Bill, re: Reuters “rebate” narrative................................................................
In this and other AAPL v QCOM articles, AAPL with the first (and often) move advantage has established the “rebate” narrative in the minds of the columnists covering this saga. In the article, “rebate” is used on three occasions.
+ The access to Cue is important because Qualcomm alleges talks between executives at Apple and its rival Samsung Electronics Co Ltd were central to its decision to cut off Apple from a stream of nearly $1 billion in licensing rebate payments.
+ Apple sued Qualcomm early last year, contesting the San Diego-based chipmaker's licensing practices and asking for those rebate payments back. Qualcomm then sued Apple for patent infringement in several countries. As part of the disputes, Qualcomm is also seeking to ban the import of some iPhones it believes are violating its patents.
+ Qualcomm said such a move violated a cooperation agreement it had with Apple and that it stopped sending rebate payments to Apple because of that and other violations of the agreement.
One of the core issues the QCOM attorneys must confront is dispelling AAPL’s contention that QCOM’s payments to AAPL were royalty rebates, since as such it would likely appear that they were in essence tied to the FRAND license rates / terms QCOM (and AAPL) had with the CM’s manufacturing the iPhones. Thus, the “rebates” would give the appearance that the FRAND rate structure, which is supposed to be applied on a non-discriminatory basis (equally ) to all parties, was violated.
QCOM’s approach appears to treat the FRAND rate structure as separate and distinct from other contractual agreements, i.e. their Business Cooperation and Patent Agreement (BCPA) with AAPL. In other words, strictly applying the rates and terms incorporated into a FRAND license to all licensees and defining the other contracted agreements as separate and distinct from the FRAND license itself.
Over the past year or more, it’s been embedded into our heads via the various writings on the subject that QCOM has been in violation of FRAND because it has treated its licensees differently, and in AAPL’s case their royalties have been lower because of the “royalty rebate program” per AAPL’s narrative.
However, we’ve also read over the years that companies that have relevant cellular IPR net out (off-set) their royalty cost via cross-license agreements, and that appears to be widely accepted and justified. It is my understanding that those agreements have been and are separate from the FRAND license itself. So, there must be some form of precedent there. I understand another example is a reduction in cost agreement for early adopters, those that take the added risk of moving before the herd.
So, there appear to be at least two examples of separate contract agreements for reducing the cost of using QCOM IPR that has been accepted industry wide.
Thus, why should it not be argued and favorably accepted that an agreement (BCPA) assuring (paying for) “patent peace” (and other conditions) is a legitimate undertaking especially against a dominant, powerful, recalcitrant entity that has over the years demonstrated its bullying tactics (including litigation / intimidation, etc) in suppressing its suppliers?
And, why should that not also be considered as separate and outside the bounds of the FRAND royalty bearing license itself?
AAPL and others are arguing that the FRAND license and other contracted agreements should be considered in total (bundled) as defining what is and is not non-discriminatory / discriminatory, but one can see that it is not that clear cut as other vital considerations / issues enter into the equation.
Comments from the legal folks on the board appreciated. |
