The Qualcomm vs. Apple licensing squabble had already gotten messy with lawsuits flying in both directions, but a report by Bloomberg says things could go to the next level soon. That’s because according to sources, Qualcomm plans to ask the ITC to block Apple from importing its phones from where they’re built in Asia to the US, ahead of new devices that we’re anticipating in the fall. We don’t know if it could be successful, although Qualcomm holds a number of patents in the space and Apple stopped making payments while the dispute is ongoing.
Qualcomm has cut its revenue outlook by $ 500 million because of the anticipated lack of licensing fees, so this is no small matter. It claims its patented technology is crucial to the iPhone even as it’s being manufactured by someone else, while Apple disagrees. We don’t know if there’s any chance the ITC will side with Qualcomm and actually ban any devices, but the threat puts billions of dollars in iPhone sales at risk.
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Qualcomm’s ongoing legal dispute with Apple today took a new turn after the chipmaker accused its device-making partner of further withholding patent royalties. According to a statement, Apple recently stopped paying licensing revenue to manufacturers of the iPhone because it believes it’s been overpaying for important 3G and 4G patents.
The legal battle started back in January when Apple sued Qualcomm for $ 1 billion for “abusing its clout” in the industry. Because the semiconductor giant enjoys a monopoly over important modem chips that connect devices to cellular or WiFi networks, it’s required to licence them under “fair, reasonable and non-discriminatory” terms. Apple argues it hasn’t done that, going as far as to claim that Qualcomm charges five times more than all of its other licensors combined.
Qualcomm hasn’t taken the issue lightly. Earlier this month, it responded to Apple’s lawsuits with one of its own, accusing the iPhone-maker of underutilizing its modem chips in the iPhone 7 and misrepresenting the performance disparity between Qualcomm basebands and those of its rivals.
Now, Apple is holding back money it owes to manufacturers of the iPhone. Qualcomm, for the most part, directly licenses its patents with partners, but Apple does things a little differently and pays partners like Foxconn that have their own agreements. It now expects to get no royalties during its current quarter.
“Apple is improperly interfering with Qualcomm’s long-standing agreements with Qualcomm’s licensees,” said Don Rosenberg, EVP and general counsel of Qualcomm. “These license agreements remain valid and enforceable. While Apple has acknowledged that payment is owed for the use of Qualcomm’s valuable intellectual property, it nevertheless continues to interfere with our contracts. Apple has now unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade.”
The move has forced Qualcomm to amend financial estimates it published only last week. The company now sees third quarter revenue reaching between $ 4.8 billion and $ 5.6 billion, instead of $ 5.3 billion to $ 6.1 billion.
Source: Qualcomm (PDF)
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