updated 06:40 pm EST, Tue December 11, 2012
Filing by Qualcomm induced by call for comments from USITC
(Updated with news of Qualcomm's retraction) In response to some questions posed by the United States International Trade Commission (USITC), wireless baseband supplier Qualcomm has torn into Apple in a court filing, saying that apple "should be embarassed" at the length and depth of the iPad makers' patent infringement. The move is curious, as Apple has been Qualcomm's largest customer for three years. Qualcomm and other stakeholders were encouraged, not required, to comment on a few questions the ITC commission posed in an Apple versus Samsung complaint. Submitters were asked to remark on the availability of injunctive relief over standards-essential patents, and the criteria for a fair, reasonable, and non-discriminatory (FRAND) royalty rate.
The vitriol-laden filing starts with the following: "Of course, Apple's premise of 'a willing licensee with a good-faith disagreement who wants nothing other than for a disinterested party to determine what terms are FRAND' is itself a sham and a pretext. At the recent proceedings before Judge Crabb in the Western District of Wisconsin, Apple's 'willing licensee' mask fell off, when it absolutely refused -- even at the cost of having its case dismissed -- to commit to take a license to Motorola's SEP portfolio on whatever terms the court might determine to be FRAND. Having literally walked away, minutes before trial, from an opportunity for an adjudication as to whether Motorola had offered FRAND terms to Apple, Apple should be embarrassed -- but apparently is not -- to demand that the Commission divest itself of jurisdiction unless and until a 'US Court has determined [the relevant license terms] to be FRAND'."
The brief continues: "If Apple is not a willing licensee, and in any event there is no risk of an exclusion order (or injunction) shutting down a truly willing licensee, what is the real agenda? It is to shelter the unwilling licensee -- the infringer that, like Apple, has no interest at all in paying market-validated royalty rates. It is to ensure that SEP infringers can only be called to account under rules, and in fora, in which they may gain yardage, but can never lose."
In its brief, Qualcomm didn't take a position on specific abuses of patents, by Samsung or Apple. Apple's own response to Qualcomm's filing calls the conclusions made by the licensor as "flawed" and declined to get in a war of words with Qualcomm. Factually, Qualcomm has omitted Apple's reasoning for declining an enforced license term by the court -- Apple wished to defend itself in infringement proceedings if the judge ordered a royalty rate greater than $1 per unit. Apple continues to assert that Samsung's requested terms violate FRAND licensing and that it demands far in excess of what the market-standard rate would dictate.
Qualcomm's business model, it should be noted, is primarily one of licensing, and building technologies that implement its own FRAND-eligible patents. Clearly, Qualcomm is not a unbiased party and has much at stake, given the recent rulings in the United States that standards-essential patents cannot be used to induce a sales embargo on potentially infringing products.
Patent analyst Florian Mueller believes that "Qualcomm doesn't like any of this, and it's apparently chosen to go on the attack against one of its largest customers, Apple -- because it presumably fears that a Posner-like FRAND regime would cost Qualcomm more money than losing Apple as a customer." Samsung accounts for 10 percent of Qualcomm's business, while Apple commands 12 percent.
Update: Qualcomm has completely retracted this statement from the USITC, and has requested it be purged from the record, and deleted from the public record.