Qualcomm is today taking another jab at Apple’s attempts to jeopardize its long-standing partnerships. The chipmaker has sued the manufacturers that make iPhones for Apple Inc. for failing to pay royalties on the licensed technology, after they received instructions from Apple not to do so. This move is definitely going to further widen the chipmaker’s legal battle with the world’s most valuable company.
In a lawsuit filed with federal district court of San Diego, it names Foxconn, Pegatron, Wistron, and Compal, all of which Qualcomm says have stopped paying royalties for patented technologies used in Apple’s products. However, the chipmaker did not disclose the quantum of royalty owed to it by the manufacturers.
In its complaint, the company said that Apple had advised the contract manufacturers to withhold royalty payments and agreed to indemnify them against any damages resulting from the breach of their agreements with Qualcomm.
Earlier, Apple had instructed the four companies not to pay while it litigated a patent fight — which includes lawsuits in the US, China, and England — against Qualcomm. The Cupertino giant said that the chipmaker has been abusing its position as the dominant supplier of smartphone modems to charge unreasonably high rates to license its patents.
In the filing, Qualcomm — the largest maker of chips used in smartphones, added that Apple is trying to force the company to agree to a “unreasonable demand for a below-market direct license”. In an earlier statement, Apple said it had been trying to negotiate with Qualcomm for five years and that it had finally decided to withhold payments “until the correct amount can be determined by the court.”
Apple sued the mobile chipmaker back in January this year, accusing Qualcomm of overcharging for chips and refusing to pay some $1 billion in promised rebates. The chipmaker has slashed its current-quarter profit and revenue forecasts last month, saying it excluded revenue receivable from the four contract manufacturers.
The withheld payments is posing a $500 million problem for the company in this quarter alone. After learning that Apple’s suppliers were refusing to pay up, Qualcomm had to lower its revenue guidance for the quarter, and similar actions could show up every time until this legal battle is played out.
While a string of lawsuits have been kicked off, what could pose as a bigger problem for Qualcomm is a lawsuit from the US Federal Trade Commission. It accuses Qualcomm abusing its market position much like Apple has claimed. Samsung and Intel both has filed briefs earlier this week backing the FTC.
