All along, the IT industry has the saying that “first-class enterprises do standards, second-rate enterprises do brands, third-rate enterprises do technology, and fourth-rate enterprises make products”, and the core of these standards is the patent dispute. Recently, the patent war between Qualcomm and Apple has intensified. On the surface, there is no difference in the game between the large international companies we have seen before, but in fact, Qualcomm sued four Apple foundries such as Foxconn (Hon Hai) Group and refused to pay. After the patent fee, the incident has been upgraded and become the focus of the world.

In fact, intellectual property rights have long been an important tool for the game of the major giants. Under the industrial competition law of “the patentee wins the world”, the immediate interests are important, but they are not the focus. Who can gain the upper hand in the patent war? It has a favorable position in the subsequent development. Regardless of the final result, it is really surprising that Apple has let its four foundries refuse to pay the patent fees. It is a bit of a big corporate style.

Why did Qualcomm vs. Apple start?

The patent battle between Qualcomm and Apple broke out in January this year. In 2017, Apple filed a $1 billion claim with Qualcomm through the Federal Trade Commission (FTC) and issued a statement that Qualcomm received royalties five times more than the total amount of other mobile communications patent licensees. Qualcomm argues that Apple could not create a successful commercial product without using the fast-moving communication connectivity provided by Qualcomm.

The two sides have remained in a stalemate until recently Qualcomm filed a lawsuit in the Federal District Court for Southern District of California, accusing Apple of manufacturing four of its globally sold iPhones and iPads - Fu Zhi Kang Group Co., Ltd. and Hon Hai Precision Industry Ltd. (collectively known as Foxconn), Heshuo United Technology Co., Ltd., Wistron Capital Co., Ltd. and Compal Computer Industry Co., Ltd. - violated their license agreement and other commitments with Qualcomm and refused to use them. Qualcomm pays for its licensed technology.

To be explained here, since Qualcomm's license agreement for iPhone and iPad is not directly signed with Apple, but signed with the manufacturer who produces these devices, it cannot directly sue Apple for refusing to pay royalties. But in essence, this lawsuit is directed at Apple.

In the prosecution, Qualcomm accused Apple of "carefully directing" its foundry vendor's refusal to pay royalties. The indictment stated that "in addition to not paying the defendant the royalties that should be paid to Qualcomm, Apple also prevented the defendant from paying royalties to Qualcomm. What's more, Apple also agreed to violate the agreement with Qualcomm for the foundry. The loss of the bill, further indicating the strength of Apple.

Some analysts believe that the dispute between Apple and Qualcomm is now outbreaking. The reason is that it will not be related to the upcoming launch of 5G, because Apple and other mobile phone manufacturers hope to negotiate new licensing fees with Qualcomm before the popularization of 5G.

Interests are inseparable

For Qualcomm, it is a technology company, patent is its core development power, but also the main source of its profits. Patents involving the fundamental interests and core values ​​of the company certainly cannot allow Apple to trample on it.

For Apple, the high profit of the iPhone is the core of Apple's annual profit. However, due to the lack of exciting new products and technologies in recent years, its development has been greatly slowed down. From many aspects, Apple must struggle to avoid any situation. The profit is reduced. The patent fee is indeed a huge expense.

Some analysts pointed out that it is still to be seen whether Qualcomm will seek an injunction through the US International Trade Commission, but this possibility is not ruled out. Once Qualcomm has more chances, Apple may choose to sit down and solve the problem. After all, if iPhone8 is postponed due to the import ban, Apple's share price may face a huge blow, no matter how short the delay, which is unacceptable to Apple.

In an exchange with the Securities Daily reporter, intellectual property lawyer You Yunting said that according to the provisions of the patent regulations, production is one of the statutory infringement patents. For these lawsuits, if Qualcomm's patents are indeed established, there should be no suspense in winning the case. But for Apple, these lawsuits can be seen as Qualcomm's beat to Apple.

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