27-Nov-17

VancouverCourt File No. VLC-S-S-1710984

THE PLAINTIFFS' CLAIM

Part 1: STATEMENT OF FACTS Introduction

1. The Plaintiffs and Class members are purchasers of cellular telephones and other cellular

devices such as computer tablets. In each such device, there is a modem chipset, which allows

the device to communicate and transmit voice and data across wireless networks controlled by

carriers, such as Rogers, Bell or Telus. The Plaintiffs bring this action against the defendant

Qualcomm Incorporated ("Qualcomm") and its subsidiaries for their anticompetitive conduct in

the modem chipset market, their abuse of the intellectual property rights underlying this

technology, and for charging excessive and unlawful royalties on cellular devices incorporating

such patents, with the result that each end-user purchaser of a cellular device pays an inflated

price.

2. To communicate with a carrier's network, a cellular device must contain a modem

chipset that complies with the cellular communications standards that the network supports.

Standard setting organizations ("SSOs"), comprised of device and component developers and

manufacturers and others, collaborate to set technology requirements to ensure mass

interoperability among system components. Standards may rely on underlying technology that is

patented. Because a standard requires that devices use a specific technology, standard-compliant

devices necessarily employ certain patents to comply.

3. Such patents are called standard essential patents ("SEPs"). Owners of patented

inventions employed in a standard are SEP holders. SEP holders benefit from the inclusion of

their patented inventions in a standard by obtaining licensing fees and royalties from the

widespread use of their technology.

4. Given the power that inclusion in a standard may give SEP holders, SSOs consider

alternative technologies before selecting a standard. Most importantly, SSOs require that its

members or any patent owner wishing to have its patent declared an SEP must agree to license

their technology on fair, reasonable, and non-discriminatory ("FRAND") terms. This ensures the

original equipment manufacturers ("OEMs") that build and sell devices containing the SEPs

may use the technology without being held to ransom.

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5. Qualcomm was one of the earliest developers of cellular technology, developing the

technology underlying the Code Division Multiple Access ("CDMA") standard on which

network carriers relied. It is the dominant producer of CDMA chipsets and holds the largest

number of SEPs for CDMA and successor technologies, known as premium LTE modem

chipsets ("Modem Chipset SEPs"). Having agreed to license its technology on FRAND terms,

Qualcomm' s technology has been incorporated into virtually every major cellular device

standard for many years.

6. Qualcomm has breached its FRAND obligations to license its Modem Chipset SEPs to

OEMs on FRAND terms in order to extract unreasonably high royalty payments. Beginning at

least as early as 2008, Qualcomm, among other things:

a. overcharged for its Modem Chipsets;

b. forced OEMs to license Qualcomm's entire patent portfolio, including non-SEP

patents, to get access to Modem Chipset SEPs, to license on fair and reasonable terms in

breach of Qualcomm' s FRAND commitments;

c. entered into exclusive licensing deals with some cellular device manufacturers,

such as Apple, Inc. ("Apple"), in breach of Qualcomm' s FRAND commitments to

license on non-discriminatory terms;

d. refused to license its Modem Chipset SEPs to competitors who manufacture

Modem Chipsets, in breach of Qualcomm' s FRAND commitment to license on non­

discriminatory terms; and

e. threatened device manufacturers with economic ruin if they refused to accept

these unlawful terms to obtain access to Qualcomm's Modem Chipset and SEPs.

7. The Plaintiffs and the class of persons they seek to represent have been harmed by paying

supracompetitive prices for cellular devices containing modem chipsets that they purchased. The

Plaintiffs seek to represent a class of persons to be described in their certification materials.

8. Qualcomm has parlayed its pioneering role in cellular technology into a patent-licensing

business that generates most of its profits. Qualcomm admits in its United States Securities &

Exchange Commission filings that its royalties are generally based upon a percentage of the

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wholesale (i.e. licensee's) selling price of complete licensed products. Qualcomm typically

charges makers of 3G devices-and 3G-compatible 4G models-up to 5% of their products'

wholesale price-around $20 on a $400 phone.

9. Qualcomm' s anticompetitive conduct has been met with condemnation by regulators

around the world. On December 21, 2016, the Korea Fair Trade Commission fined Qualcomm

$854 million (the largest fine in its history) for abuse of market dominance and anticompetitive

conduct with respect to its licensing practices.

10. On January 17, 2017, the United States Federal Trade Commission ("FTC") filed an

enforcement action against Qualcomm in United States Federal Court under the Federal Trade

Commission Act, 15 U.S.C. §§ 41-58, as amended. The FTC is challenging Qualcomm's

unlawful maintenance of a monopoly in the modem chipset market, resulting in the increased

prices paid by consumers for cellular devices.

