Caixin
Jan 26, 2017 04:00 PM
BUSINESS & TECH

Apple Sues Qualcomm in China for 1 Billion Yuan

(Beijing) — Apple Inc. has sued Qualcomm Inc. in China for 1 billion yuan ($145 million) in damages, mirroring a similar lawsuit in the U.S. last week that accuses the telecom-chip giant of abusing its market dominance.

The Beijing intellectual property court confirmed it has received the lawsuit from Apple, and that the action requests the 1 billion yuan in damages plus 2.5 million yuan in legal expenses, according to a statement on Wednesday.

“For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with,” Apple said in its own statement on the matter. It accused Qualcomm of using its market dominance to launch exclusionary licensing tactics and collect excessive royalties.

“Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined,” Apple said. “We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts.”

Apple filed the suit after taking similar legal action against Qualcomm last week in the U.S., where it is seeking $1 billion in damages. China’s antitrust regulator found Qualcomm guilty of anti-competitive behavior two years ago and fined the company nearly $1 billion, a record. It also ordered Qualcomm to renegotiate its licenses with the nation’s many cellphone makers.

Since then, governments in South Korea, the U.S. and Europe have launched similar investigations. At the heart of the matter are Qualcomm licensing agreements that its customers say are overly aggressive and sweeping. Such measures include forcing companies to pay royalties for technology they don’t need, and placing restrictive actions on them when they buy Qualcomm’s popular cellphone chips.

Qualcomm responded that it has learned of Apple’s China lawsuit but that it hasn’t seen any specifics yet. It accused Apple of launching the action to try to reduce the fees it pays for Qualcomm technology, and said Apple pays the same fees in China as its other licensees following its settlement of the 2015 antitrust case.

“Qualcomm is prepared to defend its business model anywhere in the world,” said Don Rosenberg, the company’s general counsel. “We are proud of our history of contributing our inventions to the development and success of the mobile communications ecosystem.”

Apple’s use of the Chinese courts follows a similar tactic that Qualcomm used last year, reflecting the market’s growing importance both for smartphone sales and as the world’s biggest manufacturing base.

Last year’s case saw Qualcomm initially sue Chinese smartphone maker Meizu Technology Co. Ltd. in the U.S. and Europe for unlicensed use of its technology, and then later file a similar action in China. Qualcomm announced earlier this month that the two sides had settled the matter.

Contact reporter Yang Ge (geyang@caixin.com)

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