Opening Statement

April 16, 2019

Case No. 3:17-cv-0108-GPC-MDD (S.D. Cal.)
Apple Breached BCPA Section 4

JTX007 at ’6633

2
In August 2017, Foxconn Admitted Its SULA Is Valid

DTX10662 at ’8296

DTX10688 at ’8675

DTX10689 at ’8678
3
Apple Made the CMs Stop Paying

DTX01470 at ’1769
4
 Apple Controls What the CMs Say and Do

DTX01193 at 4 DTX01194 at 4 DTX01195 at 4 DTX02588 at 4

“(f) [CM] does not settle any such claim or allegation, or make any admissions of liability or
admissions relevant to the claim or allegation (related to the Goods), or take any other
action that [CM] knows or should reasonably know will harm Apple’s position(s) with respect
to the claim or allegation, without Apple’s prior written permission.”

5
 Apple’s Goal

DTX09321 at ’6741
DTX09321
6
Apple Wants To “Devalue SEPs”

DTX09313 at ’1936

7
Apple Was “Creating Evidence” for This Lawsuit

DTX09352 at 28

DTX09352 at ’7502

DTX09352 at ’7483

DTX09352 at ’7484

DTX09352 at ’7487
8
What Apple Says About Nokia’s Patents

DTX00431 at ’0559

DTX00431 at ’0564
9
What Apple Says About InterDigital’s Patents

DTX02334 at ’5356
10
What Apple Says About Qualcomm’s Patents

DTX09324 at ’9885

11
Apple Wanted To “Hurt Qualcomm Financially”

DTX09321 at ’6742

12
Apple Needed Wistron’s Support To Stop
Royalty Payments to Qualcomm

***

“[Apple] needs [Wistron's] support to stop license fee payment upon

[receiving] notification from Apple. . . . [Wistron] will be facing below
consequences by any mobile technology Licensor (mainly Qualcomm) if
we stop payment upon [Apple's] notification: . . . Breach the agreement we
had with [Qualcomm] which may result in agreement termination. . . . If
[Wistron] refuses to pay the royalties due, [Qualcomm] will enforce the
license agreement in . . . court . . . and we may have to pay all of the
royalties due plus . . . interest[], and the legal fees . . . .”

DTX01350 at 4
13A
Apple Knew Its Plan Was Tortious Interference

DTX09321 at ’6746

14
Apple Switched to Intel To Exert “Commercial Pressure”

DTX09317 at ’1876

15
Apple Waited To Sue Qualcomm Until the BCPA and TA Expired

DTX09317 at ’1884

17A
 Timeline of CMs’ SULAs
February 10, 2000
Compal Signed
October 18, 2005
Foxconn Signed
May 23, 2007 April 29, 2010
Wistron Signed Pegatron Signed

2000 2002 2005 2006 2007 2008 2009 2010 2011 2012 2014

2007 2011
Apple releases Apple first uses
first iPhone Qualcomm chips in
its iPhones

18
 Compal SULA, First Chip Purchase from Qualcomm,
and Market Power Allegations
February 10, 2000
Compal Signed SULA

2000 2002 2004 2012 2017

2002
Compal first buys
Qualcomm chips
“Premium LTE”: 2012-2017

Alleged Market Power

CDMA: 2004-2017

19
Apple Admitted Qualcomm Has the “Strongest Patent Portfolio”

DTX00431 at ’0559

DTX00431 at ’0564

21
Cellular LTE “Unleash[es] the Power” of the iPhone

“[T]he LTE rollout with India just really began this year, and
so we’ll begin to see some really good networks coming on
in India. That will unleash the power and capability of the
iPhone in a way that an older network, a 2.5G or even
April 26, 2016 some 3G networks, would not do.”

- Tim Cook, Chief Executive Officer, Apple, Inc., DTX01146 at 12

24
Apple Says Qualcomm Is the Best

***

DTX00088 ’4854

25
Average Modem Chip Price by Standard

26
Mobile Device Downlink and Uplink Speeds

27
Total Annual Mobile Data Traffic

28
 The Cost of Data Is Decreasing
Price per GB of Cellular Data in U.S.
$50 $47

$45

$40 $37

$35

$30 $29

$25
$25

$20
$15
$15
$10
$10
$7
$6
$5

$0
2010 2011 2012 2013 2014 2015 2016 2017

29
 iPhone Net Sales Since FY 2011
$180 $180
billion
$167B
$160 $160
billion $155B
$137B $141B
$140 $140
billion

$120 $120
billion
$102B
$100 $100
billion $91B
$79B
$80
$80 billion

$60
$60 billion
$46B
$40 billion
$40

$20 billion
$20

0
2011 2012 2013 2014 2015 2016 2017 2018

30
iPhone “Ecosystem” Revenue for FY 2017
iPhone Sales

Services
(estimated allocation to iPhone)
iPhone Accessories
(estimated allocation to iPhone)

$141 billion $20 billion $1 billion

31
 iPhone Revenue vs. Royalty Revenue
$180
$180 billion
Apple’s iPhone Net Sales During Fiscal Year
$160
$160 billion

$140
$140 billion

$120
$120 billion

$100
$100 billion
2017 - Apple stops
$80
$80 billion paying for
Qualcomm’s royalties
$60
$60 billion

$40
$40 billion

$20
$20 billion
Qualcomm Royalties on Apple Devices1
$0
$0
2011 2012 2013 2014 2015 2016 2017 2018 1PTX011221

33
 Apple Dwarfs Qualcomm (FY 2017)
Apple total cash vs.
Qualcomm total cash Apple net sales vs.
Qualcomm net sales

Apple net income vs.

Qualcomm net income

$48 billion $2 billion $269 billion $39 billion $229 billion $22 billion

36
Apple Locked in Chip Supply Before Striking

***

DTX09317 at ’1884

38
Apple Ensured that Qualcomm’s Supply Commitment Applies Even if
the CMs Stopped Paying

JTX009 at ’3668

39