11. Competing Modem Chipset manufacturers including Intel Corporation ("Intel") and

Samsung Electronics Inc. ("Samsung"), have joined as amicus curiae in the FTC proceedings

against Qualcomm. Affected persons can request leave to intervene to support the FTC. Intel and

Samsung have obtained standing in the FTC proceeding to stop Qualcomm' s wrongful conduct

against OEMs and Modem Chipset competitors and the resulting harm to consumers.

12. Consumers have initiated litigation in federal court in the United States against

Qualcomm to obtain recovery for its anticompetitive conduct: Bornstein et al. v. Qualcomm

Incorporated, United States District Court for the Northern District of California (San Jose

Division), 5: 17-cv-00234 and In Re: Qualcomm Antitrust Litigation, Case No. 5: 17-MD-02773-

LHK. In addition, OEMs have instituted proceedings against Qualcomm for its anticompetitive

conduct: Apple Inc. v. Qualcomm Incorporated, United States District Court for the Southern

District of California, 3: 17-cv-00108.

13. The Plaintiffs brings this action on their own behalf and on behalf of others similarly

situated to recover for their injuries from Qualcomm' s tortious and wrongful conduct. The

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Plaintiffs and Class members seek general damages, restitution, or - in the alternative -

disgorgement of Qualcomm' s profits from its wrongdoing.

Parties

14. The Plaintiff David Barroqueiro is a resident of Vancouver, British Columbia. He

purchased a Moto GS Plus cellular phone in July 2017 for personal use, for approximate $330.

The phone contains a Qualcomm modem chipset.

15. The Plaintiff Ryan Kett is a resident of Vancouver, British Columbia. He purchased an

iPhone 7 in September 2016 for personal use, for over $1,000. The phone contains a Qualcomm

modem chipset.

16. Qualcomm is both a developer of Modem Chipset technology and owner of patents, as

well as a manufacturer and distribution of Modem Chipsets. Qualcomm develops, designs,

licenses, and markets worldwide its digital communications products and services, primarily

through its two main business segments: Qualcomm CDMA Technologies ("QCT") and

Qualcomm Technology Licensing ("QTL"). QCT deals with equipment sales while QTL

engages in licensing of patents and technology. QCT is operated by Qualcomm Technologies,

Inc. ("QTI"), a wholly-owned subsidiary of Qualcomm. QTL, grants licences or otherwise

provides rights to use portions of Qualcomm's patent portfolio.

17. QCT, QTL and QTI work with Qualcomm as a joint enterprise. As described above, each

has a distinct role in the design, manufacturing, licensing and distribution of Qualcomm' s

Modem Chipsets and SEPs. This pleading refers to QCT, QTL, QTI and Qualcomm Incorporated

collectively as "Qualcomm". Qualcomm carries on business in British Columbia and

worldwide. Qualcomm and QTI are incorporated under the laws of Delaware with an address for

service at 5775 Morehouse Drive, San Diego CA 92121 USA.

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Factual Background

A. SSOs, SEPs, and FRAND Obligations

18. Interoperability and compatibility are critical for modern electronic devices. Although

users may take for granted that their cellular devices will be able to connect wirelessly to their

cellular network and the Internet, interoperability does not happen by chance. Each component

of a cellular network (such as those operated by Rogers, Bell and Telus), and, by extension, each

component of mobile wireless devices using that cellular network, must work with other

components, regardless of which company made each component.

19. A cellular telephone contains a "modem chipset" (also called a baseband processor)-the

core electronic unit that allows it to transmit and receive information (either telephone calls or

data) to and from the wireless network. Specifically, modem chipsets transmit information, via

radio waves, to cellular base stations. Base stations, in turn, transmit information to and from

telephone and computer networks. It is essential that all components involved in this

transmission of information be able to communicate seamlessly with one another.

20. Because of the multitude of devices, device designers, component manufacturers, and

others must agree to uniform standards to ensure the smooth operation of the cellular network

and the cellular devices that connect to it. To achieve this, cellular network carriers, chipset

manufacturers, cellular device manufacturers, and others participate in SSOs.

21. SSOs are independent, non-governmental international organizations, based in different

countries around the world, but with global reach. Multiple SSOs may issue overlapping and

interrelated standards relating to the same field of technology. SSOs that create standards in the

field of mobile wireless telephony include the European Telecommunications Standard Institute

("ETSI"), the International Telecommunications Union ("ITU"), and the Institute of Electrical

and Electronic Engineers ("IEEE"). Modem chipset designers and manufacturers, including

Qualcomm and Intel, are also members of SSOs, including ETSI, ITU and IEEE. OEMs, namely

device manufacturers like Samsung and Apple, and others, are members of SSOs, including

ETSI, ITU and IEEE.

