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June 11, 2024

Apple Inc. v. Qualcomm Inc.

Apple Inc. v. Qualcomm Inc., No. 3-17-cv-00108 (consolidated with Qualcomm Incorporated v. Compal Electronics Inc. et al, No. 3-17-cv-01010) (S.D. Cal).

Qualcomm, the dominant worldwide manufacturer of modem chipsets, allegedly engaged in anticompetitive conduct including illegal monopoly maintenance, restraint of trade, unfair competition, and breaches of fair, reasonable, and non-discriminatory (ā€œFRANDā€) licensing obligations.Ā Qualcommā€™s challenged conduct included: (i) refusing to sell modem chipsets to customers unless the customers also licensed Qualcommā€™s cellular patents (the so-called ā€œno license, no chipsā€ policy); (ii) bundling its cellular standard-essential patents (ā€œSEPsā€) together with its non-standard-essential patents under the licenses it required from chipset purchasers; (iii) requiring those licensees to pay the same royalties on each cellular device that utilized technology standards covered by the license, whether or not the device contained any Qualcomm components; (iv) refusing to license its cellular SEPs to other modem chipset manufacturers on an exhaustive basis; and (v) utilizing exclusionary side payments to leading cell phone companies to limit market opportunities for other modem chipset makers.

Qualcommā€™s conduct allegedly caused Appleā€™s contract manufacturers (ā€œCMsā€)ā€”Foxconn, Compal, Pegatron, and Wistronā€”to incur antitrust overcharges in the form of (i) license payments that exceeded FRAND levels and (ii) supracompetitive prices for Qualcomm modem chipsets. The CMs retained Econ Oneā€™s Dr. Jeffrey Leitzinger, who has extensive experience in the analysis of intellectual property licensing issues and quantification of antitrust damages. Dr. Leitzinger was asked to assume liability, and form opinions regarding (i) the economic impact of the challenged conduct on the amounts paid by the CMs to Qualcomm for licenses to Qualcommā€™s patents and for Qualcomm modem chipsets used in Apple devices, and (ii) the overcharges the CMs incurred as a result of that conduct. He submitted an expert report in which he analyzed the economic evidence regarding overcharges embodied in Qualcommā€™s standard royalty rates and its modem chipset prices, and estimated the CMsā€™ license royalty overcharges (under the CMsā€™ antitrust claims and FRAND claims) and chipset overcharges. He provided deposition testimony in connection with this report. The case was settled after the trial had commenced.

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