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April 2019: Qualcomm Settlement on the Heels of Quinn Emanuel Trial Wins

April 2019

Quinn Emanuel client Qualcomm recently reached a global settlement with Apple following opening statements in an antitrust and breach of contract case in which Quinn Emanuel represented Qualcomm, with tens of billions of dollars at stake. This settlement follows years of litigation between Qualcomm and Apple in dozens of cases across the world, and comes shortly following Quinn Emanuel victories in patent suits in district court, the International Trade Commission, and abroad. Although the terms of the settlement are confidential, the stock market spoke loudly about how it viewed the settlement, with Qualcomm stock up approximately 25% on the day of settlement, and about 50% total since the settlement, adding over $30 billion to Qualcomm’s market capitalization.

            By way of background, Apple’s phones are manufactured by one of several contract manufacturers. Qualcomm did not have a patent license with Apple, but instead had patent licenses with Apple’s contract manufacturers. Apple initially sued Qualcomm in January of 2017, alleging various contract and antitrust claims, including antitrust claims relating to Qualcomm’s patent licensing business, and in particular licensing of standards-essential patents. Fundamentally, Apple alleged that Qualcomm’s royalty rate for its patents was too high. Qualcomm then sued Apple’s contract manufacturers in May of 2017 for withholding patent royalties due to Qualcomm at Apple’s direction, and those two cases were consolidated. Separately, Qualcomm brought numerous suits against Apple for infringement of Qualcomm non-standards-essential patents in United States district court, the United States International Trade Commission, and in Germany. Quinn Emanuel also represented Qualcomm in an antitrust suit in the United Kingdom, and advised Qualcomm on antitrust matters out of its Brussels office.

            In the past five months, Quinn Emanuel teams obtained a number of patent victories against Apple across the globe. In December of 2018, Qualcomm obtained an injunction against sales of the accused Apple iPhones in Germany after a finding of infringement. In March of 2019, Quinn Emanuel tried a patent infringement case asserting three patents against Apple to a Southern District of California jury. On March 15, 2019, the jury found that Apple infringed all three patents asserted against Apple, and awarded $1.41 per infringing iPhone. The jury rejected Apple’s only invalidity defense as well, rejecting Apple’s claims to have been an inventor on one of the patents. Then, on March 26, 2019 and following a September, 2018 trial, the International Trade Commission issued an initial determination that Apple infringed a Qualcomm patent, that the patent was not invalid, and recommending issuance of an order excluding Apple from importing the accused iPhones into the United States.

            Following the series of Quinn Emanuel victories, trial in the consolidated contract and antitrust case against Apple and its contract manufacturers was set to begin April 16, 2019. By the time of trial, Apple’s contract manufacturers owed Qualcomm over $8 billion in unpaid royalties. On the other side, Apple and the contract manufacturers argued that they had overpaid past royalties by $7-9 billion. Quinn Emanuel was one of two firms representing Qualcomm at trial. In its opening statement, Qualcomm explained that Apple had planned out this entire dispute years in advance, “creating evidence,” attempting to “hurt Qualcomm financially,” and exerting “commercial pressure” against Qualcomm, all merely to attempt to reduce its royalties paid to Qualcomm. The parties announced the settlement immediately after openings.