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22. SSOs create standards and technical specifications for the use and operation of particular

technologies. The technology incorporated into a standard is typically chosen from among

different options. These options may include technology patented by individual companies. Once

incorporated and widely adopted, that technology is not always used because it is the best or the

only option; it is used because the use of that technology is necessary to comply with the agreed­

upon standard. Competition within that technology market is thereby eliminated, as competing

technologies are no longer available as alternative means of implementing the standard.

23. A company whose patented technology has been included in or is proposed for inclusion

in a standard can "declare" its patent to be an SEP for that standard. A patent that is not declared

an SEP is unlikely to be incorporated into a standard. Declaring a patent as an SEP brings

benefits to the SEP holder in the form of wide-spread use of the technology and the resulting

royalties. However, the voluntary decision to declare a patent to be an SEP imposes obligations

on an SEP holder, as set out below.

24. To implement a technological standard, a device made to conform with the standard will

usually need to incorporate any patented inventions on which the standard is based.

Consequently, OEMs manufacturing products containing the patented technology generally need

to license the SEP from the SEP holder to be compliant with the applicable standard and to have

a legal right to use the SEP.

25. Competition law recognizes that under certain circumstances, collaboration by industry

participants can increase competition, innovation, product quality, and consumer choice. For

example, in this context, collaboration allows consumers to have confidence that cellular devices

bought from different manufacturers will operate with each other and with the cellular network

that they choose. Similarly, common standards allow component manufacturers, carriers, and

others in the industry to invest in technological advancement with confidence that their products

will work with wireless networks.

26. However, standards can pose challenges to OEMs and can involve trade-offs for

consumers. Once a standard is adopted, participants begin to make investments tied to the

implementation of the standard. Because these participants may face substantial switching costs

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in abandoning initial designs and substituting a different technology, an entire industry can

become "locked in" to a standard.

27. The adoption of SEPs into technological standards also enhances the potential for

extortion by the patent owner. "Patent hold-up" occurs when the holder of an SEP demands

excessive royalties after companies are locked into using a standard. Where standardized

technologies are covered by patents, companies that have chosen to implement a standard have

no choice but to license those patents and accept the licensor's unreasonable and unfair terms or

face a lawsuit if they use the technology without a licence.

28. To help alleviate these potential concerns, before agreeing to a particular standard, SSOs

seek assurances from patent owners. Specifically, SSOs require SEP holders to agree to license

their patents as SEPs on FRAND terms.

29. These commitments are usually contained in SSOs' "Intellectual Property Rights"

("IPR") policies. Members of the SSOs agree to respect SSO IPR policies as a condition of their

membership. In addition, patent holders make specific commitments to respect IPR policies

when they declare a patent to be an SEP.

30. IPR policies require SEP holders to license their SEPs on FRAND terms. Specifically,

FRAND terms require SEP holders to:

a. license the relevant SEPs;

b. to any party entitled to seek a license;

c. on terms, including royalty terms, that are

i. fair;

n. reasonable; and

iii. non-discriminatory ("FRAND Commitments").

31. Once a patent holder has agreed to FRAND Commitments, it is bound by them.

32. FRAND Commitments are more than just a matter of a private contract between owners

of technology, on the one hand, and SSOs and their other members, on the other. When an SEP

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holder makes an FRAND Commitment to an SSO, implementers of the standard at issue,

including OEMs, and their customers, are beneficiaries of that promise. The SSO also benefits

from the FRAND Commitments. FRAND Commitments are enforceable by SSOs and their

members, including OEMs, as well as by other beneficiaries.

33. Qualcomm made FRAND Commitments in relation to its Modem Chipset SEPs.

34. In particular, IEEE, ITU, and ETSI impose conditions on SEP holders in the modem

chipset industry, through their IPR policies. At material times, the following specific

commitments were parts of the FRAND Commitments in the modem chipset industry:

a. Under IEEE-SA Standards Board Bylaws, Clause 6, a patent holder intending to

assert an essential patent claim was required to submit a letter of assurance that it would

make available a licence for its essential patents to an unrestricted number of applicants

on a worldwide basis without compensation or under reasonable rates, with other

reasonable terms and conditions that are demonstrably free of any unfair discrimination,

for use in conforming with the IEEE standard;

b. Under ETSI Rules of Procedure, Annex 6, a patent holder intending to assert an

essential patent claim was required to provide an irrevocable undertaking in writing that

it was prepared to grant irrevocable licences on FRAND terms and conditions, for use in

conforming with ETSI standards; and

c. Under ITU Guidelines for Implementation of the Common Patent Policy for ITU­

T/ITU-R/ISO/IEC, a patent holder intending to assert an essential patent claim was

required to provide a licensing declaration that it was prepared to grant a licence to an

unrestricted number of applicants on a worldwide, non-discriminatory basis and on

reasonable terms and conditions, for use in conforming with ITU standards.

