Apple and Qualcomm waged war over patent royalties for many years, with Apple alleging Qualcomm was charging unfair rates for essential patents. The companies went to court with billions of dollars on the line, but ultimately reached an out-of-court settlement.
Now, it seems Apple will have another player at the negotiation table. Huawei is not just a maker of smartphones, it also owns the largest collection of 5G patents. And now it wants to start making money from them. Via Bloomberg, Huawei is beginning talks with Apple and Samsung to negotiate royalty rates.
During the legal fight with Qualcomm, Apple always said that it was willing to pay reasonable rates for patent licensing. The main issue with Qualcomm is Apple alleged that Qualcomm was charging exorbitant rates for standard essential patents, that it had no choice but to pay.
For its part, Huawei says it intends to charge lower fees for its patent than rivals like Qualcomm and Nokia. That should mean that Apple and Huawei can quietly come to an arrangement behind closed doors, and it won’t be a massive spectacle like the Qualcomm fight became. Nevertheless, Huawei wants to collect patent royalties to get a new revenue stream for its business, measured in billions of dollars.
Apple is widely known to be working on its own in-house modems, in part to reduce the amount of money it has to pay to Qualcomm for every phone sold.
However, the development of an Apple modem does not mean Apple will be able to stop paying anything. As many of the patents at stake describe essential implementations of how all 5G modems work, it is highly unlikely that Apple would be able to create a modem that does not infringe on patent owners like Qualcomm, Nokia, Huawei and others and so some level of royalties will continue indefinitely.
The 2019 settlement means Qualcomm and Apple agreed to a six-year license (with a two year option to extend), which means it can run through 2027. Current rumors expect an Apple-designed modem to be used in the iPhone in 2023 or 2024.
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