Qualcomm has intensified its offensive against Apple by going for the companies that build its iPads and iPhones. The latest development on the legal battle between the two giants is the chipmaker filing a suit against Pegatron, Winstron Foxconn and Compal Electronics because they did not want to pay their fees for licensing. The company gave a statement saying it is seeking an order which would have the defendants comply with the long-standing contractual arrangements with Qualcomm and the declaratory relief and damage. Apparently, a number of these agreements were there before Apple even produced the first iPhone. At the same time, these manufacturers are paying the firm licensing revenue for products that are not Apple-borne but not those which came from it.
Origins on the Issue
The whole thing started when FTC gave an accusation to Qualcomm, effectively making itself a monopoly by saying that it would start to claim higher patent royalties from Apple unless they agreed not to look for base-band processors from competitors. Apple retaliated by litigating against Qualcomm in a number of countries which invited a counter-suit from Qualcomm trying to get the iPhone imports banned and saying iPhone suppliers were holding out on $1 billion which was overdue overseas working with Korean regulators.
According to Qualcomm, Apples intent is to cause the company so much damage they would be forced to capitulate to the dictatorial licensing terms which Apple has laid out. Qualcomm is currently the dominant maker of the modem chips which enables handsets to link up with a number of cellular networks though the firm also has a lucrative licensing enterprise which collects fees for almost every modern phone in the world. About two-thirds of the firm’s profit originates from licensing the technology.
More problems for Qualcomm
Qualcomm antitrust lawsuit from the Federal Trade Commission was filed a week before the January suit from Apple. The regulator claims Qualcomm forced Apple to utilize the modem chips thus lowering the fees for licensing and pushing competition away. As such, Qualcomm is currently trying to flip the script with the general counsel, Don Rosenberg in a general statement saying Apple is abusing its position as one of the foremost firms in the world to coerce licensing terms which are by no means reasonable. In any case if Apple is covering some of the damages, then it could be an indication that Qualcomm is utilizing the latest suit not as a way to recover some of the lost payments but as an attempt to get back at the Cupertino firm.
Qualcomm is saying it already filed a separate claim against Apple directly on grounds of unlawful interference considering the licensing agreements. The withheld payments create a $500 million issue for the chipset company in this quarter. After determining Apple’s suppliers were not going to pay up, Qualcomm decided to lower the revenue guidance for the quarter and a number of similar dips may come up every segment up to the point the legal battle is done.