35. At all material times, Qualcomm is and has been a member of and an SEP holder in each

of ITU, ETSI and IEEE, as well as in other SSOs in the modem chipset industry. Qualcomm

agreed to each of the conditions in the preceding paragraph in relation to its Modem Chipset

SEPs as part of its FRAND Commitments.

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B. The Modern Cellular Industry

36. Wireless standards have evolved in distinct generations, as consumers demanded more

features and the industry responded by developing new innovations. The following graphic,

created by Qualcomm, shows the evolution of this technology:

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37. First-generation standards (lG) were introduced in the 1980s. Second-generation

standards (20) were introduced in about 1991. Third-generation standards (30) were introduced

in 1998, and became widely commercially available in 2001. Fourth-generation standards ( 4G

and "Long Term Evolution" or LTE) were introduced in 2008. CDMA standards have been

employed throughout each of these generations.

38. Following the first generation of cellular technology, the cellular industry developed

second generation (20) cellular technology, from which two primary technology paths, or

families of standards, emerged: (1) CDMA; and (2) "GSM," which stands for "global system for

mobility." CDMA is a channel access method used by various radio communication

technologies. CDMA is used as the access method in many mobile phone standards. GSM is

another digital mobile telephony system that is widely used in Europe and much of Asia, other

than Japan and South Korea. Cellular telephone service providers operated under one or the other

path. The CDMA and GSM technology paths are not interoperable; in other words, equipment

and technologies designed to be compatible with one standard cannot be used for the other

standard.

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39. Mobile devices are configured for a particular carrier, like Rogers, Bell or Telus, and thus

chipsets designed for a particular wireless device must conform to the standard technology

chosen for the carrier's associated network. In other words, CDMA-based networks demand

chipsets that conform to the CDMA standard, and GSM networks require chipsets that conform

to the GSM standard. As a result, chipsets that comply with a given standard are not substitutes

for chipsets that comply with other standards. Downstream consumers purchase cellular devices

that include chipsets configured to operate using the standards chosen for a particular network.

Once purchased, those consumers are inextricably tied to that standard for use of that device.

Similarly, because of the high costs of infrastructure, a carrier is essentially locked in to a

standard once they have invested in it. They cannot switch standards quickly or easily, even to

avoid abusive practices.

40. Qualcomm pioneered the development of CDMA technology beginning in the 1980s. As

a result, it controlled, and continues to control, the market for such technology, initially selling

90% of the modem chipsets that go into CDMA-compatible phones and continuing to control

over 80% of the market. Additionally, Qualcomm amassed many patents related to this standard.

41. Consequently, virtually any company that makes CDMA products-be they chipsets,

phones, or infrastructure gear-has to obtain a licence from Qualcomm. Licensees pay a one­

time fee for access to the patent portfolio and then royalties based on the final product sold by

the licensee (e.g., a smartphone). Nearly all wireless companies have signed patent licences with

Qualcomm.

42. Qualcomm's royalty stream has continued in the technologies standardized in third

generation ("3G") cellular technology. CDMA-based technology has been adopted for all 3G

wireless telephony and broadband standards throughout the world. As a result, Qualcomm has

reaped more than $50 billion in licensing revenues since 2000.

43. As with the prior generation of cellular technology, 30 evolved into two competing

standards-but this time both major standards were based on CDMA. While an improved

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version of CDMA technology was developed, the "Universal Mobile Telecommunications

Service" ("UMTS") standard was also developed.

44. UMTS uses radio technology called WCDMA, which stands for "Wideband Code

Division Multiple Access." WCDMA technology allows for increased data speed and capacity.

The UMTS standard was adopted by the ITU, ETSI, IEEE, and other SSOs after evaluating

alternative available equipment and technologies. Qualcomm owns the essential patents for the

WCDMA standard. Qualcomm supplies some of the essential technology that the ETSI included

in the UMTS standard and holds IPRs, such as patents, in this technology.

45. The fourth generation of cellular technology (4G) brought with it the "LTE" standard,

which stands for Long Term Evolution of UMTS. Nearly all cellular-enabled devices sold today

support L TE for 4G service. L TE is an "orthogonal frequency division multiple access" or

"OFDMA"-based technology. The LTE standard does not implement CDMA-based

technologies.

