Qualcomm files breach of contract complaint against Apple's manufacturers

How Regulatory Issues Could Impact Qualcomm’s Fiscal 2017 Revenue

Qualcomm files breach of contract complaint against Apple's manufacturers

Qualcomm Inc.'s battle with Apple Inc.is heating up as the chip company hauls assemblers of the iPhone into a US court on claims they are failing to pay patent royalties. Qualcomm said it is seeking an order to require all of those companies to comply with "long-standing contractual obligations" to Qualcomm, and is also seeking declaratory relief and damages.

"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 on Wednesday. But it certainly doesn't look goodfor the company right now, because Samsung and Intel have just filed amicus briefs against Qualcomm in its FTC battle.

The company has since filed their own countersuit against Apple and now it seems that they are going after Apple's manufacturing partners as well. Qualcomm adds that Apple has promised to contribute towards any damages that the contract manufacturers are hit with, as a result of them not paying Qualcomm's royalty fees.

Qualcomm had said last month Apple had instructed its suppliers not to pay Qualcomm the royalties Qualcomm believes it is entitled to for use of its intellectual property in the iPhone, which caused Qualcomm to slash its financial forecast.

Apple sued Qualcomm in January in the US and later in China and the United Kingdom, claiming that Qualcomm abused its monopoly position in cellular chips to impose "onerous, unreasonable and costly" terms on customers and competitors. Qualcomm has separate licensing agreements with the contractors. The company had already warned shareholders that earnings for the next quarter will be down by $500m thanks to Apple withholding royalties. "And we said, that is interesting, but that is between you and Apple".

For its part Apple claimed Qualcomm is trying to charge it for patents it never used - it wants a $1bn rebate for alleged overpayments. Qualcomm is disputing those claims and denying any wrongdoings. The other two companies sued are Wistron Corp. and Compal Electronics Inc. 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 has counter-sued Apple, is appealing the Korea Fair Trade Commission decision and has asked a Northern California federal judge to dismiss the FTC case.

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