WEBVTT - Bloomberg Law Brief: Qualcomm Sued Over Chip Pricing (Audio)

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<v Speaker 1>And now time for our daily Bloomberg Law Brief, exploring

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<v Speaker 1>legal issues in the news. Today, Bloomberg Law hosts June

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<v Speaker 1>Grasso and Michael Best discuss a lawsuit between Apple and

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<v Speaker 1>Qualcom over Qualcom's pricing structure. They speak to Matt Larson.

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<v Speaker 1>The litigation analysts were Bloomberg Intelligence and Andrea matuition professor

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<v Speaker 1>at Northeastern University. Matt, let's start with the basics. Explain

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<v Speaker 1>why Qualcom is allowed to charge phonemakers like Apple, whether

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<v Speaker 1>or not they use its chips, and what those charges are.

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<v Speaker 1>Certainly so, Qualcom's business is fairly unique. It's it's two fold.

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<v Speaker 1>The first part is the chip sets. They sell chips

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<v Speaker 1>that um they go into wireless devices and basically allow

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<v Speaker 1>the phones to communicate with with radio and wireless networks.

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<v Speaker 1>And the other half of their business, um about a

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<v Speaker 1>third of their business by revenue realistically, is patent licensing.

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<v Speaker 1>So Qualcom invests a tremendous amount of money and doing

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<v Speaker 1>research and development and then participates in standard setting organizations

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<v Speaker 1>that essentially dictate what kind of technologs are going to

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<v Speaker 1>be put into three G standards, four G l t

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<v Speaker 1>e UM. You know there are groups talking about five G.

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<v Speaker 1>So Qualcom participates in these groups. It contributes the technology

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<v Speaker 1>that it's done, that it's developed through its research programs,

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<v Speaker 1>and then in turn, once companies start implementing those technologies, UH,

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<v Speaker 1>Qualcom asks for compensation in the form of patent licensing.

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<v Speaker 1>So it says, we'll let you use these technologies. UH.

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<v Speaker 1>In fact, you have to use them because they're required

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<v Speaker 1>to communicate with other devices, and in return, you pay

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<v Speaker 1>us licensing fees for the use of our patented tech.

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<v Speaker 1>So Andrea, before we get to Qualcom's lawsuit that follows

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<v Speaker 1>on the heels of a lot of litigation by Apple.

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<v Speaker 1>So what what is Apple suing Qualcom about. They're allegedly

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<v Speaker 1>not getting a stream of payments back from Qualcom in

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<v Speaker 1>accordance with what were the previously stipulated deal terms pursuant

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<v Speaker 1>to their agreements, which the court will undoubtedly dig into

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<v Speaker 1>the minutia of those contracts and will learn a lot

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<v Speaker 1>about the nature of this relationship as the case moves forward.

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<v Speaker 1>And so this relationship between Apple and Qualcom also was

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<v Speaker 1>part of the concerns that are reflected in the Federal

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<v Speaker 1>Trade Commissions Recent and Activity filing. UH against Qualcom in California,

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<v Speaker 1>accusing Qualcom of anti competitive practices and violation of Section

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<v Speaker 1>five of the Fair Trade of the FTC Act as well.

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<v Speaker 1>That is Andrea Matuien, the professor at Northeastern University, and

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<v Speaker 1>Matt Lawson, a litigation analyst for Bloomberg Intelligence, speaking to

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<v Speaker 1>Bloomberg Law host Grosso and Michael Best. You can listen

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<v Speaker 1>to Bloomberg Law weekdays at one pm Wall Street Time

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<v Speaker 1>here on Bloomberg Radio Now. Among the top legal stories

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<v Speaker 1>have thou put that ban on hold. And that's this

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