Qualcomm must refund nearly $815 million in overpaid royalty fees to BlackBerry, according to the settlement of an arbitration action announced on Wednesday.
Continue Reading Below
BlackBerry, which made some of the hottest smartphones on the market in the pre-iPhone era, will get $814,868,350 from Qualcomm as part of the settlement, in addition to interest and attorneys' fees that will be determined at a hearing next month. The decision is the latest setback for Qualcomm, which has been the recipient of a lawsuit from Apple and the subject of multiple government investigations into its business practices.
BlackBerry's agreement to use Qualcomm's modems and other technology in its smartphones involved a bulk prepayment of royalty fees based on the expected sales volume of the devices, according to the San Diego Union Tribune. But BlackBerry's smartphone sales fell to just 7 million devices in 2015, down from 53 million in 2012.
"When BlackBerry structured the deal, management had expected higher smartphone shipment volumes but ended up overpaying when units collapsed," industry analyst Tim Long told the Tribune. BlackBerry, which no longer makes smartphones but still partners with Qualcomm on products for the automotive industry, said in a statement that the settlement will not strain the companies' relationship.
For its part, Qualcomm said it does not agree with the decision, which is binding and cannot be appealed. The company said in a statement that the settlement has "no impact on agreements with any other licensee."
The settlement comes after Apple sued Qualcomm in January for $1 billion, claiming that the component manufacturer withheld contractually obligated payments in retaliation for Apple's cooperation with a Korean investigation into Qualcomm's business practices. Qualcomm countersued Apple on Tuesday, denying those claims and alleging that Apple intentionally decided not to use the full performance of Qualcomm's modem chips in the iPhone 7.
Qualcomm is also facing an investigation from the Federal Trade Commission, which accused the company of using anticompetitive tactics to impose unfair conditions on its customers and weaken its competitors.