46. Like the UMTS technology before it, the arrival of L TE has not significantly impacted

Qualcomm's control over the modem chipset market or the power of its licensing business.

Qualcomm holds a leading and valuable patent portfolio that applies to LTE technologies,

including OFDMA, and over 90 major companies (including LG, Nokia, and Samsung) have

royalty-bearing licences under Qualcomm's patent portfolio for use in OFDMA products.

Additionally, many of the 4G-based cellular devices still implement CDMA technology to be

backwards-compatible with CDMA-based technologies that are still in use today. Qualcomm

exclusively supplies multimode CDMA-L TE chipsets that are backward compatible with

CDMA.

Qualcomm 's Wrongdoing in the Modem Chipset Industry

47. ETSI, IEEE and ITU and other SSOs required a commitment from vendors whose

technologies are included in the CDMA and successor standards to license their technologies on

FRAND terms.

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48. Qualcomm agreed to accept FRAND Commitments in relation to its Modem Chipset

SEPs.

49. Despite this undertaking, Qualcomm has breached its FRAND Commitments.

50. Qualcomm has leveraged its control over the supply of modem chipsets to force OEMs

into license agreements. Because OEMs need CDMA- and LTE-based chipsets (controlled by

Qualcomm) to be able to operate with CDMA- and LTE-based networks, OEMs have to accept

unreasonable licence terms dictated by Qualcomm, in breach of its FRAND Commitments.

Qualcomm' s status as both a Modem Chipset manufacturer and intellectual property licensor has

given it an unparalleled ability to collect licensing fees simply by denying physical delivery of

the modem chipsets.

51. Qualcomm uses its SEPs to require OEMs and others to license its entire patent portfolio,

which includes non-SEPs as well. Non-SEPs refer to patents that are either not essential to the

realization of a standard or replaceable in their functionalities through design-around or

avoidance design. There is no requirement by SSOs that non-SEPs be licensed on FRAND terms.

By putting both SEPs and non-SEPs into one license, Qualcomm attempts to avoid its obligation

to set SEP licence terms on an FRAND basis. Qualcomm forces OEMs to purchase licences for

technology that they do not require, in order to comply with CDMA standards. In doing so,

Qualcomm can charge excessive and unfairly high royalties to any licensees that were forced to

accept the packaged patent licenses. This is a breach of Qualcomm' s FRAND Commitments.

52. Even where Qualcomm sells its own chips, it requires purchasers to agree to its license

agreements-which include the royalty rate based on the selling price of the device. Essentially,

cellular devices today are unable to connect to their network without paying a royalty to

Qualcomm. Qualcomm' s royalty rates are significantly higher than others in the industry.

Qualcomm' s rate base is also part of what makes Qualcomm' s royalties so abusive. Qualcomm

admits that its royalties are generally based upon a percentage of the wholesale (i.e. licensee's)

selling price of complete licensed products. Using the entire value of an end product is not a

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reasonable basis for calculating SEP-based royalties. The royalties obtained in this way are

neither fair, nor reasonable. This is in breach of Qualcomm's FRAND Commitments.

53. In addition, Qualcomm has put in place a "no licence, no chips" policy. Under that

policy, Qualcomm withholds its Modem Chipsets unless an OEM also accepts a licence for SEPs

on terms preferred by Qualcomm, including elevated royalties that the OEM must pay when

using competitors' processors. By its words or its conduct, including its public and private

statements, Qualcomm threatens to withhold its Modem Chipsets from OEMs, without which

they cannot manufacturer cellular devices. Qualcomm threatens OEMs with economic ruin

unless they meet its onerous terms. This policy, Qualcomm' s public and private statements, and

Qualcomm's licensing practices constitute threats to OEMs, made without lawful justification or

excuse, to induce the OEMs to enter into licence agreements on Qualcomm's unfair,

unreasonable and unlawful terms ("Threats"). The Threats are a breach of Qualcomm's FRAND

Commitments.

54. Because OEMs need to use Qualcomm's technology for their devices to communicate

with the major carrier networks, and for them to be saleable to consumers, they are forced to

agree to Qualcomm' s unfair, unreasonable and unlawful licensing terms. As a result of the

Threats, OEMs have entered into licensing agreements for the SEPs with Qualcomm on unfair

and unreasonable terms, in breach of Qualcomm's FRAND Commitments ("Unfair

Agreements").

