Team Sponsorship: Advantages and Disadvantages
In the previous articles, we have already come across the concept of team sponsorship. We have seen how teams can sell different types of sponsorships in order to raise money. This definitely ends up increasing the cash flow as well as the return on investment for the team. It also generally provides a positive return […]
Lessons Learned in Behavioural Finance
In the past few articles, we have studied about how behavioral finance impacts financial markets more than one might believe. When the subject of behavioral finance was first created, it was thought of as being an unimportant subject. It was perceived as being a cross between financial theory and psychology. However, over the years, behavioral […]
Separation of Investing and Financing Decisions
We have already seen that there are a lot of differences that arise between what we have learned in accounting and how we use it in corporate finance. The separation of financing and investing decisions is one such important concept. It is important because we have to make a very important adjustment based on this […]
Precedent Transaction Analysis
Investment bankers use several different types of methodologies while arriving at the valuation of a company. One of the most commonly used analysis is called precedent transaction analysis. What is Precedent Transaction Analysis? Precedent transaction analysis is a relative valuation methodology, just like comparables analysis. This means that these methodologies do not derive the value […]
Financial and Economic Models used in the Equity and Currency Markets
We often read about how electronic and software based trading is the norm in stock or equity markets as well as currency and other financial markets. Indeed, anyone who is remotely connected with the stock market or for that matter any financial market would know that there are trading systems and trading software that help […]
Apple Inc. is the largest and the most profitable company in the entire world. However, of late, it has also found itself in the middle of several lawsuits. The company has been facing a legal battle with Spotify of late.
However, none of the legal battles even come close to the legal drama that is unfolding between Apple and Qualcomm. The two companies have been involved in a barrage of suits and countersuits across various countries.
Apple is suing Qualcomm for over $1 billion in the United States. The company has another lawsuit filed against Qualcomm in China for $145 million. Then there is yet another lawsuit which is in process. This one has been filed in the United Kingdom. At the same time, Qualcomm has also filed multiple lawsuits against Apple Inc. in Germany and in China.
In this article, we will have a closer look at the reason behind the legal battle between these two technology giants.
Qualcomm is suing Apple for many reasons. One of them is the fact that according to Qualcomm, Apple agreed to use their patented technology in exchange for a percentage of the revenue derived from the sale of iPhones.
Qualcomm believes that Apple is trying to renege on the agreement and end up paying less than what was agreed upon. On the other hand, Apple believes that Qualcomm is trying to double charge the firm.
On the one hand, Qualcomm makes money when it sells the chips to Apple and then it also charges a royalty on the same. According to Apple, this is an “illegal business model” and is being viewed with suspicion by regulators worldwide.
Qualcomm has been able to enforce its position in some places. For instance, in Germany, the sale of iPhones was banned for sometime, thanks to the Qualcomm lawsuit. The German courts had cracked down on the high handedness shown by the largest corporation in the world.
There is some merit to Qualcomm’s case. This is the reason why the German courts decided to back it up. Similarly, a Chinese court had ordered Apple to stop the sale of the iPhone in China. However, Apple was able to circumvent the ban thanks to their legal team.
Qualcomm has tried to implement a similar ban in the United States as well. It has urged the courts to stop further imports of the iPhone. Qualcomm also wants to ban the sale of iPhones which have already been imported.
Hence, the writing on the wall is clear, Qualcomm has Apple on the backfoot at many places across the world.
Lastly, Qualcomm has also accused Apple of stealing its intellectual property and giving in to Intel. According to Qualcomm, Apple was tired of the pricing power that it had.
As a result, it tried to steal the intellectual property from Qualcomm and give it to Intel. This would result in increased competition between Qualcomm and Intel and also reduced profit for the two companies. Apple would be the direct beneficiary since it would have to pay a lower price.
Apple has also countersued Qualcomm for patent infringement. Apple believes that some of the chipsets which were manufactured by Qualcomm stole technology from Apple. This technology pertained to the improvement of battery life which is achieved by switching off parts of the processor when they are not required.
Apple has also sued Qualcomm for operating an illegal business practice. Apple has reportedly co-operated with Korean regulators to bring the incorrect trade practices being followed by Qualcomm to light.
These lawsuits are having a massive economic effect on both parties. Some of the effects have been listed below:
Qualcomm reportedly punished Apple by not paying $1 billion in rebates after Apple decided to co-operate with Korean regulators. This fact is also being upheld against Qualcomm by regulators in the United States and many other countries.
Your email address will not be published. Required fields are marked *
