Apple, Qualcomm spat intensifies, manufacturers drawn in

18 May, 2017, 01:00 | Author: Sam Montgomery
  • Impact on Qualcomm’s Business if Apple Wins

Qualcomm filed a breach of contract complaint against Apple's manufacturers on Wednesday, almost one month after the iPhone maker stopped paying for the chip company's patent royalties.

Qualcomm previously sued Apple accusing it of breaking contracts and interfering in deals negotiated with iPhone suppliers.

Late last month, Qualcomm warned investors that it faced a shortfall in sales and profits because Apple, one of its largest customers, had stopped paying an amount equivalent to Qualcomm's previous share of royalties to the manufacturers that produce the iPhone and iPad.

Qualcomm has already filed a separate claim against Apple for its unlawful interference with the license agreements between Qualcomm and these manufacturers. Apple has promised to indemnify the manufacturers for any damages resulting from breaching their agreements with Qualcomm.

The five companies named in the filing are Compal Electronics, FIH Mobile Ltd, Hon Hai Precision Industry Co Ltd, Pegatron Corporation and Wistron Corporation. The two companies have sued and countersued each other since January.

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The license agreements with the manufacturers in many cases were entered into before Apple sold its first iPhone and Apple is not a party to the agreements.

The fight between Apple and Samsung is getting uglier.

Rosenberg declined to comment on why Qualcomm chose a lawsuit in San Diego Federal Court against Apple's contract manufacturers rather than going to the U.S. International Trade Commission to bar iPhone imports.

Despite a long history of consistently paying royalties under their license agreements with Qualcomm, the manufacturers now are refusing to pay royalties on the Apple products they produce.

Apple joined the assault shortly after the FTC and perhaps has been the most aggressive in maneuvers against Qualcomm, which believes that Apple is behind a "global attack on the company". Following that, Apple launched a lawsuit of their own in which they alleged that Qualcomm had withheld payments to them as a form of "punishment" amongst other things. To deny the case would continue to impede the progression of the technology and drive up the cost of smartphones for consumers, it argued. Qualcomm counter sued last month, claiming that Apple provided misleading statements to regulators in an effort to punish the company. "You are responsible for paying that".

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