Apple and Qualcomm settles their disagreements before trial

Abdelrahman Mohamed, World/Business Editor

On Tuesday, just as a trial had begun in a federal courtroom in San Diego over a suit Apple had filed against Qualcomm, the two companies announced that they settled their disputes. Apple and Qualcomm have been fighting for the past two years on three continents over the division of billions of dollars of smartphone profits.

The two companies agreed to dismiss all litigation between them worldwide. They reached a six-year agreement for Apple to pay unspecified royalties on Qualcomm’s patents. The deal will take effect on April 1. It includes a two-year option for an extension, plus a multiyear agreement for Qualcomm to supply chips to Apple. In addition, Apple will make an undisclosed one-time payment to Qualcomm.

One of the main disagreements was over how Qualcomm charges royalties on patents that it holds on mobile chips. Qualcomm, based in San Diego, had pioneered a type of cellular communications in the 1990s that later became a major component in mobile devices. That allowed it to charge royalties on nearly every smartphone sold, even if the phone did not actually use Qualcomm chips. Apple eventually objected to that arrangement.

The deal announced on Tuesday suggest a partial victory for Qualcomm and its patent-driven business model. Qualcomm’s shares jumped 23 percent after the announcement.