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Qualcomm Determined To Go After Apple, Want To Stop New iPhone Going On Sale

BLOOMBERG: Chip maker Qualcomm who is suing Apple for patent infringement has again come out swinging this time claiming that Apple should be pay for “their” technology which is used in iPhones.
Qualcomm claims that Apple infringes six patents covering various aspects of mobile phone technology. Qualcomm is also asking the U.S. International Trade Commission in Washington to stop versions of the iPhone that aren’t built with its chips from entering the country.

Qualcomm’s legal strategy has two aims: increase pressure on Apple to pay up, and demonstrate that they are still capable of delivering cutting-edge technology rather than milking old inventions, as Apple has charged.

“They’re taking advantage of these new technologies and they’re not paying for them,” Qualcomm’s general counsel Don Rosenberg said. “We are current, we are new and we will continue to enhance the value of the experience.”
An Apple spokesman told Bloomberg that they were always willing to pay a fair rate for standard technology used in its products and attempted to negotiate with Qualcomm for fair licensing terms for years without success. In May, Chief Executive Officer Tim Cook told analysts and investors that he doesn’t believe that any court would decide to enjoin the iPhone in the absence of an offer of fair terms from Qualcomm.

Broader Dispute

The broader legal dispute revolves around patents that let Qualcomm take a cut of the sale of every modern smartphone — even if the device doesn’t have one of its chips. Apple argues the system is unfair and that Qualcomm has used licensing leverage to illegally help its semiconductor unit.

“It doesn’t bode well for a quick and easy agreement,” said Will Stofega, an analyst at IDC Corp. “The bottom line is Apple wants a lower price and Qualcomm says no. This is a really big issue and they’re prepared to fight.”

Apple has cut off technology license payments to Qualcomm and filed an antitrust lawsuit that accuses the chipmaker of trying to monopolize the industry.

The blow to the chipmaker’s most profitable business spurred the company to intensify the fight against Apple to improve its negotiating position. Qualcomm is also facing regulatory scrutiny around the world for its business practices, something it says the iPhone maker has lobbied for by lying to government officials.

Modem Chips

Qualcomm’s modem chips, components that connect phones to cellular networks, are used in some versions of the iPhone. Others use chips made by Intel Corp. Qualcomm won’t seek to exclude those that carry its own modems.

The patent-infringement complaint was filed in federal court in San Diego, where Apple filed its antitrust suit and Qualcomm sued some manufacturers who refused to pay royalties on Apple’s order. The new case is likely to be put on hold pending the outcome of the trade complaint.

The trade commission in Washington, a quasi-judicial body that has the power to block the import of goods into the U.S., is known for its speed — cases at the commission are completed in 15 to 18 months, compared with years for district court — and the heavy cudgel it wields in the form of an import ban.

The commission doesn’t have the power to order Cupertino, California-based Apple to pay royalties like a court can. It does have the power to order that iPhones be stopped at the border and force Apple to stop selling already imported products.

Qualcomm knows how much such an ITC action can hurt. A decade ago the company was limited in its ability to import its own chips for testing after losing a case filed by Broadcom Corp. over a patent that extended battery life. All phones that used Qualcomm chips were nearly banned before that order was overturned by an appeals court in 2008. The companies later settled their fight.

The technology covered by the six patents in the new complaint isn’t related to any industry standard, meaning there’s no limit on how much Qualcomm could demand in royalties and no legal argument over whether the rates are reasonable. Some of the patented inventions help phones efficiently transmit data — such as video files — over cellular networks without killing the battery, Qualcomm said.

Rosenberg likened Qualcomm’s suit against Apple to Apple’s long-running fights against Samsung

“They believe they have the right to get paid when someone takes their technology and uses it,” Rosenberg said. “And so do we.”