55. Because of the Unfair Agreements, OEMs cannot purchase chipsets from Qualcomm's

competitors without also paying royalties to Qualcomm. Some OEMs have agreed to deal

exclusively or near-exclusively with Qualcomm on the purchase of its Modem Chipsets to

reduce their royalty burden. Since 2007, Apple has entered into agreements to deal exclusively

with Qualcomm in exchange for partial relief from Qualcomm' s standard royalties. Samsung has

also entered into a similar exclusive arrangement with Qualcomm. These exclusive arrangements

are a breach of Qualcomm' s FRAND Commitments to license on fair and non-discriminatory

terms to anyone entitled to license its SEPs.

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56. In addition, Qualcomm refused to license its Modem Chipset SEPs to competitors who

themselves manufacture Modem Chipsets. In breach of Qualcomm' s FRAND Commitments to

license on fair and non-discriminatory terms, Qualcomm ignored or refused requests from

competitors, including Samsung and Intel, to license Qualcomm' s Modem Chipset SEPs. If

Qualcomm did grant SEP licenses to its competitors, Qualcomm would not be able to use the

threat of disruption of supply of Modem Chipsets against those competitors in the way it does

against OEMs. Further, the availability of Modem Chipsets from another source would

undermine Qualcomm's ability to extort OEMs through its "no license, no chips" policy.

57. Qualcomm's wrongful conduct took place in the United States and elsewhere in the

world, where OEMs and SSOs are headquartered or carry on business, and where OEMs enter

into contractual arrangements with Qualcomm. Qualcomm's wrongful conduct has caused loss to

OEMs and to SSOs and their members. Qualcomm· s wrongful conduct caused loss to Canadian

purchasers of the affected cellular devices.

C. Consumers are Harmed as a Direct Result of Qualcomm's Conduct

58. In breach of its FRAND Commitments, Qualcomm has abused its position to force OEMs

and other licensees to pay excessively high royalties, among other things, which has directly

resulted in harm to the Plaintiffs and Class members because it resulted in them paying higher

prices for their devices containing chipsets than they would have in the absence of Qualcomm' s

wrongful conduct.

59. Cellular devices are commodity products that consumers purchase as stand-alone

products. Consumers buy cellular devices either from the direct purchaser OEMs such as Apple

and Samsung, through network carriers such as Rogers, Bell and Telus, or through other

resellers.

60. OEMs, network carriers and other resellers are subject to vigorous.price competition, and

as a result, they do not absorb all of Qualcomm's unlawful royalties which are a percentage of

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the wholesale cost of the device itself. Instead, they pass along some, or all, of the excessive

royalty to consumers.

61. Ultimately, Qualcomm, the Plaintiffs and Class members are all participants in the

cellular device market. the Plaintiffs and Class members are consumers of such devices.

Qualcomm licenses technology essential to the operation of cellular devices and obtains profits

tied directly to the entire wholesale price of the cellular devices at issue in this litigation. As a

result, Qualcomm's anticompetitive acts, as alleged herein, directly distorted the price of the

cellular devices paid by the Plaintiffs and Class members. Indeed, the Plaintiffs and Class

members may not use the cellular devices at issue in this litigation without the licences provided

by Qualcomm.

62. Through its actions, Qualcomm intended to cause economic harm to the Plaintiffs and

Class members as a necessary means of enriching itself. In particular, Qualcomm's decision to

tie its royalty regime to the wholesale pricing of cellular devices was intended to harm the

Plaintiffs and Class members as a necessary means of enriching itself at their expense.

63. As a result of Qualcomm's unlawful conduct, the Plaintiffs and Class members have been

forced to pay supracompetitive prices for cellular devices when they purchase a device

containing a Qualcomm Modem Chipset ("Overcharge"). Qualcomm receives the Overcharge

from the Plaintiffs and Class members indirectly through OEMs, network carriers and other

resellers.

Part 2: RELIEF SOUGHT

64. An order certifying this action as a class proceeding;

65. General damages for the tort of unlawful means;

66. An accounting and restitution of the benefit received by Qualcomm in the full amount of

the Overcharge;

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67. In the alternative, disgorgement of all profits received by Qualcomm to the full amount of

the Overcharge;

68. Damages under the Business Practices and Consumer Protection Act, SBC 2004, c. 2, s.

171 ("BPCPA");

69. Punitive damages;

70. Interest under the Court Order Interest Act, RSBC 1996, c 79; and

71. Such further and other relief as this Honourable Court may deem just.

Part 3: LEGAL BASIS Unlawful Means Tort

72. Qualcomm has committed the tort of unlawful means.

73. By its conduct set out at paragraphs 48-58, Qualcomm intended to economically injure

the Plaintiffs and Class members as a means to enrich itself.

