Apple points to recent Supreme Court decision to buoy its lawsuit against Qualcomm
Apple has latched onto a recent U.S. Supreme Court ruling that restricts patent holders’ rights to bolster its increasingly bloody legal war against San Diego’s Qualcomm.
The iPhone maker on Tuesday amended its January lawsuit in San Diego federal court that alleges Qualcomm illegally charges too much to license its cellular patents. The amendments include arguments from a May Supreme Court decision that details when certain patent rights are “exhausted,” which Apple contends is favorable to its case.
In addition, Apple beefed up the penalties it is seeking from Qualcomm by asking for “restitution of all excessive (patent) license fees that Apple paid,” which could be a large amount if Apple wins and is awarded that remedy.
The filing increases the pressure in this complicated legal fight between Apple, the world’s largest technology company, and Qualcomm, the top smartphone technology provider. The dispute shows no sign of ending soon.
Apple aims to break Qualcomm’s technology licensing business model, which would cut its iPhone supply costs.
Apple claims Qualcomm has concocted a scheme that allows it to overcharge for patents. Qualcomm has to top market share in cellular modems that link smartphones to wireless networks. According to Apple, smartphone makers overpay for patent licenses for fear that Qualcomm will cut off their modem supply. Regulators in South Korea and the U.S. have made similar claims.
While Qualcomm won’t sell chips to smartphone makers unless they first license its patents, the company denies that it uses its chip business as leverage to extract higher patent fees.
The company points out that smartphone makers pay the same royalty rate — which tops out at 5 percent of the device price — even it they buy modems from Qualcomm’s rivals such as Intel or MediaTek.
By widely licensing its patents to all smartphone makers, Qualcomm contends it helped grow the wireless industry. That includes enabling Apple to launch the highly profitable iPhone a decade ago with little or no investment in core cellular technology.
Apple’s amended lawsuit leans on the U.S. Supreme Court decision involving a dispute between copier maker Lexmark International and Impression Products, a third party that refills empty laser toner cartridges.
The ruling centered on when patents are “exhausted.” The court found that Lexmark couldn’t sue for patent infringement once it sold a toner cartridge to a retail buyer because it had exhausted its patent rights with the sale.
Apple argues that once Qualcomm sells chips to a smartphone maker, it can’t charge a separate patent licensing fee. Doing so is “double dipping.” Apple argues that Qualcomm is entitled to just “one reward” under the Supreme Court’s Lexmark decision.
“This one reward is either a license fee or the sale price, not both,” according to the amended complaint. “The Lexmark decision makes it clear that Qualcomm’s separate sale and license business model is an illegal practice.”
In a statement, Qualcomm General Counsel Don Rosenberg said Apple knowingly distorts the large amount of Qualcomm technology that’s used in iPhones and iPads.
The company’s patents — 130,000 worldwide — cover much more than a single modem chip. They read on “system” level technologies for the entire mobile network, including techniques that boost download and upload speeds,allow high precision GPS navigation, app store operations, power management and battery efficiency, mobile video, including advanced compression, graphics, camera and facial recognition technologies, sound quality and audio file compression, airplane mode, auto lock, mobile hot-spot technology and more.
For this, Qualcomm charges Apple’s contract iPhone manufacturers a per device royalty fee that is less than what Apple charges consumers for a single wall plug, said Rosenberg.
“Qualcomm’s innovations are at the heart of every iPhone and enable the most important use cases and features of those devices,” he said.
Qualcomm’s shares ended trading Tuesday down 82 cents at $56.79 on the Nasdaq exchange.
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mike.freeman@sduniontribune.com;
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This article was updated at 2 p.m. Tuesday..
