Market Insight

Apple and Qualcomm licensing dispute – to SEP or not to SEP?

August 14, 2017  | Subscribers Only


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On January 20, 2017 Apple filed a lawsuit against Qualcomm at the Southern District Court of California. In the lawsuit, Apple accused Qualcomm of breach of contract, violation of unfair competition laws and requested judgement on royalty rate it must pay for Qualcomm’s standard essential patents. (SEPs) Since Apple’s initial legal lawsuit, both companies filed additional lawsuits in different jurisdictions and the dispute grew into a full scale patent licensing war. 

This article provides summary and analysis of the licensing dispute between Apple Inc. and Qualcomm Inc.

Apple and Qualcomm dispute: Background

Although the initial lawsuit from Apple was filed on January of 2017, the event that initiated the conflict happened on August of 2016 when Apple made a presentation to Korea Fair Trade Commission (FTC) disclosing its patent licensing details with Qualcomm. After the presentation, Korea FTC later levied the largest fine in the history against Qualcomm. Qualcomm felt this was non-compliance to an existing contract it had with Apple and stopped making pre-agreed payments – which was agreed from the contract - to Apple without a warning. Since September 2016, Qualcomm stopped making regular payments to Apple. By January 2017, Qualcomm’s unpaid amount to Apple accrued from the past three quarters (From 2Q-4Q 2016) totaled nearly $1 billion USD. After receiving no payment for three quarters, Apple filed its first lawsuit against Qualcomm in January and since then multiple lawsuits were filed by both companies in different jurisdictions.

Below are the summary of lawsuits filed by Apple and Qualcomm since the initial lawsuit was filed by Apple back in January, 2017: 

(Note: Since these lawsuits involve multiple claims and enormous amount of details, the above summary table only captures the information related to the type of patents involved.)

1. What are the reasons Apple is targeting Qualcomm's standard essential patents?
2. What are the reasons Qualcomm is asserting its non-essential system patents against Apple?
3. How will the dispute between the two companies most likely going to develop over the next 12-18 months?
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Organization
Apple Inc. Qualcomm
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