Apple, Qualcomm spat intensifies, manufacturers drawn in

Fiscal 3Q17 Won’t Be Great for Qualcomm Technology Licensing

The aforementioned contract manufacturers have stopped paying royalties they owe Qualcomm for the licensing of certain technology used on Apple's handsets and tablets.

In January, Apple sued Qualcomm for $1 billion alleging that the company has been "charging royalties for technologies they have nothing to do with".

"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", the company said.

Qualcomm, in its counterclaims to Apple's suit, accused Apple of unlawfully interfering with its agreements with contract manufacturers and of encouraging worldwide regulators to attack it. Our license agreements with Apple's manufacturers remain valid and enforceable.

The other manufacturers listed in the filing by Qualcomm were Pegatron Corp 4938.TW , Wistron Corp 3231.TW and Compal Electronics Inc 2324.TW .

"We don't like suing our licensees", said Rosenberg, noting that in the past decade the company has brought just one patent infringement case against a smartphone maker. "As immersed as the larger dispute between Apple and Qualcomm is in IP, the suit between Qualcomm and Apple's ODMs is about breach of contract due to non-payment which, ironically, is slated to be heard in San Diego, Qualcomm's home town".

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Apple reiterated that it had been trying to reach a licensing agreement with Qualcomm for more than five years but the company has refused to negotiate fair terms. The company had already warned shareholders that earnings for the next quarter will be down by $500m thanks to Apple withholding royalties.

Qualcomm was little changed at $55.89 at 12:45 p.m.in NY trading, while Apple dropped 2.2 percent to $152 as broader markets fell amid political turmoil in Washington. "You are responsible for paying that".

Now, Qualcomm is insisting that Apple was in no position to influence the manufacturers, as the license agreements were entered into before Apple sold the first iPhone.

Qualcomm responded immediately, stating that it "believes the complaint is based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry".

"We are suing to get our money", Rosenberg said.

Several other companies and trade associations seem to be of similar mind and have also filed briefs supporting the FTC.

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