In what is a major financial win, BlackBerry said that it has been awarded a sum of $814.9 million by a court, in an arbitration against Qualcomm. The case was regarding an alleged over payment of royalties on BlackBerry’s part. What’s more, the decision was made in an arbitration case and as such, is binding and can not be challenged.
The whole debate raged over the advance payments BlackBerry made to Qualcomm, regarding the utilization of some of their patents. Once the payments were made, BlackBerry argued that there was supposed to be a cap on royalty payments that wasn’t applied on time. To counter these, Qualcomm said that these payments were supposed to be non-refundable and as such, it wasn’t liable to make any returns.
The case escalated and went into a binding arbitration. The results are out and are in BlackBerry’s favor, making the company liable to receive a significant amount of funds.
Meanwhile, both the companies have refused to elaborate on the matter. Qualcomm has merely said that the sale was associated with subscriber units and BlackBerry is likely getting refunded for the same. Meanwhile, the new is certain to cause a significant low to Qualcomm, which is already facing some significant problems associated with its patents in different parts of the world.
For instance, Apple has filed three different lawsuits against Qualcomm in three different companies. Similarly, the Federal Trade Commission has also filed a lawsuit against the company in association with anti-competitive practices. This is not good considering that the company makes most of its profits through patents. I mean sure, Qualcomm is well known for its chip business. However, a significant chunk of its revenue stems from patent licensing.
Meanwhile, there is still some deliberations to be done. A final amount will be issued on the 30th of May after taking into account things like attorney fee and interest. Following the decision, BlackBerry shares jumped more than 18 percent while those of Qualcomm went down by over 2 percent.
Here is Qualcomm’s perspective on the matter:
Qualcomm Incorporated (NASDAQ: QCOM) announced a binding interim arbitration award requiring Qualcomm to refund a sum of $814.9 million, plus interest and attorneys’ fees, to BlackBerry Incorporated related to royalties for certain past sales of subscriber units. The parties had agreed to arbitrate a contract dispute relating to one specific issue: whether Qualcomm’s voluntary per unit royalty cap program applied to BlackBerry’s non-refundable prepayments of royalties for sales of a specified number of subscriber units from 2010 through the end of 2015.
While Qualcomm does not agree with the decision, it is binding and not appealable. The arbitration decision was limited to prepayment provisions unique to BlackBerry’s license agreement with Qualcomm and has no impact on agreements with any other licensee.