The front page headline of the Wall Street Journal* blared the news: “Apple, Qualcomm End Legal Feud.” But the Journal declined to speculate how much money Apple will pay for the 4G, LTE, and 5G technologies patented by Qualcomm.
“Undisclosed payment,” indeed. The stock market, though, has an uncanny knack for valuing deals. Qualcomm’s market capitalization jumped about 20%–for its best day in 20 years–with a gain of about $14.5 billion to reach more than $84 billion.
What’s a few billion between friends? Make no mistake: The vendor Qualcomm and the customer Apple need each other desperately. Qualcomm’s 5G technology is almost priceless to the company formerly known as Apple Computer; it takes more than round corners and a pretty face to compete in the rarefied world of telecom. And where would Qualcomm be without the iPhone maker to buy its chips and pay its royalty fees?
Yes, Apple and Qualcomm have a symbiotic relationship. And friends don’t let friends drive for the last word from a jury. Opening statements were made. More could and would have been said, under oath, with documentary evidence for added proof and multimedia visuals for extra zing. Both parties were ready to present their cases. If trial had proceeded, many sensitive details would have been shared under bright lights, captured by court reporters, and published by the press.
The two chief executives—the collaborative leader Tim Cook of Apple and the quiet man Steve Mollenkopf of Qualcomm—were expected to testify. Wouldn’t we love to hear what they were ready to state under oath? Aye, that’s one good reason to settle! That and fear of an adverse outcome. Courts, after all, are limited in the remedies they can fashion. But parties can be creative in structuring a deal to take into account their many interests—some shared, others divergent.
As a patent attorney and trial lawyer, here’s the main lesson I draw from Telecom Patent Litigation for Dummies: When you invent and improve red-hot technologies, you must patent your innovations, and you must enforce your patents against big-time infringers—even against your biggest customer, if necessary.
Apple did Qualcomm a favor by throwing down the gauntlet in court, thereby sparing seller Qualcomm from the unpleasant act of suing its best customer Apple for failure to pay up.
Apple wanted to renegotiate its deal with Qualcomm. The escalating payments were amounting to far more than anyone ever imagined. Yet Apple, having litigated its own patents to the nth degree against behemoth Samsung, also knew that Qualcomm had no alternative but to enforce its intellectual property.
Both parties were street-smart in preparing their respective cases for trial. And both parties were smart to settle their differences before the jurors settled into their seats.
Here’s the benediction sought by Apple and Qualcomm: May the force of 5G be with them! They’ll need all the strength they can muster as they march arm-in-arm to do battle with their competitors.
*WSJ, Apr. 17, 2019 (print ed.).