CRAVATH, SWAINE & MOORE LLP

Gary A. Bornstein (pro hac vice)

gbornstein@cravath.com

Yonatan Even (pro hac vice)

yeven@cravath.com

825 Eighth Avenue

New York, New York 10019-7475

Telephone: (212) 474-1000

Facsimile: (212) 474-3700

KEKER, VAN NEST & PETERS LLP

Robert A. Van Nest 

rvannest@keker.com

633 Battery Street 

San Francisco, CA 94111-1809

Telephone: (415) 676-2289

Facsimile: (415) 397-7188

MORGAN, LEWIS & BOCKIUS LLP

Richard S. Taffet (pro hac vice)

richard.taffet@morganlewis.com

101 Park Avenue 

New York, NY 10178-0060

Telephone: (212) 309-6000

Facsimile: (212) 309-6001

Attorneys for Defendant

QUALCOMM INCORPORATED

Additional counsel listed in the signature 

block 

BOIES SCHILLER FLEXNER LLP

William A. Isaacson, DC Bar No. 414788

wisaacson@bsfllp.com

Karen L. Dunn, DC Bar No. 1002520

kdunn@bsfllp.com

Amy J. Mauser, DC Bar No. 424065

amauser@bsfllp.com

1401 New York Avenue, N.W.

Washington, DC 20005

Telephone: (202) 237-2727

Facsimile: (202) 237-6131

BOIES SCHILLER FLEXNER LLP

Edward H. Takashima, SBN 270945

etakashima@bsfllp.com

401 Wilshire Blvd, Suite 850 

Santa Monica, CA 90401

Telephone: (310) 752-2408

Facsimile: (310) 752-2490

Attorneys for Non-Party APPLE INC.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FEDERAL TRADE COMMISSION

Plaintiff,

v.

QUALCOMM INCORPORATED, a Delaware 

corporation,

Defendant.

Case No. 5:17-CV-00220-LHK-NMC

DEFENDANT QUALCOMM 

INCORPORATED’S AND NONPARTY APPLE INC.’S JOINT 

DISCOVERY STATEMENT

Courtroom: 7, 4th Floor

Judge: Hon. Nathanael M. Cousins 

IN RE QUALCOMM ANTITRUST 

LITIGATION

Case No. 5:17-MD-02773-LHK-NMC

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 1 of 10
1

Defendant Qualcomm Incorporated (“Qualcomm”) and Non-Party Apple Inc. (“Apple”) 

submit this joint statement concerning a dispute over a request seeking certain proposed or actual 

component supply agreements, arising out of subpoenas (the “Subpoenas”) Qualcomm issued to 

Apple on May 18, 2017 and June 1, 2017 in the above-captioned cases (the “FTC Action” and 

the “MDL Action” respectively, and together the “Actions”).1 Qualcomm and Apple have met 

and conferred by telephone nine times but have been unable to reach agreement on this request.2

I. Qualcomm’s Position

Agreements between Qualcomm and Apple regarding the supply of baseband processors 

for use in Apple’s cellular devices are a key issue in both Actions. (See Compl. ¶¶ 116-130, FTC 

Action (Jan. 17, 2017), ECF No. 1; Compl. ¶¶ 96-117, MDL Action (July 11, 2017), ECF 

No. 94.) Both the FTC and the MDL plaintiffs (together, “Plaintiffs”) allege that Qualcomm 

provided financial incentives to Apple conditioned on Apple’s exclusive use of Qualcomm 

baseband processors in new iPhones and iPads—and that those agreements harmed competition 

in alleged baseband processor markets. (Id.) In its defense, Qualcomm will prove (among other 

things) that there were legitimate business justifications for the contested terms, including costly 

up-front investments Qualcomm had to make to supply products that met Apple’s demands. 

