Apple and the chip company Qualcomm have settled their patent dispute after more than two years. All mutual complaints are dropped, as the companies announced on Tuesday. Apple will make a payment to Qualcomm, it said. The amount was not mentioned. In addition, a patent agreement will be concluded for an initial six years. The conditions were not communicated.
The deal came as a surprise, in the midst of a large California trial just opened, which was credited with a crucial role in the dispute.
Apple accused Qualcomm of demanding too high royalties for its patents and unfair competition. Qualcomm countered with the allegation that used in Apple devices invented by the company technology without a patent license.
The dispute was a significant burden for Qualcomm. Apple’s contract manufacturers had already stopped their payments to the chip company in 2017. Qualcomm estimated the lost revenue and interest on seven billion US dollars. The investors were relieved accordingly: The Qualcomm share jumped after announcement of the agreement by a good 23 percent high. The Apple price remained virtually unchanged.
The trial, which started in San Diego on Monday,, was a lawsuit filed by Apple in 2017. The court had only been able to select nine jurors on day one, and on Tuesday the lawyers had just made initial statements when the agreement was reached was announced.
Millions of difficult process averted
The process was scheduled for four to five weeks. It was expected that various top managers such as Apple CEO Tim Cook and Qualcomm CEO Steve Mollenkopf be called to the witness stand.
Among other things, Apple was bothered by the fact that Qualcomm demanded a share of the device price for the patent licenses, rather than just the price of individual components. Thus, the chip company also benefited unjustifiably from price increases, which went back to own inventions of Apple, Apple argued. In addition, Qualcomm refused to grant chip competitors such as Intel patent licenses. Qualcomm responded that, as it was a portfolio of patents covering many different technologies, it was appropriate to use the price of the device to calculate the licenses.
How this part of the dispute went out also remained open. The companies merely said that the six-year patent deal included an option for a further two-year extension. In addition, there is a multi-year agreement for chip deliveries.
Apple gets a way to be able to offer faster devices for the new super-fast 5G data radio – in the chips for Qualcomm is leading. According to the Japanese businesspaper Nikkei, this is also the intention of the group . For Apple, it is already too late to install Qualcomm chips in this year’s iPhones, but by 2020, the company will buy modem chips, including 5G chips, said an informed person the sheet. Intel’s 5G modems were not expected until next year. The first 5G-capable phones from other providers will be released this year.
Apple had previously used communication chips from Qualcomm in its iPhones, even exclusively for a while. In the latest models but are modems from Intel.
Qualcomm executives have repeatedly stated that they expect the patent dispute to end in a settlement. Apple showed up to the last fighting.
Even sales prohibition reached
Qualcomm had been able to get a ban on selling some older iPhone in Germanyin its lawsuits last December. It was about devices with Intel modems. Apple circumvented the ban on sales by the fact that in the devices sold in this country, the communication chips come back from Qualcomm instead of Intel.
Above all, Qualcomm is known as a leading provider of smart phone chips; patent licenses are the second – and more lucrative – pillar for the Group. Its business model is already under pressure: In January, there was a lawsuit filed by the US Trade and Industry Bureau, FTC, which accused Qualcomm of unfair competition from patent licenses as a prerequisite for chip deliveries. This procedure is not decided by a jury, but by a judge, their verdict is still pending.