Apple and Qualcomm end legal fight over chipset licensing

Apple and Qualcomm end legal fight over chipset licensing

Qualcomm's stock jumped about 25 percent after news of the settlement. Although the litigation was slightly different in each iteration, nearly all of them came down to a pretty simple quarrel: Qualcomm has patents it thinks Apple's infringing, and Apple thinks Qualcomm is essentially a patent troll. But since Qualcomm is the leader in 5G modem technology, the dispute with Apple threatened to slow down the roll-out of 5G phones to consumers.

What was the suit about?

This is blockbuster news, folks, and an implicit agreement from Apple that it did, in fact, owe Qualcomm significant patent-based royalties.

The two-year legal fight centered around Apple's purchase of modem chips from Qualcomm. That delay would have left Apple without a 5G capable iPhone at a time when competitors are launching devices that can utilise the next-generation cellular broadband standard.

Apple argued that the chip technology it licensed from Qualcomm was fundamental to how smartphone's work, and that its payments should therefore be at a "reasonable rate", under the law.

Qualcomm still faces other potential fallout from its demands to be paid royalties in addition to the fees it charges for its mobile chips.

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"Even when Apple sells an iPhone with added memory-256GB instead of 128GB - Qualcomm collects a larger royalty just because of that added memory", according to the company, which claims it has been overcharged by "billions of dollars".

On Tuesday, just one day after Apple and Qualcomm's court battle officially started, Apple announced that a settlement between the two companies has been reached. Apple executives testified in January at a trial between the U.S. Federal Trade Commission and Qualcomm that Apple's policy is always seek several suppliers. The case was expected to last until May. While the judge has yet to rule, she has already said that Qualcomm would have to license its patents to other chipmakers-something it had previously declined to do.

The row between the pair began in 2017 when Apple first filed a legal complaint.

"All litigation between the two companies worldwide" has been dropped, the firms said in a joint statement.

They agreed to dismiss all litigation stemming from the disagreement, with both companies hammering out a six-year licensing agreement and a multiyear supply agreement.

The Qualcomm settlement means Apple will rely on the chipmaker for most if not all of its 5G modems in iPhones starting in 2020, with Qualcomm likely the leading to only supplier for the next several years, Canaccord Genuity analysts said.