Qualcomm Seeking A Ban On U.S. iPhone Shipments Is Much Ado Over Nothing

Last week, Qualcomm stepped up its fight with Apple by seeking the help of the International Trade Commission (ITC) to ban the import of a few iPhone and iPad models that are supposedly violating six of the company's patents.

Qualcomm said in their filing that they are seeking ITC assistance to ban Apple products that use baseband modems that are manufactured by companies other than Qualcomm. Baseband models are chips that allow for communications between the handset and cellular networks (simply put). Qualcomm also says that Apple should be forced to stop selling those products that they allege are infringing on their technology.

Qualcomm has now taken the patent fight with Apple to the next level and Apple is counter-suing by stating that Qualcomm's licensing rates are over-the-top and do not take into account "fair" business practices which would be a violation of international trade laws and practices.

This is not a new issue at all despite the hue and cry by the kindly uncles and the always-short-never-wrong crowd because Bloomberg had reported the same issue in very early May as well.

I have stated on numerous occasions that Qualcomm and Apple need to find some common ground and find a way to settle the issue soon, which would be in the best interest of both parties.

Otherwise, it is just costing shareholders of both companies a lot of money.

Apple has already instructed its OEM partners to not pay Qualcomm royalties because the two sides are unable to agree on what those fees/royalties should be going forward.

Tim Cook has said the following, "Qualcomm is trying to charge Apple a percentage of total iPhone value."

On the flip side, Qualcomm's general counsel has released the following statement: "Apple continues to use Qualcomm's technology while refusing to pay for it."

In the January lawsuit, Apple has stated the following, Qualcomm has "built its business on older, legacy standards but reinforces its dominance through exclusionary tactics and excessive royalties."

I am inclined to go with Apple on this issue because not only is Apple locked in dispute with Qualcomm regarding its baseband/modem patents, but even the United States Federal Trade Commission is after Qualcomm for anti-competitive practices relating to the exact same issue.

According to the FTC, Qualcomm has maintained a "no license, no chip" policy where it has refused to sell modems to smartphone makers that don't agree to its unfair licensing terms.

The Apple sell-siders have not chimed in on last week's escalation of the dispute by Qualcomm however I think for the moment, the issue is "Much ado over nothing."

Both sides have way too much to lose without finding some common ground fairly soon.

(Long aapl, long and short aapl options)

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