Qualcomm settles with investors for $75 million payment over licenses
Shareholders have sued Qualcomm over its business model with chips and licenses. The company is prepared to reach an agreement with a payment in the millions.
(Image: Sundry Photography/Shutterstock.com)
Qualcomm is prepared to settle a lawsuit filed by investors with a payment of 75 million US dollars. The chip manufacturer has agreed on this sum with its shareholders. The presiding judge only has to approve the settlement. The investors have accused Qualcomm of fraudulent business practices in the years 2012 to 2017, which were intended to artificially inflate the share price.
Qualcomm had always claimed that chip sales and the licensing of technology patents were separate business areas. However, the company had also made licensing dependent on the interested licensee simultaneously purchasing Qualcomm's chips, such as wireless modems for mobile devices. In addition, Qualcomm had refused to grant licenses to competitors in the chip business.
Apple and US regulator unsuccessful
These were also the allegations made by Apple and the US regulatory authorities in their proceedings against Qualcomm. All mutual lawsuits were subsequently dropped and a patent agreement was concluded. At the beginning of 2021, the US competition authority also gave up the fight against Qualcomm. It had accused the company of violating antitrust law with its business model involving chips and licenses.
The investors have thus achieved what Apple and the competition authorities failed to do, namely get Qualcomm to pay up due to its business practices. However, the company was not found guilty in this lawsuit either. On the contrary: Qualcomm and six personally named defendants, such as former CEOs Paul Jacobs and Steven Mollenkopf, deny any wrongdoing as part of the settlement, reports Reuters.
Investors benefit from Qualcomm's business practices
Qualcomm's alleged artificial influence on the share price did not harm shareholders anyway. Following Apple's lawsuit, Qualcomm's share price fell by 13 percent on the first day. However, the share price recovered in the course of the proceedings and was higher than before following the settlement between the two companies, meaning that every investor who kept their Qualcomm shares can be described as a stock market winner. This was also one of Qualcomm's counter-arguments in the proceedings.
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On June 26, 2024, the competent district court in San Diego, where Qualcomm has its headquarters, will deliberate on the preliminary settlement between the plaintiffs and the Group under the direction of Judge Jinsook Ohta. At the beginning of October, around 100 days after the preliminary settlement, it is to be finally heard and confirmed by the court. The investors have until mid-November to claim their share of the settlement payment.
The proceedings are pending in the US District Court for Southern California under case number 3:17-cv-00121-JO-MSB.
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