After several years of litigation over patents and other matters, Apple and Qualcomm recently announced a settlement. The two communications giants agreed to end a series of international lawsuits.

The case illustrates how important patent protection can be, especially in electronics.

What was the issue?

The issue arose after Apple contested royalty charges from Qualcomm technology in iPhones. The company claimed that Qualcomm was overcharging for the use of its patents.

Qualcomm designs and sells its own chips, but much of its profit has historically come from licensing its extensive patent portfolio.

This initially resulted in a $1 billion lawsuit being filed by Apple in the United States, as well as suits in the U.K. and China.

Qualcomm counter-sued, claiming that phone models iPhone 6 through iPhone X infringed on two of the company’s patents. The patents concerned manipulating photographs and interacting with apps via touchscreen.

Why did Apple settle?

Apple found itself at a disadvantage when it came to the lawsuits. Qualcomm presented a strong case in court, but there was another factor in the settlement. The competitor Apple chose as an alternative to Qualcomm couldn’t provide the needed technology in time.

This made Qualcomm the only supplier able to meet Apple’s requirements. This undoubtedly gave Apple motivation to end the lawsuits. Qualcomm announced that Apple would pay the company at least $4.5 billion to settle.

In addition, the company was able to broker agreeable terms in a 6-year patent-licensing deal with Apple.

The value of patent protection

Qualcomm’s aggressive protection of its technologies, via the establishment of a large patent portfolio, helped the company create a compelling legal and business case in its dispute with Apple. Qualcomm was able to eventually reach a favorable settlement by following a system of constant innovation and protection of their R&D efforts, via patents.

The lawsuits and their resolution demonstrates how vital it is for businesses to manage and protect their research and development efforts via intellectual property protection.