The iPhone maker on Tuesday amended its January lawsuit in San Diego federal court, which 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 its uses its chip business as leverage to extract higher patent fees.
The company points out that smartphone makers pay the same royalty rate even it they buy modems from Qualcomm’s chips rivals such as Intel, MediaTek or others.
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.”
©2017 The San Diego Union-Tribune Distributed by Tribune Content Agency, LLC.