Qualcomm will also prove that—contrary to Plaintiffs’ allegations—Apple willingly agreed to 

and in some instances affirmatively suggested the terms that Plaintiffs now challenge. Apple’s 

consideration of comparable agreements for other components is squarely relevant to these 

claims and defenses. Such other proposed or actual supply agreements are relevant to assessing 

the business justifications for Apple’s agreements with Qualcomm. They are also relevant to 

assessing the credibility of the claim that Apple was coerced into those agreements, or if it was 

following a practice it has pursued with other suppliers to maximize available discounts.

Request No. 45 in the MDL Action Subpoena (No. 43 in the FTC Action Subpoena)—as 

limited by Qualcomm during the meet-and-confer process—seeks:

“Documents sufficient to show pricing structures proposed to, proposed by or 

considered by Apple for components other than Baseband Processors, for actual 

or potential use in Apple Cellular Devices, in which pricing or related terms were 

conditioned on: (1) exclusive supply of the component(s) from a particular 

supplier; (2) supply of a particular percentage of Apple’s demand for the 

component(s); or (3) any other arrangement where Apple’s satisfaction of a 

purchasing threshold (whether based on volume, revenue or otherwise) affects the 

price of any component procured by Apple before hitting such threshold (whether 

by applying a retroactive discount to such component, through the payment of a 

rebate or lump sum, through a true-up mechanism or through any other 

mechanism affecting the effective price of pre-threshold components) (i.e., any 

arrangement akin to a retroactive rebate).” (Ex. 8 at 5.) 

Apple initially refused to produce any documents in response to this Request and still objects to 

producing many of the documents sought. It has agreed to produce only documents sufficient to 

show pricing structures it has entered into for Apple Cellular Device components other than 

Baseband Processors where pricing is (i) “conditioned on exclusivity” (Ex. 7 at 4) or (ii) based 

 

1 The Subpoenas overlap in all respects relevant to this joint statement.

2

See Declaration of Gary Bornstein (“Bornstein Decl.”), dated August 11, 2017, Ex. 3 at 6; id. Ex. 4 at 5; id. Ex. 5 

at 9-10; id. Ex. 6 at 8-9; Ex. 7 at 4; Ex. 8 at 5; Ex. 9 at 3-4. All exhibits cited in this submission are exhibits to the 

Bornstein Decl.

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 2 of 10
2

on “certain types of volume[] arrangements that are similar to exclusive supply agreements”.

(Ex. 9 at 4.) Apple’s proposed production would exclude important, relevant documents.

First, Apple seeks to exclude documents sufficient to show relevant pricing structures 

that were “proposed to, proposed by or considered by” Apple but not agreed upon. Documents 

sufficient to show circumstances in which Apple itself proposed such pricing structures are 

plainly relevant to determining whether the agreements at issue resulted from Apple’s own 

supply practices and/or buying power. Similarly, documents sufficient to show prospective 

suppliers’ proposals to Apple are relevant to assessing the business justifications behind such 

pricing structures. These documents will be particularly important for the cross-examination of 

any Apple witness who testifies about Qualcomm’s purported coercion of Apple.

Second, Apple seeks to limit the Request to agreements where pricing is conditioned on 

strict exclusivity or includes volume pricing structures “that are similar to exclusive supply 

agreements”. (Ex. 9 at 4.) This limitation is too strict. Pricing structures with retroactive 

rebates or other retroactive benefits—even without purchasing thresholds “similar to 

exclusivity”—are often grounded in the same business justifications that underlie Qualcomm’s 

agreements with Apple, i.e., the seller’s need for some assurance of sufficient sales volumes to 

recoup relationship-specific investments and justify the buyer’s discounted pricing demands. 

Documents sufficient to show such proposals or agreements—for any type of component—are

relevant to show that other suppliers have pursued or been offered contractual terms that provide 

such assurances due to the substantial investments and favorable terms demanded by Apple. A 

limitation allowing Apple to produce only agreements that are “similar to exclusive” agreements 

would allow Apple, in its sole discretion, to rely on a vague distinction to exclude relevant 

proposals or agreements that show Apple was not coerced by Qualcomm. It would also allow 

Apple to exclude proposals or agreements demonstrating that other suppliers, when faced with 

similar demands from Apple, were motivated by the same legitimate business rationales 

justifying the agreements challenged in the Actions.

