Apple, Qualcomm spat intensifies, manufacturers drawn in

Posted May 18, 2017

The lawsuit, filed in U.S. District Court in San Diego, names Foxconn, formally known as Hon Hai Precision Industry Co., and its subsidiary, FIH Mobile Ltd; Pegatron Corp.; Wistron Corp. and Compal Electronics Inc.

The rub here is that Qualcomm says many of these licensing agreements were in place before Apple produced its first iPhone. Apple's suit built upon a wave of global resistance to Qualcomm's patent-licensing business that has included investigations and fines in several countries.

The lawsuit falls short of more drastic moves that media outlets speculated Qualcomm would pursue against Apple - including seeking to ban imports of iPhones and iPads into the U.S. "While not disputing their contractual obligations to pay for the use of Qualcomm's inventions, the manufacturers say they must follow Apple's instructions not to pay", Qualcomm said in a statement on Wednesday.

"Specifically, Apple has withheld substantial payments from Defendants that it owes for Qualcomm royalties and has directed Defendants not to make corresponding royalty payments to Qualcomm". Qualcomm has separate licensing agreements with the contractors.

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Qualcomm also said that the suppliers have continued to pay royalties for non-Apple products under the same agreements that apply to Apple.

"We don't like suing our licensees", said Rosenberg, noting that in the past decade the company has brought just one patent infringement case against a smartphone maker. "Qualcomm's demands are unreasonable and they have been charging higher rates based on our innovation, not their own".

The chipmaker slashed its current-quarter profit and revenue forecasts in April, saying it excluded revenue receivable from the four contract manufacturers. These royalties amount to a tax on the manufacturers' use of baseband processors manufactured by Qualcomm's competitors, a tax that excludes these competitors and harms competition. "You are responsible for paying that". While it is not unusual for the companies and other organizations to make such filings, for the briefs to be filed at such an early stage in the process shows the interest the case is garnering in the tech community.

Qualcomm's latest complaint alleges the four Taiwanese manufacturers breached longstanding licensing deals and seeks unspecified damages.