Finance

Apple looking to take a ‘bite out’ of Qualcomm as court battle kicks-off

Apple and US chipmaker Qualcomm will resume their long-running feud as a new court case between the two titans of American enterprise begins in San Diego next week.

The two companies have been embroiled in a bitter row over patent licensing practices for the best part of two years. Last month, a Californian jury ruled in favour of Qualcomm and awarded the company $31m after it found that Apple’s iPhone 7, 7 Plus, 8 and 8 Plus and X infringed two patents.

Apple has expressed its confidence that this new lawsuit in San Diego will rule in their favour as they seek damages of up to $27bn after accusing its one-time supplier of engaging in patent license practices that amounted to double-dipping.

Qualcomm on the other hand are claiming that the US technology behemoth forced some of it business partners to stop paying the company royalties and is seeking $15bn in damages.

The initial lawsuit was filed by Apple back in 2017, which forced the US chipmaker to counter-sue the iPhone maker and winning bans on the sale of some iPhone models in some markets for patent violations.

Qualcomm charges its customers for the chips themselves and also adds on patent licensing charges. It asks customers to sign an agreement before supplying any products.

Apple has termed this "no licence, no chips" policy a way of charging twice for the same thing. Along with its business partners, Apple is seeking an end to this practice and a refund of something in the region of US$9 billion.

This amount could be tripled if the jury comes to the conclusion that Apple's anti-trust allegations against Qualcomm are correct. Apple claims Qualcomm's practices kept rivals like Intel - from whom Apple is now sourcing chips - from competing in this sector for a long time.

Companies that are on contract with Apple, such as Foxconn, have paid the royalties to Qualcomm and been reimbursed by Apple. But Apple has pushed some of these firms to violate their contracts and deprive Qualcomm of about US$7 billion in royalties, the chip producer claims.

A victory for Apple will not mean much in terms of money but it would destroy a business model that Qualcomm has used with great success for many years.