Apple’s burden argument is also meritless. First, Qualcomm seeks only documents 

“sufficient to show” the identified agreements, as opposed to all documents concerning those 

agreements. Second, any burden can be addressed through negotiation of custodians and search 

terms, which Qualcomm has sought to do for many weeks.3 As it stands, however, Apple has 

said that even if it came across responsive documents in the course of its custodial review, it still 

would not produce them. Apple’s assertion below that “adding the generic pricing search terms 

necessary to collect documents responsive to this request would vastly increase the number of 

documents that Apple would need to review” is without basis. To date, Apple has been 

unwilling to consider, let alone negotiate, any search for the documents at issue. And Apple has 

not provided Qualcomm or the Court any facts as to the number of documents it would have to 

review to respond to this Request. Nor has Apple provided any information about the existence 

 

3 Qualcomm has requested that Apple propose search terms for over a month, so that Qualcomm and Apple can 

discuss those terms and assess Apple’s burden of compliance. Apple has repeatedly represented that it would 

provide the terms “shortly” or “in a matter of days”. However, to date, despite reaching agreement on the scope of 

production for most of the Requests, Apple has not shared any proposed search terms with Qualcomm—even though 

it has prepared terms on a Request-by-Request basis (and could have provided Qualcomm with terms relating to this 

Request). For weeks, Apple has said that it is “running metrics” on its search terms but has been unwilling to 

provide them to Qualcomm. Until writing footnote 5 below, Apple had not even agreed to a date by which it will 

provide the terms. Likewise, for over a month, Qualcomm has repeatedly asked Apple to provide organizational 

charts or employee directory information to facilitate the discussion of appropriate document custodians. Apple still 

has not produced any such information and did not agree to a date by which it would do so until writing footnote 5.

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 3 of 10
3

of centralized repositories from which it could collect documents sufficient to show responsive 

agreements. Therefore, Apple’s burden argument on this Request is unsubstantiated.

Compromise Position: If the Court disagrees with Qualcomm’s position above, 

Qualcomm proposes limiting: (1) responsive agreements proposed to Apple by prospective 

suppliers to proposals for 15 components to be designated by Qualcomm, and (2) all responsive

agreements to those with a 40% or greater purchasing threshold.4 As limited, this Request would 

seek “Documents sufficient to show pricing structures executed or proposed by Apple for 

components other than Baseband Processors, and pricing structures proposed to Apple for 15

specific components to be designated by Qualcomm, for actual or potential use in Apple Cellular 

Devices, with pricing or related terms (1) that were conditioned on exclusive supply of the 

component(s) from a particular supplier, or (2) under which Apple’s satisfaction of a purchasing 

threshold of 40% or greater (whether based on percentage of Apple’s demand for the 

component(s), a volume threshold expected to equal or exceed 40% of total units purchased by 

Apple, a dollar threshold expect to equal or exceed 40% of Apple’s expenditures on the 

component, or otherwise) affects the price of any component procured by Apple before hitting 

such threshold (whether by applying a retroactive discount to such component, through the 

payment of a rebate or lump sum, a true-up mechanism or any other mechanism affecting the 

effective price of pre-threshold components) (i.e., any arrangement akin to a retroactive rebate).”

II. Nonparty Apple’s Position

Qualcomm seeks documents sufficient to show any pricing structures (actual, proposed, 

or contemplated) for iPhone and iPad components other than baseband processors, where 

“pricing or related terms were conditioned on exclusivity or on Apple’s satisfaction of specified 

purchasing thresholds (whether based on volume, percentage, revenue or otherwise).” (Ex. 2, 

Req. No. 45; Ex. 1, Req. No. 43.) Notably, this request solely concerns components other than

the baseband processors at issue in the N.D. Cal. actions. Moreover, Qualcomm is demanding 

information about pricing structures Apple never entered into, components Apple never 

purchased, and all pricing based on volume thresholds, without any attempt to limit its request to 

agreements with exclusivity or de facto exclusivity provisions similar to those found in the 

contracts between Apple and Qualcomm. Apple has agreed to produce documents regarding 

actual pricing structures for components in its Cellular Devices where pricing or related terms 

are based on exclusivity. (Ex. 7 at 4.) To the extent any pricing structures for components other 

than baseband processors could possibly be relevant, Apple’s agreed-upon production is 

proportional to the needs of the N.D. Cal. actions. The remainder of this request is 

disproportional to the needs of the N.D. Cal. actions and would place undue burden on Apple.

