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Apple, Qualcomm settle years-long, multibillion dollar antitrust, licensing dispute
16 April 2019 00:00
After years of intensive litigation and licensing negotiations, Qualcomm and Apple settled their multibillion dollar dispute on confidential terms today as opening arguments in an antitrust and breach of contract trial were wrapping up.
Settlement negotiations began in earnest three weeks ago, MLex has learned. The parties were hoping to reach a agreement by Sunday night, prior to the start of jury selection, but were unable to hammer out every detail, it is understood
Qualcomm, Apple and the iPhonemaker's contract manufacturers, including Foxconn, have settled their years-long global licensing dispute over patent licenses needed for essential cellular communications.
Leaving aside fleeting overtures between the companies, the settlement negotiations over the past few weeks were the first substantive talks since last fall, it is understood.
The closely held talks are understood to have taken place almost entirely between internal teams at the companies. Qualcomm's lead trial lawyer, Evan Chesler, had about 15 minutes left in his opening argument today in San Diego when news of the settlement began rippling through the federal courtroom.
According to a joint statment from Apple and Qualcomm, the companies "today announced an agreement to dismiss all litigation between the two companies worldwide. The settlement includes a payment from Apple to Qualcomm."
The amount of the settlement payment wasn't disclosed.
"The companies also have reached a six-year license agreement, effective as of April 1, 2019, including a two-year option to extend, and a multiyear chipset supply agreement," according to the statement.
Apple and Qualcomm did not immediately respond to a request for comment on the settlement negotiations.
The contractors were seeking as much as $9 billion for overpayment in royalties to Qualcomm. Apple didn't have a direct license, and instead relied on agreements signed with Foxconn and others.
Qualcomm was seeking more than $7 billion dollars in unpaid royalties.
The settlement also covers the claims brought by the other contractors.
At trial, Apple and its contractors would have attacked Qualcomm for allegedly using its monopoly power to overcharge patent royalties. Apple lawyer Ruffin Cordell told the jury that from 2010 to 2016, Apple paid Qualcomm $16.1 billion for chips and another $7.23 billion for licensing fees.
Chesler countered that Apple and the contractors simply didn’t want to pay their fair share for Qualcomm's technology. Qualcomm's patents cover much more than the cellular modems, as Apple contends, Chesler said. Qualcomm, he said, is responsible for "what makes your smartphone smart."
Both companies had a tremendous amount of money on the line, but the litigation amounted to an existential threat to Qualcomm's business model.
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