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Qualcomm seeks court order forcing Apple suppliers to pay royalties amid legal dispute

As part of an ongoing patent licensing dispute with Apple, Qualcomm on Wednesday requested a court order stipulating that Apple contract manufacturers maintain royalty payments during the legal process.

News of the court request arrives from Axios, which obtained a statement on today's proceedings from Qualcomm's general counsel Don Rosenberg.

"We are confident that our contracts will be found valid and enforceable but in the interim it is only fair and equitable that our licensees pay for the property they are using," Rosenberg said.

Last month, Qualcomm revealed an unspecified number of contract manufacturers using Qualcomm IP to build hardware bound for Apple products were withholding royalty payments. Certain suppliers continue to underpay royalties in amounts equal to those Qualcomm had not paid Apple under previously arranged licensing rebate deals.

In a lawsuit leveled in January, Apple accused Qualcomm of unfair licensing terms, saying the firm withheld nearly $1 billion in rebates in retaliation for participating in a South Korean antitrust investigation.

At the heart of Apple's suit are claims against Qualcomm's business practices, which the iPhone maker describes as monopolistic. Apple alleges Qualcomm abuses its "monopoly power" of the mobile wireless chip market to flout FRAND (fair, reasonable and nondiscriminatory) patent commitments to charge customers exorbitant royalty rates on standard-essential patents. Qualcomm also restricts sales to buyers who have agreed to license its SEPs, a practice Apple refers to as "double-dipping."

Those accusations mirror certain claims addressed in a U.S. Federal Trade Commission antitrust lawsuit also lodged in January.

For its part, Qualcomm claims Apple is interfering with its contract manufacturers, and to that end filed an amended counterclaim on Wednesday that provides further evidence of such tampering. Qualcomm initially outlined its case in a countersuit in April.

Along with allegations relating to hardware suppliers, Qualcomm asserts Apple is in breach of contract and has in the past wrongly induced regulatory action in a number of jurisdictions. The original counterclaim cited 35 specific defenses to Apple's January allegations. Qualcomm asserts that Apple has not suffered tangible injury, antitrust or otherwise, from Qualcomm's business practices.



14 Comments

Rayz2016 8 Years · 6957 comments

The reduction in cash flow must hurt. 

Indeed.

It's a tricky one though. With their payments being withheld then Qualcomm will be forced to get this resolved as soon as possible. If folk are still paying then their best bet is to keep the whole thing tied up in the courts for the next decade.

But the same can also be said for Apple; this non-payment thing will suit them for as long as possible, though knowing how Apple works, the money they're withholding will be accounted for and held in case they lose the case. They can't do anything with the money until this is resolved, so a speedy solution is really in their best interest as well, I think.

rotateleftbyte 12 Years · 1630 comments

They could offer to put the money in escrow pending the outcome of the case.
That seems to be acceptable in many cases.

saltyzip 10 Years · 193 comments

The reduction in cash flow must hurt. 

Yep, this is just wrong by Apple.

They are using their power to bully supplier's.

Apple make more than enough money off their devices and by threatening suppliers to reduce costs with only one aim to make them even more money to feed the share price rise, it makes me sick. Hope Apple get shackled with huge fine on this one and it tarnishes their reputation too.

anton zuykov 9 Years · 1056 comments

saltyzip said:
The reduction in cash flow must hurt. 
Yep, this is just wrong by Apple.

They are using their power to bully supplier's.

Apple make more than enough money off their devices and by threatening suppliers to reduce costs with only one aim to make them even more money to feed the share price rise, it makes me sick. Hope Apple get shackled with huge fine on this one and it tarnishes their reputation too.

What are you on? Is that.. (cough).... medicine even legal or was it just an overdoze?
Qualcomm conjured some weird scheme of how royalties are paid, yet it is somehow Apple's fault?