Posted by Aliasger Mithaiwala.
Qualcomm, a telecommunications company that designs and sells wireless telecommunications products and services, is suing Apple Inc. for patent infringement. Apple was originally the initiator in this entire legal conflict because they were the first to file a lawsuit against Qualcomm. Specifically, they filed an “antitrust suit against [them], arguing that the chipmaker’s licensing practices are unfair, and that it abused its position as the biggest supplier of chips in phones” by charging Apple more in payments than any other company (King). This suit Apple initiated claims that Qualcomm has been “charging royalties for technologies they have nothing to do with” and that the telecommunications company has been “withholding nearly $1 billion in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them” (Balakrishnan). After this first legal bout, Apple ended its licensing program with Qualcomm, which has cost the telecommunications company billions of dollars in lost revenue. As a result of this suit by Apple, Qualcomm shares decreased by “19 percent … [while] Apple shares are up 36 percent this year” (King).
Qualcomm then fired back with a lawsuit of its own, which could potentially prove fatal to Apple, if the court finds it reasonable. Qualcomm disagrees with Apple’s claims stated above and cites that, “Apple employs technologies invented by Qualcomm without paying for them,” and as a result, they have filed lawsuits in China, which they intend to ban Apple from selling and manufacturing iPhones in that country (King). If the court finds that Apple is to blame and finds the ban a reasonable punishment, then Apple will lose a large sum of money because not only will their costs of making the products increase drastically, but also they will be unable to market and sell the product in China, which possesses the largest population in the world. In addition, “two-thirds of Apple’s revenue” is derived from China and because this suit became public, Apple has already seen some of the effects (King). Its shares “gave up some gains from earlier on Friday,” so if this lawsuit continues in favor of Qualcomm, Apple may see a continued decrease in their stocks (King).
The lawsuit against Apple is of patent infringement; however, there are multiple parts as to this particular patent infringement case. Qualcomm’s lawsuit is based on “three non-standard essential patents,” which covers “power management and a touch-screen technology called Force Touch that Apple uses in [its] current iPhones” (King). Apple uses the technology of Qualcomm to better its products and increase their profits; however, as per Qualcomm, Apple does not pay them for the use of their technology. Obviously, there are many different viewpoints of this story: one from Apple and one from Qualcomm. The courts will expose the truth and the financial ramifications will certainly be grave at the expense of one company’s finances.
Aliasger is a finance major at the Stillman School of Business, Seton Hall University, Class of 2020.
Works Cited
https://www.bloomberg.com/news/articles/2017-10-13/qualcomm-seeks-china-iphone-ban-escalating-apple-legal-fight
https://www.cnbc.com/2017/01/20/apple-sues-qualcomm-for-1-billion.html