Apple likens Qualcomm chips to fried chicken as trial begins

FILE PHOTO: A surveillance camera is seen outside an Apple store in Beijing, China December 12, 2018. REUTERS/Jason Lee/File Photo

SAN DIEGO, Calif. (Reuters) – A trial opened Tuesday in a complex contract and anti-trust dispute between Apple Inc and Qualcomm Inc with the iPhone maker using a fried chicken analogy to explain its claim that the chip company is abusing its market power.

Tens of billions of dollars and the fate of Qualcomm’s business model are at stake in the case. Apple alleges that Qualcomm engaged in illegal patent licensing practices to maintain a monopoly on the market for premium modem chips that connect smart phones to wireless data networks.

Qualcomm in turn says Apple uses innovations that Qualcomm spent billions to develop without proper compensation and that Apple has interfered in Qualcomm’s longstanding business relationships.

A jury of three women and six men will hear the case over five weeks in the San Diego federal courtroom of Judge Gonzalo Curiel. On Tuesday, attorneys sought to cut through the technological complexity and frame key elements of the case in terms the jury could understand.

Apple has objected to a practice that it calls “no license, no chips” under which Qualcomm will not sell chips to a company that has not signed a patent license agreement.

Apple attorney Ruffin Cordell likened Qualcomm’s policy to a Kentucky Fried Chicken restaurant that refuses to sell a bucket of chicken to customers.

“You first have to go over to this different counter, KFL – Kentucky Fried Licensing,” Cordell said. “You have to go pay that ‘eating license’ fee before they’ll sell you any chicken.”

Qualcomm had not yet given its arguments as of mid-morning, but the company has argued in court papers that its portfolio of 130,000 patents contains technologies used by virtually all mobile devices.

The company’s position is that mobile phone makers need a license to its patents regardless of whether they choose its chips and that it has followed longstanding industry practices by charging a license fee as a percentage of a device’s adjusted selling price.

Reporting by Stephen Nellis in San Diego; Editing by Cynthia Osterman

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