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Qualcomm’s chip monopoly reportedly edged out competition, inflating the prices of smartphones.
BlackBerry scored a big win on Wednesday against Qualcomm. A court awarded the Waterloo, Canada-based smartphone maker $815 million in refunded royalty payments stemming from a binding arbitration agreement, CNBC reports.
The specifics of the refund remain unclear — Qualcomm said it is for sales of “subscriber units” — but at the core of the dispute is licensing fees BlackBerry paid in advance to Qualcomm. The smartphone maker argued that an agreed-upon caps on royalties was never applied, and Qualcomm argued that the payments were nonrefundable.
Qualcomm, unsurprisingly, said it disagreed with the court’s ruling. But it acknowledged that it was binding and that it “[had] no impact on agreements with any other licensee,” a Qualcomm spokesperson said.
It’s the latest in a string of legal blows against Qualcomm. In January, the United States Federal Trade Commission sued the San Diego, California-based company for anti-competitive practices, accusing it of using its dominant market position to edge out competition. The FTC alleged that Qualcomm gave its partners two choices: Pay pricey royalties for the use of its patents or limit the sale of their devices to smaller markets.
The FTC said that Qualcomm abused standards-essential patents — patents that must be licensed at fair, reasonable, and non-discriminatory rates — by refusing to license them directly to competing suppliers. The FTC characterized Qualcomm’s fees as “disproportionately high” relative to its competitors and it said that consumers ultimately paid the inflated prices.
Apple later filed its own $1 billion lawsuit against Qualcomm (and subsequent suits in two other countries) over royalties for basic patents, claiming that Qualcomm forced it to pay excessive fees and withheld nearly $1 billion “as retaliation for responding truthfully to law [South Korean] enforcement agencies investigating them.”
“Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined,” Apple said in a statement.
It put the kibosh on competition. Qualcomm cut Apple a discount in exchange for agreeing not to source competitors’ wireless modems for five years. That reportedly hampered silicon giants like Intel, which for years have tried to break into the smartphone chip space.
In a statement, Qualcomm general counsel Don Rosenberg said that Apple had “intentionally mischaracterized” Qualcomm’s practices and has been “actively encouraging regulatory attacks on Qualcomm’s business” around the world. “We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits,” Rosenberg said.