US: Apple and Qualcomm’s global fight heads to court

Tim Cook, the Apple chief executive, is expected to give testimony in a four-week trial in a federal court in which the iPhone maker and four companies in its supply chain are suing Qualcomm for up to US$27 billion in damages for overcharged chip royalties. Qualcomm, which has denied wrongdoing, is seeking at least US$7 billion in back-payments from Apple and its suppliers in addition to billions in damages.

According to the Wall Street Journal, there isn’t much of a personal relationship between the CEOs of both firms. As a result of the animosity between Apple’s Tim Cook and Qualcomm’s Steve Mollenkopf, there seems to be no common ground for settlement talks.

Apple states Qualcomm should also repay US$3.1 billion associated with patents whose rights Apple claims are exhausted. It has already won a preliminary ruling that Qualcomm should pay nearly US$1 billion in withheld rebates.

Qualcomm, in return, estimates that Apple’s partners—Foxconn, Pegatron, Wistron, and Compal Electronics—owe more than US$7.5 billion in unpaid royalties. And it contends that Apple, which reimburses the manufacturers’ royalty payments, should be liable for a doubled penalty that would take the total to US$15 billion or more.

The San Diego trial is the centrepiece of a lengthy dispute between the two companies that has sprawled across the US, China, and Europe and may affect Apple’s ability to launch a mobile phone equipped for 5G, the next generation of mobile internet.

“This is by far the most significant [case] we’ve seen so far, for both sides,” said Geoff Blaber, analyst at CCS Insight. For Qualcomm, it “stands to shape the future of their business,” but it could also weaken Apple’s “bargaining power” and cost the iPhone maker billions.