According to a new report from Reuters, a U.S. federal judge has issued a preliminary ruling this evening that Qualcomm must pay Apple nearly $1 billion in patent royalty rebate payments. The ruling comes from Judge Gonzalo Curiel of the U.S. District Court for the Southern District of California.
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As Reuters explains, contract factories that build the iPhone generally paid Qualcomm “billions of dollars per year” to use Qualcomm’s patented technology in the iPhone. In turn, Apple would reimburse the factories. Further, Qualcomm and Apple had a separate agreement that would see Qualcomm pay Apple “a rebate on the iPhone patent payments if Apple agreed not to attack in court or with regulators.”
Two years ago, Apple sued Qualcomm and claimed that the chip maker had breached their agreement by not paying those patent royalty rebates. Qualcomm, however, said it stopped paying the rebates because Apple encouraged other smartphone makers to “complain to regulators” and made “false and misleading” statements to the Korean Fair Trade Commission.
This evening, Judge Curiel came down on Apple’s side, ruling that Qualcomm must pay Apple the missed patent rebate payments. In a statement, Apple said, “Qualcomm’s illegal business practices are harming Apple and the entire industry.”
Meanwhile, Qualcomm VP and general counsel Don Rosenberg said the company is glad to see Apple’s role in this agreement exposed:
“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.”
Despite Curiel’s ruling, however, there is still a lot undecided. The decision will not be final until after next month’s trial. Furthermore, Apple’s contract factories have already withheld $1 billion in payments to Qualcomm. Thus, Qualcomm has already accounted for this in its financial statements and it will not need to cut a check to Apple.
Apple’s contract factories, which under normal circumstances would pay Qualcomm for patent royalties owed on iPhones, have already withheld the nearly $1 billion in payments to Qualcomm. Qualcomm’s Rosenberg said those withheld iPhone payments have already been accounted for in Qualcomm’s existing financial statements.
“Apple has already offset the payment at issue under the agreement against royalties that were owed to Qualcomm,” Qualcomm’s Rosenberg told Reuters.
Meanwhile, in the separate Qualcomm versus Apple patent infringement case ongoing in San Diego, the jury left today without a decision. Deliberations continue tomorrow morning at 9AM PT.