A U.S. federal judge has issued a preliminary ruling that Qualcomm Inc owes Apple Inc nearly $1 billion in patent royalty rebate payments, though the decision is unlikely to result in Qualcomm writing a check to Apple because of other developments in the dispute.
The payments were part of a business co-operation agreement between the two companies amid the peculiar patent licensing practices of the consumer electronics industry.In general, the contract factories that built Apple’s iPhones would pay Qualcomm billions of dollars per year for the use of Qualcomm’s patented technology in iPhones, a cost that Apple would reimburse the contract factories for.
Qualcomm in turn alleged that it stopped paying the rebate payments because Apple had broken the agreement by urging other smartphone makers to complain to regulators and making “false and misleading” statements to the Korean Fair Trade Commission, which was investigating Qualcomm over antitrust allegations. Apple responded that it was making lawful responses to regulators in an ongoing investigation.