Qualcomm this week filed suit against four Apple manufacturers in an effort to recoup royalty payments that have been withheld as part of a patent spat between the tech giants.
In a Wednesday release, Qualcomm said the four manufacturers – Foxconn, Pegatron, Wistron, and Compal Electronics – haven’t disputed their contractual obligations to Qualcomm, but have insisted they must follow instruction from Apple not to make payments to the chip maker. Qualcomm asserted such action constitutes a breach of contract, and is seeking a court order that would require the manufacturers to comply with their contractual payment obligations and provide “declaratory relief and damages.”
“It is unfortunate that we must take this action against these long-time licensees to enforce our agreements, but we cannot allow these manufacturers and Apple to use our valuable intellectual property without paying the fair and reasonable royalties to which they have agreed,” Qualcomm EVP and General Counsel Don Rosenberg commented.
The new complaint comes amid a $1 billion patent battle between Apple and Qualcomm in which the former accused Qualcomm of overcharging for royalties. In turn, Qualcomm has denied “each and every allegation” made by Apple in its complaint, and claimed Apple both breached and mischaracterized its agreements with Qualcomm and meddled with Qualcomm’s agreements with other licensees who produce iPhones and iPads.
At the end of April, Qualcomm broke the news that Apple was planning to withhold royalty payments until the dispute comes to a close. Qualcomm slashed its forecast as a result, reducing its revenue guidance from a range of $5.3 billion to $6.1 billion down to a new bracket of $4.8 billion to $5.6 billion in the third fiscal quarter.
Interestingly, Qualcomm in its Wednesday complaint noted it is still receiving payments from the four Apple manufacturers for the use of its technology in other non-Apple products they produce. Those payments are being made under the same contract agreements that apply to the Apple products the four are withholding payments for.
Rosenberg said the discrepancy was evidence of Apple’s interference in Qualcomm’s agreements with other companies.
“As Apple continues to collect billions of dollars from consumer sales of its Qualcomm-enabled products, it is using its market power as the wealthiest company in the world to try to coerce unfair and unreasonable license terms from Qualcomm in its global attack on the company,” he said. “Our license agreements with Apple’s manufacturers remain valid and enforceable. The manufacturers must continue to live up to their obligations under these agreements and Apple should immediately cease its tortious interference.”