Apple Inc has filed a $1 billion lawsuit against supplier Qualcomm Inc. The lawsuit comes days after the United States Federal Trade Commission accused Qualcomm of resorting to anti-competitive tactics to maintain a monopoly over key semiconductors in mobile phones.
Apple was specifically named in the FTC filing, which accused Qualcomm of engaging in an anti-competitive “no license, no chips” policy, which jacked up licensing fees on patents and forced phone makers to pay more for using competitors’ processors.
According to the FTC, Qualcomm precluded Apple from sourcing baseband processors from Qualcomm’s competitors from 2011 to 2016. Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.
Apple says that Qualcomm has taken “radical steps,” including “withholding nearly $1 billion in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.”
“For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. The more Apple innovates with unique features such as TouchID, advanced displays, and cameras, to name just a few, the more money Qualcomm collects for no reason and the more expensive it becomes for Apple to fund these innovations. Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties. Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.
To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding nearly $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.
Apple believes deeply in innovation and we have always been willing to pay fair and reasonable rates for patents we use. We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts.”
The suit follows a number of other international legal proceedings for Qualcomm across the world, including large fines in South Korea and China. We’ve reached out to the company for comment.