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Cell Phone Showdown Part IV: New Opposition

Business Advisors|Litigation Support

By Dan Riske

This is the fourth article in a series tracking ongoing patent infringement cases between cell phone manufacturers Apple and Samsung.  A brief background on the situation and summary of events occurring through the date of this article are provided below.

In 2012, Apple was awarded damages of approximately $1.05 billion, one of the largest patent awards on record, because of Samsung’s “willful” infringement of certain patents utilized in Apple’s iPhone and iPad.  The damages were later reduced to $548 million through various appeals, trials and rulings over the subsequent years.  Samsung asked the U.S. Supreme Court to review a portion of those damages related to design patents and was able to avoid another $399 million of the $548 million in damages after the Supreme Court reversed the earlier appeals court ruling.  However, this case is set to return to a lower district court to revisit the proper damages calculation.

In 2016, as part of another case, Apple won a battle in a federal appeals court that ruled Samsung violated patents owned by Apple relating to turning alphanumeric characters into links and the iPhone’s slide-to-unlock feature.  Samsung owes Apple approximately $120 million as a result.

Qualcomm enters the ring too!?

Apple filed suit against Qualcomm in January, claiming that Qualcomm charges excessive royalties for the modem chips used in its iPhones.  Apple alleged that Qualcomm abused its dominant market position by charging royalty rates calculated based on the overall price of the iPhone instead of just the price of its communications components.  In 2016, Apple started utilizing modem chips from Qualcomm-competitor Intel in half of its iPhones instead of purchasing all modem chips from Qualcomm, which it normally does.  Apple also stopped paying its phone manufacturers for royalties due to Qualcomm. 

Qualcomm asserts that its licensing agreements are fair and legal and that Apple is harming Qualcomm’s business and breaching existing agreements in place between the two companies.  Qualcomm then filed a patent infringement lawsuit and sought to have imports of some iPhones and iPads (those containing competing modem chips) banned from the U.S. 

Unlike Apple’s disputes with Samsung, industry analysts, as well as Qualcomm’s CEO, estimate that the Qualcomm skirmish will be settled out of court; one analyst estimated that Apple will pay $8 billion to Qualcomm, and a new lower royalty rate could be negotiated to resolve the issues at hand.

Schneider Downs provides litigation support services, including economic damages calculations and expert witness services, to small and midsize private companies.  Contact Joel Rosenthal, Shareholder, if you have any questions on how we can help your business.

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