First, Qualcomm is demanding documents concerning pricing structures that were merely 

proposed or contemplated (rather than entered into) by Apple, claiming they would have bearing 

on whether Apple was coerced into entering into exclusive or quasi-exclusive pricing structures 

with Qualcomm for baseband processors. (Ex. 6 at 8.) Apple has released dozens of separate 

iPhone and iPad models over the last decade, each containing hundreds of individual 

 

4 Apple’s claim that a 40% threshold is far “from quasi exclusivity” is a red herring. Any retroactive rebate would be 

relevant to show the business justifications raised by Qualcomm, i.e. suppliers’ need to ensure certain sales levels to 

justify Apple's investment and pricing demands. Qualcomm's proposed 40% threshold is meant merely to exclude 

de minimis thresholds in the spirit of compromise, given Apple's objection. Apple has made no representation that 

it has a significant number—or any number—of agreements with thresholds at any particular level, and therefore 

cannot credibly argue that the proposed limit would add burden. The proposed 15-component limit on supplier 

proposals will also alleviate any claimed burden.

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 4 of 10
4

components. As a result, Apple has actually procured at least thousands of components for its 

cellular devices—and considered procuring countless more. Apple has already agreed to produce 

documents concerning any exclusivity-based pricing structures it entered into, but this request 

would call on Apple to review every pricing proposal for thousands of components, including 

both proposals made in negotiations and one-way offers from prospective suppliers, and 

determine whether those proposals made any reference to exclusivity or threshold-based pricing. 

This request is grossly disproportional to the needs of the case. 

Second, Qualcomm is demanding documents that concern “pricing or related terms [that] 

were conditioned on Apple’s satisfaction of specified purchasing thresholds (whether based on 

volume, percentage, revenue or otherwise).” Although proposed or contemplated pricing terms 

regarding exclusivity could be relevant to the case (particularly with regard to baseband 

processor pricing terms), the same is not true for volume-based pricing structures (or other 

threshold-based pricing structures). To the extent those pricing structures are not exclusive or 

quasi-exclusive, they do not have any relevance here. 

Qualcomm contends that such pricing structures are relevant because they are “often 

grounded in the same business justifications underlying Qualcomm’s agreements with Apple, 

i.e., the seller’s need for some assurance of recouping relationship-specific investments incurred 

to meet the buyer’s demands.” But Apple has already agreed to produce documents that would 

go to this issue, at least with regard to the baseband processors that are actually relevant in the 

N.D. Cal. actions. Specifically, MDL Request Nos. 24–29 require Apple to produce “All 

Documents” concerning Apple’s requirements for baseband chipsets, and suppliers’ readiness to 

meet those requirements across a number of different metrics. (Ex. 2., Reqs. Nos. 24–29.) And 

Request No. 31 requires Apple to produce “All Documents Concerning any Agreement or 

potential Agreement Concerning the proposed or actual procurement of Baseband Processors for 

use in Apple Cellular Devices, including but not limited to any Agreement or potential 

Agreement with a Third Party providing Apple with any payment discount, rebate or other 

benefit conditioned on the consideration or use of Baseband Processors (or some threshold of 

Baseband Processors) from that Third Party in Apple Cellular Devices. (Id., Req. No. 31) Apple 

has agreed to all of these requests, which will provide Qualcomm the information it seeks for the 

relevant product: baseband chipsets.

