[JURIST] Technology giant Apple [corporate website] filed suit [complaint, PDF] against Qualcomm [corporate website] on Friday seeking $1 billion in damages, alleging that the chip manufacturer demanded unfair terms for use of its technology. In a statement [Forbes report], Apple alleged that Qualcomm, despite being only one of many manufacturers involved in the production of Apple’s iPhone, insisted on onerous and allegedly illegal prices for technology. Apple’s complaint, filed in the US District Court for the Southern District of California [official website], also alleges that Qualcomm took punitive measures against it when Apple cooperated in a South Korean investigation, stating “to protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding nearly $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.” The Apple lawsuit also follows closely behind a suit [press release] filed by the Federal Trade Commission (FTC), based on Qualcomm’s status as the main supplier of modem chips that enable phones to connect to cellular networks. As such, the company has collected licensing fees on nearly every cell phone utilized worldwide, which the FTC alleges is the perpetuation of an illegal monopoly. Qualcomm responded to Apple’s complaint, stating that “it is quite clear Apple’s claims are baseless,” and responded [press releases] to the FTC complaint, stating that it is based on bad law and significant “misconceptions.”

In particular, the FTC alleges [JURIST report] that Qualcomm, a leading supplier of baseband processors, imposed onerous conditions and licensing terms on cellphone manufacturers. According to the FTC, Qualcomm requires cellphone manufacturers to agree to license terms which would require paying higher royalty fees to Qualcomm if the manufacturer uses a competitor’s device and that the company refuses to provide licenses for competitors. The company has faced several other anti-trust lawsuits over the last decade. In December 2008 the US Court of Appeals affirmed a 2007 ruling in part, and vacated in part, against Qualcomm, finding its patents unenforceable [JURIST report]. The court found that by not disclosing relevant intellectual property rights, Qualcomm was engaging in what is known as “patent hold-up” in an effort to prevent competitors from implementing the technology. Broadcom sued Qualcomm in federal court in 2008 asking the court to declare several Qualcomm patents exhausted and unenforceable. That suit was dismissed [JURIST report] in federal court the following year. Also in 2009, a district court dismissed [JURIST report] a consumer class action lawsuit against Qualcomm which claimed that it used patent licensing to adversely affect competition in the CDMA market.