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Regulation

Qualcomm Told to Pay Apple $1B but Wins Case in Japan

Qualcomm owes Apple nearly $1 billion in licensing-related fees, said a US federal judge after a long-running legal battle between the two companies.

But that doesn't mean the US chipmaker will pay up. It claims it is owed the same amount by Apple in royalty fees, and says the two payments effectively cancel each other out, according to a Reuters report.

As if to show that legal challenges and counter-challenges can drag on for years, Qualcomm took the opportunity today to publicize the outcome of a case in Japan that lasted nine years before Japanese authorities this week decided the company had done nothing wrong.

In the US case, the ruling by Judge Gonzalo Curiel comes after Apple accused Qualcomm of breaking a cooperation agreement between the two companies, Reuters reported.

Apple is the company at fault because it has goaded other smartphone makers into complaining to regulators about Qualcomm, the chipmaker has responded. Qualcomm also accuses Apple of making "false and misleading" statements to the Korean Fair Trade Commission, one of several international regulatory authorities that have investigated Qualcomm in recent years.

Claiming it is owed $1 billion in royalty payments by Apple, Qualcomm said the two companies had already accounted for the payments each owes but will not make. "Apple has already offset the payment at issue under the agreement against royalties that were owed to Qualcomm," said Dan Rosenberg, Qualcomm's general counsel, as quoted by Reuters.

No doubt, this will not be the concluding chapter in the affair between Qualcomm and Apple, which has switched to rival chipmaker Intel for modems used in recent iPhone models. Qualcomm's statement on the court case in Japan shows just how interminable legal affairs can be.


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Nine years ago, when 3G was the main technology used by mobile data customers, Japan began legal proceedings to figure out if there was something fishy about Qualcomm's licensing activities in Japan. After 37 separate hearings, and plenty of lucrative work for lawyers, the answer has come back today: no.

The legal team at Qualcomm is unsurprisingly delighted after the Japan Fair Trade Commission said it would reverse the so-called "cease-and-desist" order issued in 2009.

That order did not take effect while legal proceedings were in motion. But had this week's decision gone the other way, Qualcomm would by implication have violated Japanese anti-monopoly laws.

Full details of the company's licensing program in Japan were not disclosed in today's statement, but it essentially relates to various cross-licensing agreements between Qualcomm and Japanese manufacturers.

Relieved at the outcome, Rosenberg said: "We are very gratified to learn that after years of considering the evidence and applicable legal authority, the Japan Fair Trade Commission has concluded there was nothing improper about Qualcomm's cross-licensing program.

Rosenberg went on to say that Qualcomm's program was "completely lawful and the product of arms-length, good-faith negotiations with our Japanese licensees." The Japanese authority is the second to have now revoked rulings against Qualcomm after a favorable decision by the Taiwan Fair Trade Commission.

Litigation has become one of the chief business activities for Qualcomm, which owns much of the intellectual property underpinning modern-day cellular communications.

Reporting first-quarter results at the end of January, Qualcomm said earnings had been affected by its dispute with Apple and licensees, including controversial Chinese equipment giant Huawei.

Despite all this, both its licensing and technology divisions reported year-on-year revenue growth of 20%, with overall quarterly sales rising to $6 billion from $4.8 billion a year earlier.

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— Iain Morris, International Editor, Light Reading

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