Qualcomm has not been willing to reduce the potentially enormous burden on Apple by 

limiting its request to pricing structures similar to those at issue in these actions. For example, 

Apple asked whether Qualcomm would limit its request to pricing structures conditioned on 

exclusivity or volume thresholds rising to the level of de facto exclusivity, as opposed to other 

volume-based pricing structures that are irrelevant here. See W. Parcel Exp. v. United Parcel 

Serv. of Am., Inc., 190 F.3d 974, 976 (9th Cir. 1999) (upholding volume-based discounts that do 

not “preclude competition”). In response, Qualcomm agreed only to limit its request to pricing 

terms conditioned on (1) exclusivity, (2) volume percentages, or (3) retroactive volume-based 

rebates. (Ex. 8 at 5.) But this “limitation” does not meaningfully change the scope of the 

documents Apple would have to collect and review, because Apple would still need to produce 

documents concerning pricing structures with any volume percentages and any retroactive 

rebates, even if the volume threshold was extremely low (e.g., 5%). Such pricing structures do 

not have any relevance to the N.D. Cal. actions. Searching and reviewing all of Apple’s actual, 

proposed, and considered pricing structures for such volume conditions would therefore be 

disproportional to the needs of the case and unduly burdensome.

Nonetheless, Qualcomm argues that its request will impose little burden on Apple 

because Qualcomm seeks only documents “‘sufficient to show’ the identified agreements” (or 

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 5 of 10
5

proposed agreements) “as opposed to all documents concerning those agreements.” But as noted 

above, the number of components Apple actually procures (let alone considers procuring) for its 

Cellular Devices is in the thousands. Accordingly, Apple negotiates with a large number of 

suppliers, and the terms and pricing structures that are proposed by those suppliers are diverse. 

Searching for and reviewing references to pricing structures that would (a) fit within 

Qualcomm’s (irrelevant) categories of volume percentages and retroactive volume-based rebates 

and (b) be representative of any responsive pricing structure ever discussed, even in passing, 

would be an enormous undertaking. 

Qualcomm also argues that the burden of this request will be minimal because the parties 

have agreed to conduct the review using agreed-upon custodians and search terms.5 But unless 

Qualcomm is willing to agree that Apple would not need to run search terms directed at this 

request, and further agree that Apple would not need to conduct any search for responsive 

documents outside of custodial files, Qualcomm’s argument is disingenuous. Apple has 

proffered several high-level custodians involved in iPhone and iPad procurement (including 

Apple’s Chief Operating Officer and its Vice President of Procurement), and adding the generic 

pricing search terms necessary to collect documents responsive to this request would greatly 

increase the number of documents that Apple would need to review. Likewise, searching for the 

non-custodial documents that would allow Apple to produce even documents “sufficient to 

show” the various pricing structures proposed to or by Apple (or actually entered into) would be 

extremely burdensome. There are no “centralized repositories” containing all of Apple’s 

component contracts, let alone repositories containing all draft contracts and supply negotiation 

documents.6

Apple remains willing to produce documents responsive to this request to the extent they 

are relevant and proportional to the needs of the case. But the scope of Qualcomm’s current 

request is staggering, particularly Qualcomm’s demands for documents concerning pricing 

structures never entered into, and for pricing structures that are irrelevant to those at issue in 

these actions.

Apple’s Response to Qualcomm’s Proposed “Compromise”: While Qualcomm’s 

proposal would reduce Apple’s burden to some extent, it does not justify the remaining burden or 

cure the defects inherent in Qualcomm’s Request. Qualcomm still demands irrelevant documents 

about non-baseband components that are not at issue in the N.D. Cal. actions. Qualcomm does 

not attempt to justify the relevance of the 15 components and has instead refused to identify the

components until after the parties file this joint submission. Moreover, Qualcomm’s proposed 

volume threshold of 40% remains far removed from any quasi-exclusive level comparable to the 

exclusive or quasi-exclusive Apple-Qualcomm contracts at issue in the N.D. Cal. actions. Apple 

notes (again) that it has already agreed to provide all documents concerning threshold-based 

pricing structures for baseband processors—the relevant product in these actions. Apple objects 

to providing additional documents concerning irrelevant products.

