U.S. Court Rules Qualcomm Owes Apple Nearly $1 billion USD in Rebate Payments

A U.S. District Court judge decided on Thursday that Qualcomm owes Apple nearly $1 billion USD in rebate payments.

In a preliminary ruling, the U.S. District Court for the Southern District of California ruled that Qualcomm owed Apple nearly $1 billion USD in rebate payments that were part of the business cooperation agreement of the two companies, reads a new report from Reuters.

Today’s ruling is unrelated to the patent fight that both companies are embroiled in but pertains to the matter of patent royalty rebates.

In a summary judgment published Thursday, US District Court Judge Gonzalo P. Curiel of the Southern District of California granted four of Apple’s requests ahead of a trial that kicks off next month in San Diego. The ruling isn’t final but gives Apple a win over Qualcomm before they face off in court.

Here’s how Reuters explains the issue:

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. Separately, Qualcomm and Apple had a cooperation agreement under which Qualcomm would pay Apple a rebate on the iPhone patent payments if Apple agreed not to attack in court or with regulators.

In a lawsuit filed two years ago, Apple sued Qualcomm, alleging that the chip supplier had broken the cooperation agreement by not paying nearly $1 billion in patent royalty rebates.

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.

Judge Curiel sided with Apple, ruling that Qualcomm owed the Cupertino company the $1 billion USD in missed rebate payments.

“The Court concludes that Qualcomm has not carried its burden on this issue, and partial summary judgment should be entered in favor of Apple that Qualcomm cannot receive a refund of the BCPA payments as damages…for the breach of contract claim,” Curiel wrote. He added that “Apple did not file a lawsuit during the BCPA. And Apple’s filing of the lawsuit after the BCPA does not retroactively relieve Qualcomm of past payment obligations.”

Qualcomm said in a statement that “Apple has made false and misleading statements to antitrust regulators aimed at instigating unjustified action against Qualcomm.”

“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,” Don Rosenberg, Qualcomm executive vice president and general counsel, said in a statement. “Apple has already offset the payment at issue under the agreement against royalties that were owed to Qualcomm, and the amount, without consideration of interest that may be awarded, was previously accrued in Qualcomm’s financial statements.”