Qualcomm Fails to Win Court Approval for iPhone Royalty Case

by CCB Today | Monday, Sep 18, 2017 | 85 views

Hand holding an iPhoneU.S. District Judge Gonzalo Curiel rejected Qualcomm’s pursuit of regaining patent royalty payments from the manufacturing of iPhones, as the technology company locks horns with Apple on a legal battle.

Analysts expected the court order since Qualcomm faced a tough situation in proving that withholding royalty payments, amid ongoing litigation, would cause “irreparable harm” to the company.

Huge Blow

Qualcomm’s patent licensing revenue has fallen by an estimated $500 for every three months, as Apple four Taiwanese iPhone manufacturers in early 2017 to stop paying the patent royalties. By being unable to win a court ruling, it further hurts Qualcomm’s business in the meantime. However, the company may still regain monetary losses from withheld royalties by proving its case during the trial.

Still, the legal case has set a precedent for other smartphone companies to follow Apple’s lead. Qualcomm’s legal counsel said that a particular manufacturer has stopped paying royalty payments to the company, amid the ongoing litigation. The lawyer’s words contradicted Qualcomm President Derek Aberle’s previous comments in a July earning call when the latter said that the current dispute with Apple would not encourage smartphone makers to do the same.

Apple’s Victory

The ruling means that Apple can suspend accounting for royalties, if any, owed to Qualcomm until a resolution. While the court order represented a win, the iPhone maker did not stop there and filed a counter lawsuit.

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Apple CEO Tim Cook said that the company is suing Qualcomm because of the latter’s desire to charge a hefty royalty fee, which is equivalent to a certain amount of the iPhone’s total value.

Conclusion

It is unclear whether or not Qualcomm would recover lost royalty payments from its cellular patents. The same applies to Apple if it can prove that Qualcomm’s royalty fee is unfair. At this point, a settlement remains off the table.

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