U.S. Judge Rules Qualcomm Owes Apple Almost $1 Billion in Rebate Payments

Judge Gonzalo Curiel of U.S. District Judge for the Southern District of California has in a preliminary ruling that Qualcomm owes Apple almost $1 billion in rebate payments. While the ruling is not going to be enough for Qualcomm to pay Apple, it is a major blow for the San Diego chipmaker in its ongoing dispute with Apple.

Judge Curiel ruled that Qualcomm needs to pay Apple the $1 billion for rebate payment as it was a part of the business agreement between the two companies. While it is Qualcomm which charges a licensing fee for using its technology in its devices, the chip maker had entered into an agreement with Apple where it promised a rebate of nearly $1 billion if the latter did not sue it in court or complained about it to regulators.

However, Qualcomm never made the royalty payment which led Apple to file a lawsuit against it almost two years ago. Qualcomm, on its part, alleges that Apple broke the agreement by urging other smartphone OEMs to complain about Qualcomm and making misleading statements about the chip maker’s business practices to the Korean Fair Trade Commission.

Don Rosenberg, executive vice president and general counsel of Qualcomm, told Reuters in a statement, “Although the Court today did not view Apple’s conduct as a breach of Apple’s promises to Qualcomm in the 2013 Business Cooperation and Patent Agreement, the exposure of Apple’s role in these events is a welcome development.”

Qualcomm will only be liable to pay Apple once the decision is final which will only happen next month once the trial starts. As for Apple, it has already adjusted the $1 billion rebate payment from Qualcomm by withholding patent royalties of nearly the same amount.

“Apple has already offset the payment at issue under the agreement against royalties that were owed to Qualcomm,” Qualcomm’s Rosenberg told Reuters.

Our Take

If Qualcomm ends up losing this trial against Apple, it would be a major blow to its business. Qualcomm has signed similar deals with other smartphone OEMs and a ruling against it would force it to change the way it conducts business.

[Via Reuters]

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