You'll never guess what Qualcomm collects a 5% royalty from Apple for
As we await a ruling on the FTC v. Qualcomm non-jury trial from Judge Lucy Koh, we will soon be watching the Apple (& contract manufacturers) v. Qualcomm trial in San Diego. According to Foss Patents, Apple, its four contract manufacturers (Foxconn, Wistron, Pegatron and Compal) and Qualcomm filed a joint pre-trial brief. The latter contains some of the issues that will be brought up over the course of the trial.
Some of the info that Foss Patents found in the filing, which was submitted to the court last Saturday, is very interesting. Qualcomm not only seeks a 5% royalty payment on the amount that Apple pays Foxconn to assemble an iPhone, it also seeks 5% of the amount that Apple pays the contract manufacturer for services including repairs. Now let's say that your iPhone is broken and you want it fixed. If you go to the Apple Store and have it repaired at the Genius Bar, Apple pays Qualcomm $0 because there is no deal between them for such a transaction. But if your phone has to be sent to Foxconn for a repair, Qualcomm wants 5% of the amount that the assembler charges Apple to fix the device.
Apple states in the pre-trial briefing that Qualcomm also wants the same 5% of the amount that the tech giant pays one of the assemblers to take an iPhone unit apart to recycle the parts. Apple writes in the filing that "Yet, Qualcomm would charge a royalty on these transactions notwithstanding that they are unrelated to Qualcomm's patents." None of Qualcomm's patents are related at all to smartphone repairs.
As decisions are made in the multiple trials that involve Qualcomm, the company could face major changes to the way it does business not only in the U.S., but globally as well.