U.S. Markets open in 4 hrs 12 mins

Apple CEO uses sofa analogy to explain Qualcomm lawsuit

Daniel Howley
Technology Editor
Apple CEO Tim Cook broke down his company’s $1 billion lawsuit with Qualcomm using a sofa analogy. (wikimedia)

Apple (AAPL) CEO Tim Cook doesn’t like lawsuits. He’s said as much himself. But he’s throwing the full force of his company behind the suit it recently filed against component maker Qualcomm (QCOM), and isn’t backing down anytime soon.

“I don’t like litigation and view it as a last resort,” Cook said during Apple’s Q1 2017 earnings call. “You should take from our filing that we viewed it as we didn’t see another way forward,” he added.

Apple’s suit revolves around a dispute over how much Qualcomm charges the iPhone maker for the use of its modem chips, which allow the phones to get cellular data.

Apple contends that Qualcomm won’t license its technology to competing manufacturers, which would then be able to make similar chips and sell them at lower prices.

Apple says Qualcomm also forced the company to pay an additional royalty fee on top of the money it pays for chips — essentially “double-dipping.”

Qualcomm denied the allegations during its Jan. 25 Q1 2017 earnings call, with president Derek Aberle saying Apple was driving “regulatory attacks” against his company.

Cook, naturally, sees things just a little differently.

Qualcomm President Derek Aberle shows a watch made with a Qualcomm snapdragon processor during a press conference March 2, 2015. (Reuters/Albert Gea)

“They were insisting on charging royalties for technologies that they had nothing to do with,” the Apple CEO said. “We were in a situation where the more we innovated with unique features like Touch ID… the more money Qualcomm would collect for no reason and the more expensive it would be therefore for us to innovate.”

Cook said the move was the same as, “buying a sofa and you charge somebody a different price depending on the price of the house it goes into.”

In its suit, Apple claims that Qualcomm went so far as it attempt to extort the iPhone maker into changing statements it made about the chip supplier to the Korea Fair Trade Commission in exchange for $1 billion it owes to Apple.

“As a part of their increasingly radical steps they were taking to try to hold up that model, they withheld $1 billion in payments,” Cook explained.

“I don’t like litigation and so if there’s another way then that would be great,” the Apple CEO said. “But at this point I don’t see it. I fully expect at this point in time that it will take some time. In the end I think common sense will prevail and the courts will see it for what it is.”

More from Dan:

Email Daniel at dhowley@yahoo-inc.com; follow him on Twitter at @DanielHowley.