Apple and Qualcomm end their “Legal Beef” and drop lawsuits

The convoluted legal battle between Apple and chipmaker Qualcomm may be coming to an end. The companies said Tuesday that they’re dismissing all litigation against each other. Apple will pay Qualcomm an undisclosed sum as part of the settlement, which includes a six-year licensing agreement between the two.

The settlement also covers suits brought by Apple’s manufacturing partners, which wanted Qualcomm to repay $9 billion—a number that reportedly could have been tripled under antitrust law—that they say the chipmaker overcharged them for patent royalties.

The announcement came while Qualcomm’s lawyer was delivering his opening remarks in a trial of numerous claims and counterclaims that started Tuesday morning in San Diego, according to CNET. Qualcomm told investors last year that Apple would stop using its wireless chips, switching instead to chips made by competitors like Intel.

One potential catalyst for the settlement emerged a few hours later: Intel said it won’t make wireless modems capable of connecting to the coming generation of 5G networks. Earlier this year, Intel had said it would have sample 5G modems ready in 2019, and officially launch the products next year. With Intel no longer an option, that would explain why Apple needed to work out a new deal with Qualcomm. There are few 5G-capable networks operating yet, but Huawei, Samsung, and other smartphone makers have announced 5G-capable phones based on Qualcomm’s wireless chips.

The dispute between Apple and Qualcomm involved the unusual way Qualcomm licenses its technology to other companies. Qualcomm generally charges handset makers like Apple and Huawei around 5 percent of the total price of a phone for the right to use its technology, up to about $20 per device, according to a legal brief filed by Qualcomm. In other words, if you pay $300 for a phone that uses Qualcomm technology, $15 of that might go to the company, even if there are no chips made by Qualcomm in the device. If you paid $1,000, Qualcomm would get $20. Those licensing fees come on top of what a manufacturer would pay for Qualcomm’s chips. Apple referred to this as double-dipping and argued that Qualcomm only got away with it because it effectively holds a monopoly on high-end wireless chip technologies.

Though terms of the agreement were not disclosed, investors viewed it as good news for Qualcomm. Its shares rose 23 percent. Apple shares were little changed.

It’s not necessarily the end of the legal woes that have pitted Qualcomm against regulators around the world in recent years. The company is still awaiting a decision in an antitrust suit brought by the Federal Trade Commission alleging the company uses its dominant position in the wireless chip market to overcharge customers to use its technology.

During the FTC trial, Qualcomm said it doesn’t factor the value of its intellectual property into its chip prices. In other words, Qualcomm claims that it essentially sells the chips at a discount and then makes up for it with the patent licensing fee. It’s an odd arrangement, but it’s one that Qualcomm has had in place for decades, long before it became a major player in the semiconductor industry.

The history of Apple and Qualcomm’s legal beef sounds a bit like a Game of Thrones recap. Apple sued Qualcomm in January 2017, alleging that Qualcomm had withheld $1 billion in royalty rebates in retaliation over Apple’s cooperation with antitrust regulators in South Korea, where Qualcomm was hit with a $854 million fine in 2016.

Qualcomm countersued Apple that spring, claiming that Apple deliberately slowed Qualcomm modems used in some iPhones to cover up slower performance of Intel-made modems used in other iPhones. Apple retaliated by withholding payments for the patent licensing fees its manufacturing partners were supposed to pay to Qualcomm, and by expanding its lawsuit to include the double-dipping allegations. Qualcomm responded by suing Apple’s manufacturers over the unpaid licensing fees and by suing Apple itself for patent infringement.

Clydesdale PHOTO

Claimants up the stakes against Clydesdale Bank with second legal letter

The stakes have been raised in a £1bn dispute against Clydesdale Bank and National Australia Bank (NAB) after lawyers for a group of small businesses sent a second letter threatening legal action.

Claim management group RGL Management, which acts for the group, has accused Clydesdale Bank and NAB of acting fraudulently and dishonestly in their selling of Tailored Business Loans (TBLs) to small businesses and individuals who have since suffered alleged collective financial losses of £1bn.

TBLs included hedging arrangements and “swaps” that were designed to freeze interest rates for businesses, but meant they often ended up paying more when rates fell.

RGL wrote an original letter before action, designed to give a party one last chance to settle before the matter is taken to court, back in December, but sent another letter today which demanded a “substantive response” by May.

The letter outlines complaints made against Clydesdale and its subsidiary Yorkshire Bank at a time when it was wholly owned by National Australia Bank. ​Legal action could begin either mid or late 2018.

A spokesperson for Clydesdale Bank said it was aware of the second letter but had not officially received it.

“We have not received a follow-up letter from RGL relating to the historical sale of Fixed Rate Tailored Business Loans,” the spokesperson said. “The bank has dedicated substantial effort in recent years working through this historic conduct matter, engaging openly and transparently with customers as part of a wide-ranging remediation programme. We have made significant progress in resolving the vast majority of cases. The allegations being made by RGL are not accepted by the bank and, if necessary will be defended in the strongest terms possible.”

The group is thought to number hundreds of claimants, with a further 50 registering a interest in joining the action. RGL has urged businesses which has not yet joined the action are no cost, even if some businesses already received some sort of compensation payment as part of the bank’s own “redress” procedures.

James Hayward, CEO of RGL, stated: “What we have heard from our members certainly constitutes fraudulent behaviour by NAB and Clydesdale Bank. We are swiftly progressing our claim in order to achieve justice and appropriate recompense for those of our members damaged by the activity of the banks. We urge any affected businesses to join our group quickly, before it becomes too late for them to participate.”

RGL’s case is funded by Augusta Ventures, one of a number third party funders lending financial support to high-value court cases.

Clydesdale Bank was contacted for comment. The lawyers for NAB, Herbert Smith Freehills, declined to comment.