American judicial rules Qualcomm owes Apple nearly $ 1 billion rebate

(Reuters) – A US federal judge has issued a preliminary ruling that Qualcomm Inc owes Apple Inc nearly $ 1 billion in patent credit deductions, although the decision is unlikely to cause Qualcomm to write a check to Apple for other developments in the dispute.

FILE PHOTO: A woman holds the phone near an Apple company logo in Beijing, China December 14, 2018. REUTERS / Jason Lee

Judge Gonzalo Curiel of the US District Court in the Southern California District on Thursday claimed that Qualcomm, the world largest mobile phone chip supplier, was committed to pay nearly $ 1 billion in rebate payments to Apple, which for many years used Qualcomm's modem chips to connect iPhones to wireless computing networks.

The payments were part of a cooperation agreement between the two companies in the consumer patent industry's special patent licensing practice.

In general, the contract factories that were built Apple's iPhones would pay Qualcomm billions a year for the use of Qualcomm's patented technology in the iPhone, a price that Apple would refund for the contract factories. Separately, Qualcomm and Apple had a collaboration agreement under which Qualcomm would pay Apple a discount on iPhone patent payments if Apple agreed not to attack in court or with regulators.

In a lawsuit filed two years ago, Apple appealed to Qualcomm, claiming that the chip supplier had broken the cooperation agreement by not paying nearly $ 1 billion in a patent card.

Qualcomm, on the other hand, claimed that it stopped paying discount payments because Apple had broken the agreement by urging other smartphone manufacturers to complain to regulators and making "false and misleading" statements to the Korean Fair Trade Commission, which investigated Qualcomm over antitrust claims. Apple responded that there was legal response to regulators in an ongoing investigation.

Judge Curiel sat with Apple, claiming that Qualcomm owed the unpaid rebate payments.

"Qualcomm's illegal business practices damage Apple and the entire industry," Apple said in a statement.

Don Rosenberg, executive vice president and general adviser to Qualcomm, told Reuters in a statement: "Although the Court today did not see Apple's behavior as a violation of Apple's promises to Qualcomm in the 2013 co-operation and patent agreement, Apple's role in these events is a welcome development. "

The decision will not be final until after the trial in the case, which starts next month. And it is unlikely that Qualcomm will make another payment to Apple.

Apple's contract factories, which under normal circumstances would pay Qualcomm for patent royalties owed to iPhones, have already withheld the nearly $ 1 billion in payments to Qualcomm. Qualcomm's Rosenberg said that the retained iPhone payments have already been accounted for in Qualcomm's existing accounts.

"Apple has already compensated the payment under the Qualcomm royalty agreement," Qualcomms Rosenberg told Reuters.

Reporting by Stephen Nellis; Editing by Cynthia Osterman

Our Standards: Thomson Reuters Trust Principles.

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