74. Qualcomm acted unlawfully against third parties in order to inflict economic injury on

the Plaintiffs and Class members. Qualcomm actions were unlawful as follows (the "Unlawful

Acts"):

a. By its conduct set out at paragraphs 48-58, Qualcomm has breached the antitrust

laws of the United States. The Plaintiffs plead and rely on the following foreign statutes

("Breach of Foreign Law"):

i. Sherman Act, 15 U.S.C. §2;

ii. Clayton Act l 5 U.S.C. §3;

iii. FI'C Act: and

iv. State antitrust laws, including inter alia the California Business and

Professions Code § 16700 et seq (Cartwright Act); New York General

Business Laws § 340 et seq (Donnelly Act);

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b. By its conduct set out at paragraphs 33, 35, 48-58, Qualcomm has breached its

FRAND Commitments to SSOs, OEMs, Modem Chipset competitors, and other licensees

or potential licensees of its Modem Chipset SEPs.

75. As set out at paragraphs 48-63, the OEMs and Modem Chipset competitors have or

would have suffered loss as a result of the Unlawful Acts by Qualcomm. As set out at paragraphs

48-58, the SSOs have or would have suffered loss as a result of the breach of FRAND

Commitments by Qualcomm.

76. OEMs, Modem Chipset competitors, and SSOs would have a cause of action against

Qualcomm for breach of FRAND Commitments under Canadian law through a claim of breach

of contract or fraud on the SSOs, and under the law of the United States for conduct that took

place in that jurisdiction. OEMs, Modem Chipset competitors, and SSOs would have a cause of

action for Breach of Foreign Law under the law of the United States for conduct that took place

in that jurisdiction. Indeed, as set out at paragraph 12, Apple has instituted proceedings in the

United States against Qualcomm for its wrongful conduct, and Intel and Samsung have joined in

FTC proceedings against Qualcomm. In addition, OEMs would have a cause of action against

Qualcomm for the tort of intimidation as a result of the unlawful Threats.

77. As set out at paragraphs 59-63, the Plaintiffs and Class members have suffered loss and

damage from the Unlawful Acts by Qualcomm in the form of the Overcharge.

78. The Plaintiffs and Class members are entitled to damages against Qualcomm in the full

amount of the Overcharge.

79. In the alternative, the Plaintiffs and Class Members waive the tort and elects to pursue

restitutionary remedies against Qualcomm. Qualcomm must disgorge to the Plaintiffs and Class

Members an amount equal to the Overcharge from the sales of cellular devices containing

Modem Chipsets in British Columbia.

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Unjust Enrichment

80. As set out at paragraphs 59-63, Qualcomm has been enriched by the receipt of the

Overcharge from the Plaintiffs and Class members.

81. The Plaintiffs and Class members have been deprived through the payment of the

Overcharge to Qualcomm.

82. There is no juristic reason why Qualcomm should have received or should retain the

benefit of the payment of the Overcharge. The Unlawful Acts negate any juristic reason why

Qualcomm should have received or should retain the benefit of the payment of the Overcharge.

83. In addition, by its conduct set out at paragraphs 50-55, Qualcomm has committed

extortion against the OEMs, in breach of s. 346 of the Criminal Code of Canada, RSC 1985, c C-

46. In particular, Qualcomm committed extortion by making the Threats to the OEMs, without

reasonable justification or excuse and with intent to obtain benefit for itself, to induce them to

enter the Unfair Agreements ("Extortion"). The Extortion negates any juristic reason why

Qualcomm should have received or should retain the benefit of the payment of the Overcharge.

84. In addition or in the alternative, by its conduct set out at paragraphs 50-55, Qualcomm

has attempted by its Threats to commit extortion against the OEMs, in breach of the Criminal

Code, s. 463. The attempted Extortion negates any juristic reason why Qualcomm should have

received or should retain the benefit of the payment of the Overcharge.

85. As a result, Qualcomm has been unjustly enriched by the benefit it received from the

Plaintiffs and the Class members in the form of the Overcharge.

86. The Plaintiffs and Class members are entitled to restitution of the benefit received by

Qualcomm from them, in the full amount of the Overcharge.

87. In the alternative, justice and good conscience require that Qualcomm disgorge to the

Plaintiffs and Class Members an amount equal to the Overcharge from the sales of cellular

devices containing Modem Chipsets in British Columbia.

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Punitive Damages

88. As set out at paragraphs 6, 49-63, Qualcomm's misconduct was malicious, oppressive

and high-handed, and departed to a marked degree from ordinary standards of decent behaviour.

Qualcomm' s actions offend the moral standards of the community and warrant the condemnation

of the Court such that an award of punitive damages should be made.

