1 00:00:00,080 --> 00:00:03,080 Speaker 1: And now time for our daily Bloomberg Law Brief, exploring 2 00:00:03,160 --> 00:00:06,000 Speaker 1: legal issues in the news. Today, Bloomberg Law hosts June 3 00:00:06,040 --> 00:00:08,879 Speaker 1: Grasso and Michael Best discuss a lawsuit between Apple and 4 00:00:08,960 --> 00:00:13,480 Speaker 1: Qualcom over Qualcom's pricing structure. They speak to Matt Larson. 5 00:00:13,560 --> 00:00:18,040 Speaker 1: The litigation analysts were Bloomberg Intelligence and Andrea matuition professor 6 00:00:18,200 --> 00:00:23,120 Speaker 1: at Northeastern University. Matt, let's start with the basics. Explain 7 00:00:23,160 --> 00:00:27,040 Speaker 1: why Qualcom is allowed to charge phonemakers like Apple, whether 8 00:00:27,160 --> 00:00:30,440 Speaker 1: or not they use its chips, and what those charges are. 9 00:00:31,040 --> 00:00:34,880 Speaker 1: Certainly so, Qualcom's business is fairly unique. It's it's two fold. 10 00:00:34,960 --> 00:00:37,440 Speaker 1: The first part is the chip sets. They sell chips 11 00:00:37,520 --> 00:00:41,040 Speaker 1: that um they go into wireless devices and basically allow 12 00:00:41,080 --> 00:00:44,080 Speaker 1: the phones to communicate with with radio and wireless networks. 13 00:00:44,080 --> 00:00:46,680 Speaker 1: And the other half of their business, um about a 14 00:00:46,720 --> 00:00:50,360 Speaker 1: third of their business by revenue realistically, is patent licensing. 15 00:00:50,400 --> 00:00:53,120 Speaker 1: So Qualcom invests a tremendous amount of money and doing 16 00:00:53,159 --> 00:00:57,440 Speaker 1: research and development and then participates in standard setting organizations 17 00:00:57,480 --> 00:01:00,560 Speaker 1: that essentially dictate what kind of technologs are going to 18 00:01:00,600 --> 00:01:04,040 Speaker 1: be put into three G standards, four G l t 19 00:01:04,200 --> 00:01:06,760 Speaker 1: e UM. You know there are groups talking about five G. 20 00:01:07,440 --> 00:01:11,200 Speaker 1: So Qualcom participates in these groups. It contributes the technology 21 00:01:11,240 --> 00:01:14,720 Speaker 1: that it's done, that it's developed through its research programs, 22 00:01:15,040 --> 00:01:19,319 Speaker 1: and then in turn, once companies start implementing those technologies, UH, 23 00:01:19,400 --> 00:01:23,039 Speaker 1: Qualcom asks for compensation in the form of patent licensing. 24 00:01:23,080 --> 00:01:25,760 Speaker 1: So it says, we'll let you use these technologies. UH. 25 00:01:25,800 --> 00:01:28,600 Speaker 1: In fact, you have to use them because they're required 26 00:01:28,640 --> 00:01:31,360 Speaker 1: to communicate with other devices, and in return, you pay 27 00:01:31,400 --> 00:01:34,199 Speaker 1: us licensing fees for the use of our patented tech. 28 00:01:34,800 --> 00:01:39,800 Speaker 1: So Andrea, before we get to Qualcom's lawsuit that follows 29 00:01:39,840 --> 00:01:43,000 Speaker 1: on the heels of a lot of litigation by Apple. 30 00:01:43,120 --> 00:01:49,280 Speaker 1: So what what is Apple suing Qualcom about. They're allegedly 31 00:01:49,520 --> 00:01:53,440 Speaker 1: not getting a stream of payments back from Qualcom in 32 00:01:53,720 --> 00:01:59,240 Speaker 1: accordance with what were the previously stipulated deal terms pursuant 33 00:01:59,240 --> 00:02:03,520 Speaker 1: to their agreements, which the court will undoubtedly dig into 34 00:02:03,520 --> 00:02:06,920 Speaker 1: the minutia of those contracts and will learn a lot 35 00:02:06,960 --> 00:02:11,160 Speaker 1: about the nature of this relationship as the case moves forward. 36 00:02:11,600 --> 00:02:16,280 Speaker 1: And so this relationship between Apple and Qualcom also was 37 00:02:16,440 --> 00:02:20,040 Speaker 1: part of the concerns that are reflected in the Federal 38 00:02:20,120 --> 00:02:28,000 Speaker 1: Trade Commissions Recent and Activity filing. UH against Qualcom in California, 39 00:02:28,080 --> 00:02:32,080 Speaker 1: accusing Qualcom of anti competitive practices and violation of Section 40 00:02:32,160 --> 00:02:34,640 Speaker 1: five of the Fair Trade of the FTC Act as well. 41 00:02:35,040 --> 00:02:38,720 Speaker 1: That is Andrea Matuien, the professor at Northeastern University, and 42 00:02:38,800 --> 00:02:42,080 Speaker 1: Matt Lawson, a litigation analyst for Bloomberg Intelligence, speaking to 43 00:02:42,160 --> 00:02:45,679 Speaker 1: Bloomberg Law host Grosso and Michael Best. You can listen 44 00:02:45,720 --> 00:02:48,239 Speaker 1: to Bloomberg Law weekdays at one pm Wall Street Time 45 00:02:48,440 --> 00:02:52,280 Speaker 1: here on Bloomberg Radio Now. Among the top legal stories 46 00:02:52,320 --> 00:02:55,320 Speaker 1: from Bloomberg Law, the passenger who was dragged off that 47 00:02:55,440 --> 00:02:58,519 Speaker 1: United Airlines flight earlier this week wants a judge to 48 00:02:58,560 --> 00:03:02,480 Speaker 1: preserve evidence that be used in a case. David Dowell 49 00:03:02,560 --> 00:03:06,160 Speaker 1: has asked that the airline and the city be required 50 00:03:06,200 --> 00:03:10,480 Speaker 1: to preserve surveillance videos, crewe lists, and other information. The 51 00:03:10,520 --> 00:03:14,520 Speaker 1: Department of Homeland Security faces illegal blitz over President Trump's 52 00:03:14,560 --> 00:03:17,680 Speaker 1: travel ban. The a c l U filed thirteen lawsuits 53 00:03:17,960 --> 00:03:21,000 Speaker 1: demanding to see records on how the agency's field offices 54 00:03:21,040 --> 00:03:25,000 Speaker 1: interpreted the ban against certain Muslim majority nations. Federal courts 55 00:03:25,200 --> 00:03:28,640 Speaker 1: have thou put that ban on hold. And that's this 56 00:03:28,680 --> 00:03:31,240 Speaker 1: morning's Bloomberg Lawbrary. If you can find more legal news 57 00:03:31,280 --> 00:03:34,840 Speaker 1: at Bloomberg Law dot com and Bloomberg BNA dot com. 58 00:03:34,880 --> 00:03:39,080 Speaker 1: Attorneys will find exceptional legal research and business development tools 59 00:03:39,120 --> 00:03:42,120 Speaker 1: there as well. Visit Bloomberg Law dot com and Bloomberg 60 00:03:42,400 --> 00:03:44,200 Speaker 1: Bienna dot com for more information.