chipsets (Intel’s) as well as Qualcomm chipsets,” write Apple lawyers. That choice cost Apple, which didn’t get its usual exclusivity “rebate” from Qualcomm. The amount it cost Apple is redacted from the complaint.
The lawsuit accuses Qualcomm of breach of contract, monopolization, and violations of California contract law. The lawsuit also mentions nine specific patents for which Apple was overcharged and says Apple didn’t infringe those patents.