Business Practices and Consumer Protection Act

89. The Plaintiffs and some Class members are "consumers" within the meaning of s. 1 of the

BPCPA.

90. Qualcomm is a "supplier", within the meaning of s. 1 of the BPCP A.

91. Modem Chipsets are "goods" within the meaning of s. 1 of the BPCPA.

92. The manufacture, distribution and sale of cellular devices containing Modem Chipsets are

"consumer transaction[ s ]", within the meaning of s. 1 of the BPCP A.

93. The Plaintiffs and some Class members purchased their cellular devices for purposes that

are primarily personal, family or household, within the meaning of s. 1(1) of the BPCPA.

94. By its conduct set out at paragraphs 59-63, Qualcomm breached ss. 8 and 9 of the

BPCPA. Qualcomm's actions constitute unfair and unconscionable business practices.

95. As set out at paragraphs 59-63, the Plaintiffs and Class members have suffered loss and

damage within the meaning of s. 171 as a result of Qualcomm' s contraventions of the BPCP A. In

particular, the Plaintiffs and Class members have suffered the loss through payment of the

Overcharge.

96. Qualcomm engaged in or acquiesced to the contraventions that caused the loss and

damage to the Plaintiffs and Class Members, within the meaning of s. 171 of the BPCPA.

97. The Plaintiffs and Class Members are entitled to an order for damages under s. 171 of the

BPCPA.

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Joint Enterprise

98. The Defendants functioned as a joint enterprise fo r the development, manufacturing,

licensing, distribution and sale of their products. The Defendants divided among themselves

certain responsibilities for the development, manufacturing, licensing, sale and distribution of

Qualcomm's Modem Chipsets and SEPs. Within this joint enterprise, the Defendants

individually and jointly developed, manufactured, licensed, sold and distributed Qualcomm 's

Modem Chipsets and SEPs.

Service ex juris

99. The Plaintiffs have the right to serve this Notice of Civil Claim on Qualcomm pursuant to

the Court Jurisdiction and Proceedings Trans.fer Act, SBC 2003, c 28, s. I 0, because there is a

real and substantial connection between British Columbia and the facts on which this proceeding

is based.

I 00. The Plaintiffs rely on the fo llowing grounds, in that this action concerns:

a. Restitutionary obligations that, to a substantial extent, arose in British Columbia (CJPTA , s l O(f); b. a tort committed in British Columbia (CJPTA, s I O(g)); and c. a business carried on in British Columbia (CJPTA, s 1 O(h)).

Plaintiffs' address for service: KJein Lawyers LLP 1385 W 8th Ave #400 Vancouver, BC V6H 3V9

Place of trial: Vancouver, BC

The address of the registry is: 800 Smithe Street Vancouver, BC V6Z 2E l

Date: November 27, 20 I 7

2 1

Signature of lawyer fo r plaintiff David A. Klein

Rule 7-1 (1) of the Supreme Court Civil Rules states:

(1) Unless all parties of record consent or the court otherwise orders, each party of record

to an action must, within 35 days after the end of the pleading period,

(a) prepare a list of documents in Form 22 that lists

(i) all documents that are or have been in the party's possession or control

and that could, if available, be used by any party at trial to prove or

disprove a material fact, and

(ii) all other documents to which the party intends to refer at trial, and

(b) serve the list on all parties of record.

Appendix

[The following information is provided for data collection purposes only and is of no legal

effect.]

Part 1: CONCISE SUMMARY OF NATURE OF CLAIM:

This is a claim for damages and disgorgement at common law for unjust enrichment and the

unlawful means tort arising out of the defendant's business practices in the modem chipset

industry.

Part 2: THIS CLAIM ARISES FROM THE FOLLOWING:

A personal injury arising out of:

[ ] a motor vehicle accident

[ ] medical malpractice

[ ] another cause

A dispute concerning:

[ ] contaminated sites

[ ] construction defects

[ ] real property (real estate)

[ ] personal property

[x] the provision of goods or services or other general commercial matters

[ ] investment losses

[ ] the lending of money

[ ] an employment relationship

[ ] a will or other issues concerning the probate of an estate

[ ] a matter not listed here

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Part 3: TIDS CLAIM INVOLVES:

[x] a class action

Part 4:

[ ] maritime law

[ ] aboriginal law

[ ] constitutional law

[ ] conflict of laws

[ ] none of the above

[ ] do not know

Business Practices and Consumer Protection Act, SBC 2004, c 2 Criminal Code of Canada Court Jurisdiction and Proceedings Transfer Act, SBC 2003, c 28 Court Order Interest Act, RSBC 1996, c 79

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