Qualcomm owes Apple $1 billion in rebate payments, US judge says

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

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

As noted by Reuters, both companies had a patent licensing agreement that worked in the following manner:

“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.

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“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.

While the agreement worked for several years, Qualcomm decided to stop paying Apple when it found that the company was making “false and misleading” statements to the Korean Fair Trade Commission, which was investigating Qualcomm at the time over antitrust violations.

Qualcomm viewed this as a breach of its agreement, but Apple countered by saying that it was making lawful responses in an ongoing investigation.

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