Judge Rules Qualcomm Owes Apple Nearly $1 Billion in Rebate Payments

Federal Judge Gonzalo Curiel of the U.S. District Court for the Southern District of California has issued a preliminary ruling that Qualcomm owes Apple nearly $1 billion in rebate payments, reports Reuters.

When Apple used Qualcomm modems for iPhone the factories that built the smartphones would pay Qualcomm billions for use of its technology. Apple would then reimburse the factories for these costs. Separately, Apple had an agreement with Qualcomm under which Qualcomm would pay Apple a significant rebate on patent payments if Apple didn't attack it in court or with regulators.

Two years ago, Apple sued Qualcomm for withholding these rebates and breaking their agreement. Qualcomm says it stopped making payments because Apple broke the agreement by urging other smartphone makers to complain to regulators and making "false and misleading" statements to the Korean Fair Trade Commission which was investigating Qualcomm. Apple says it was merely providing lawful responses as required by the investigation.


Judge Curiel sided with Apple and ruled that Qualcomm owed the missed rebate payments.

“Qualcomm’s illegal business practices are harming Apple and the entire industry,” Apple said in a statement.

Don Rosenberg, general counsel for Qualcomm, told Reuters, “Although the Court today did not view Apple’s conduct as a breach of Apple’s promises to Qualcomm in the 2013 Business Cooperation and Patent Agreement, the exposure of Apple’s role in these events is a welcome development.”

The decision isn't final until a trial that begins next month. If Apple does win, its unlikely that Qualcomm will need to make a payment to Apple as its contract factories have been withholding patent payments to offset the unpaid rebates.


“Apple has already offset the payment at issue under the agreement against royalties that were owed to Qualcomm,” said Rosenberg.

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