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Qualcomm to continue supplying Apple with chips despite $1B lawsuit, considering legal rebuttal

Qualcomm is expected to continue supplying modems and other components to Apple despite facing a $1 billion lawsuit over patent royalties and a related U.S. Federal Trade Commission action involving the Cupertino tech giant, according to a report on Monday,




Citing sources familiar with Qualcomm's plans, Re/code reports that while Qualcomm is mulling a countersuit against Apple, it is not looking to end or suspend business relations with the iPhone maker. That means the chipmaker will continue to supply Apple with a steady stream of mobile modems even as legal proceedings progress behind the scenes.

Both decisions are perhaps expected. Qualcomm needs to fight Apple's claims, or at least seek to have them dismissed, but at the same time the company cannot afford to lose one of its biggest clients.

Apple filed suit against Qualcomm on Friday alleging the firm takes part in extortion, monopolistic practices, price gouging and other unsavory business tactics.

In particular, Qualcomm uses its "monopoly power" to flout FRAND (fair, reasonable and nondiscriminatory) patent commitments by charging clients exorbitant royalty rates on standard-essential patents. Further, the chipmaker will only sell chipsets to customers who have first agreed to license the SEPs, a practice Apple refers to as "double-dipping."

The impetus for Apple's suit is Qualcomm's refusal to pay nearly $1 billion in owed licensing rebates after Apple cooperated with a Korea Fair Trade Commission probe into the chipmaker's business practices. Qualcomm was fined $854 million as a result of the investigation, and Apple alleges the firm is withholding payment in retaliation.

Qualcomm is also the target of an FTC lawsuit alleging the company forced Apple to buy wireless chips in exchange for better royalty rates.

Responding to the recent legal barrage, Qualcomm calls the claims from both suits baseless, adding it was Apple who provoked the "regulatory attacks." As noted by today's report, Qualcomm believes Apple is in the wrong for turning a contract dispute into regulatory issue.

Re/code was unable to elaborate on Qualcomm's potential countersuit. Though specifics are unknown at this time, the company apparently believes it has sufficient legal fodder to file suit against Apple. Whether the case is to be lodged domestically or in an international court is also unclear.

In any case, the Apple and FTC filings put Qualcomm in a bind. Beyond the nearly $1 billion payout and related fines attached to the Apple action, the chipmaker could be facing a major change to its lucrative patent licensing operation as implied by the antitrust suit.