Qualcomm’s Refund to BlackBerry Swells to $940 Million

The final check that San Diego's Qualcomm must write to smartphone maker BlackBerry for overpayment of patent royalties is $940 million.

BlackBerry released the total settlement amount Friday. Qualcomm will make the payment by May 31.

In April, a three-judge arbitration panel ruled that BlackBerry overpaid for patent royalties between 2010 and 2015 after its smartphone sales collapsed.

The refund itself totals $815 million. The arbitration panel also ordered Qualcomm to pay attorney's fees, plus 10 percent interest dating back to 2015.

Qualcomm reduced patent licensing revenue for the March quarter by $974 million as an accrual for the BlackBerry award.

Qualcomm not only makes chips that power smartphones, but also licenses its portfolio of thousands of cellular patents to smartphone makers.

These patent license agreements vary with each smartphone maker. A few handset firms, such as BlackBerry, agree to pay a set amount in advance of device sales -- betting that they'll sell enough smartphones to lower their overall per-device royalty costs.

Wall Street analysts estimate that BlackBerry agreed to prepay Qualcomm between $2 billion to $2.3 billion in patent royalties on smartphone sales from 2010 to 2015.

But when BlackBerry's smartphone sales tumbled amid competition from Apple and Android devices -- dropping from 53 million phones in 2012 to just 7 million in 2015 -- it ended up overpaying.

While prepayments are supposedly nonrefundable, BlackBerry argued that Qualcomm has per-device royalty caps that should apply -- even when a phone maker pays in advance.

The arbitration panel agreed. Its decision is binding and can't be appealed. Qualcomm said the ruling has no impact on agreements with other device makers.

The BlackBerry setback comes as Qualcomm's patent licensing business is increasingly under attack from government regulators and smartphone makers.

Qualcomm has been fined more than $900 million by South Korea's anti-monopoly regulator, which is demanding changes in the way the company...

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