BlackBerry awarded $815M from Qualcomm in arbitration over royalties dispute

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Qualcomm was ordered to pay nearly $815 million to BlackBerry due to royalty overpayments.

Shares of BlackBerry soared after Qualcomm was ordered to pay the Canadian company nearly $815 million in overpaid royalties.

According to the binding interim arbitration decision, BlackBerry overpaid Qualcomm in royalty payments from 2010 to 2015 under terms of a licensing deal. The companies agreed last year to arbitrate the dispute, and the decision cannot be challenged.

Interest and “reasonable attorneys’ fees” could be added to the sum after a hearing on May 30.

“BlackBerry and Qualcomm have a long-standing relationship and continue to be valued technology partners,” BlackBerry CEO John Chen said in a brief press release. “We are pleased the arbitration panel ruled in our favor and look forward to collaborating with Qualcomm in security for ASICs [application-specific integrated circuits] and solutions for the automotive industry.”

Shares of BlackBerry shot up nearly 18% following the announcement.

Apple filed a $1 billion lawsuit against Qualcomm in January over patent royalties just days after the dominant chipmaker was sued by the Federal Trade Commission on charges of anticompetitive practices. The suit contends that Qualcomm insists on onerous royalties for its technologies and demands royalties for technologies it didn’t develop—such as Apple’s Touch ID.

Qualcomm hit back at Apple this week, claiming in a countersuit that the iPhone vendor “breached” and “mischaracterized” agreements with the chipmaker and interfered in deals with Qualcomm licensees.

Meanwhile, BlackBerry is becoming increasingly active in patent litigation following its exit from the handset manufacturing business. Earlier this year it filed a lawsuit claiming Nokia is infringing on as many as 11 of its patents in offerings to carriers including AT&T and T-Mobile. Last August it filed a 105-page patent lawsuit against Avaya, then followed that two weeks later with a suit claiming Blu Products was infringing on 15 of its patents.

The arbitrator’s decision marks a big win for BlackBerry as it moves to expand its software development and licensing businesses, Maynard Um of Wells Fargo Securities wrote.

“The magnitude of the award was the big surprise to us and we think is clearly positive for the company,” Um said in a research note. “BlackBerry’s net cash/investments balance at the end of (the fiscal fourth quarter) was $1.1 billion, and the award should grow its balance to at least $1.92 billion (BlackBerry’s initial expectation is that there will not be any tax impact), which, at yesterday’s close, would account for nearly half of its market cap.”