The Apple vs. Qualcomm lawsuit was a multi-year, multi-country fight over how Qualcomm licensed its cellular patents and sold its modem chips, and it ended in April 2019 with a global settlement: Apple made a one-time payment to Qualcomm, the two companies signed a six-year patent license, and Qualcomm agreed to supply chipsets for future Apple devices.1SEC. Qualcomm and Apple Agree to Drop All Litigation
What the Dispute Was About
At the center of the case was Qualcomm’s practice of conditioning modem chip sales on a manufacturer’s acceptance of its patent licensing terms, an approach often described as “no license, no chips.” Regulators argued the policy let Qualcomm charge higher royalties than a competitive market would have allowed.2FTC. FTC Charges Qualcomm With Monopolizing Key Semiconductor Device Used in Cell Phones
Because those royalties applied to devices regardless of whose modem was inside, critics said the fees functioned as a surcharge on the use of rival chips, raising costs for any manufacturer that tried to buy from a competing supplier.2FTC. FTC Charges Qualcomm With Monopolizing Key Semiconductor Device Used in Cell Phones
Standard-essential patents were the other pressure point. Companies that contribute technology to cellular standards typically commit to license those patents on fair, reasonable, and non-discriminatory terms. Allegations arose that Qualcomm’s rates did not honor that commitment.2FTC. FTC Charges Qualcomm With Monopolizing Key Semiconductor Device Used in Cell Phones
The FTC Antitrust Case and How It Ended
The Federal Trade Commission sued Qualcomm, alleging it used anti-competitive tactics to keep a monopoly on cellular modem chips. The case centered on whether tying chip sales to patent licenses shut rivals out of the market.2FTC. FTC Charges Qualcomm With Monopolizing Key Semiconductor Device Used in Cell Phones
The claims were brought under Section 2 of the Sherman Act, which addresses the maintenance of a monopoly through unfair conduct. Prosecutors argued the licensing structure raised rivals’ costs and created a bottleneck across the industry.3Office of the Law Revision Counsel. 15 U.S.C. § 2
A federal district court initially ruled that Qualcomm’s licensing practices violated antitrust law and were an unfair method of competition.4FTC. Statement on District Court Ruling in Monopolization Case against Qualcomm An appellate court later overturned that decision, finding that while the conduct was aggressive, it did not amount to illegal monopolization under federal law.5FTC. FTC Requests Rehearing En Banc of Qualcomm Appeals Panel Decision
Exclusivity Between Apple and Qualcomm
A separate strand of the dispute involved exclusivity. Regulators alleged Qualcomm reached an arrangement with Apple that prevented Apple from sourcing modem chips from any competitor for several years, keeping rival chipmakers out of one of the industry’s highest-profile design wins.2FTC. FTC Charges Qualcomm With Monopolizing Key Semiconductor Device Used in Cell Phones
The FTC argued that shutting out other suppliers dulled the incentive to innovate and reinforced Qualcomm’s position as the primary modem provider for leading mobile devices.2FTC. FTC Charges Qualcomm With Monopolizing Key Semiconductor Device Used in Cell Phones
The 2019 Settlement Terms
Apple and Qualcomm announced a settlement in April 2019 that resolved all pending litigation between them worldwide, including cases involving Apple’s contract manufacturers.1SEC. Qualcomm and Apple Agree to Drop All Litigation
The agreement included:1SEC. Qualcomm and Apple Agree to Drop All Litigation
- A one-time payment from Apple to Qualcomm.
- A six-year patent license, effective April 2019, with a two-year extension option.
- A multi-year chipset supply agreement.
The deal ended the litigation without a court verdict between the two companies and locked in the licensing and supply terms Apple needed for future devices.1SEC. Qualcomm and Apple Agree to Drop All Litigation