 

5 Qualcomm’s reference to search terms and employee directories is a red herring. Apple will send the search terms 

to Qualcomm by the end of this week. And with respect to employee directories, Apple has repeatedly informed 

Qualcomm that the employee directory information Qualcomm informally requested (without issuing a Request for 

Production or Interrogatory in the N.D. Cal. actions) does not exist in the form Qualcomm has demanded. On July 

25, Apple voluntarily offered to provide information about the direct reports (up and down) of both parties’ 

proposed custodians. (Ex. 9 at 1–2.) Apple is working to compile this information, which does not exist natively in 

producible form, and will provide it to Qualcomm this week, as soon as it is available.

6 Apple and Qualcomm have never discussed whether such repositories for this information exist during meet and 

confer negotiations. Had Qualcomm asked, Apple would have informed Qualcomm that such repositories do not 

exist.

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 6 of 10
Dated: August 11, 2017

Respectfully submitted,

CRAVATH, SWAINE & MOORE LLP,

/s/ Gary A. Bornstein

Gary A. Bornstein

Yonatan Even

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

Tel: (212) 474-1000

Fax: (212) 474-3700

gbornstein@cravath.com

yeven@cravath.com

Robert A. Van Nest

Asim M. Bhansali

Eugene M. Paige

KEKER, VAN NEST & PETERS LLP

633 Battery Street

San Francisco, CA 94111-1809

Tel: (415) 676-2289

Fax: (415) 397-7188

rvannest@keker.com

abhansali@keker.com

epaige@keker.com

Richard S. Taffet

MORGAN, LEWIS & BOCKIUS LLP

101 Park Avenue

New York, NY 10178-0060

Tel: (212) 309-6000

Fax: (212) 309-6001

richard.taffet@morganlewis.com

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 7 of 10
Willard K. Tom

MORGAN, LEWIS & BOCKIUS LLP

1111 Pennsylvania Ave. NW

Washington, DC 20004-2541

Tel: (202) 739-3000

Fax: (202) 739 3001

willard.tom@morganlewis.com

Donn P. Pickett

Geoffrey T. Holtz

MORGAN, LEWIS & BOCKIUS LLP

One Market, Spear Street Tower

San Francisco, CA 94105-1126

Tel: (415) 442-1000

Fax: (415) 442-1001

donn.pickett@morganlewis.com

geoffrey.holtz@morganlewis.com

Attorneys for Qualcomm Incorporated

BOIES SCHILLER FLEXNER LLP,

/s/ Edward H. Takashima

 Edward H. Takashima

William A. Isaacson, DC Bar No. 414788

Karen L. Dunn, DC Bar No. 1002520

Amy J. Mauser, DC Bar No. 424065

1401 New York Avenue, N.W.

Washington, DC 20005

Tel: (202) 237-2727

Fax: (202) 237-6131

wisaacson@bsfllp.com

kdunn@bsfllp.com

amauser@bsfllp.com

Steven C. Holtzman, SBN 144177

1999 Harrison Street, Suite 900

Oakland, CA 94612

Tel: (510) 874-1000

Fax: (510) 874-1460

sholtzman@bsfllp.com

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 8 of 10
Edward H. Takashima, SBN 270945

401 Wilshire Blvd, Suite 850

Santa Monica, CA 90401

Tel: (310) 752-2408

Fax: (310) 752-2490

etakashima@bsfllp.com

Attorneys for Non-Party APPLE INC.

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 9 of 10
FILER’S ATTESTATION

I, Gary A. Bornstein, am the ECF user whose identification and password are 

being used to file this Joint Discovery Submission. In compliance with Civil Local Rule 

5-1(i)(3), I hereby attest that the signatories of this document have concurred in this 

filing.

/s/ Gary A. Bornstein

Gary A. Bornstein

Case 5:17-cv-00220-LHK Document 167 Filed 08/11/17 Page 10 of 10