The legal battle between Qualcomm and Apple over patent royalties for wireless chips has been further escalated. Qualcomm has effectively accused Apple of blackmailing it by instructing its suppliers to withhold royalty payments.
Qualcomm makes the accusation in a court filing requesting an injunction against all four of Apple’s iPhone manufacturers …
Barrons cited the relevant section – the bold part is our emphasis.
Apple is not disputing that it must pay royalties to Qualcomm for patented wireless technology, but it believes that a contract which requires it to pay a percentage of the cost of an iPhone is unreasonable. CNET highlighted comments made about the case by Apple CEO Tim Cook during the most recent earnings call.
Although a percentage of the iPhone cost has always been the basis of the agreement between the two companies, Apple likely wants to change this as it prepares the iPhone 8, which is expected to sell for a higher price than earlier models. The most recent analyst estimate suggests that the iPhone 8 will max out at $1,070.
The battle began when the FTC accused Qualcomm of effectively giving itself a monopoly by saying that it would charge Apple higher patent royalties unless the company agreed not to source baseband processors from its competitors. Apple then sued Qualcomm in several different countries, Qualcomm countersued, tried to get iPhone imports banned and said that iPhone suppliers were withholding around $1B in overdue royalties. It subsequently sued the suppliers directly, and now seeks an injunction forcing them to continue payments until the main case is resolved.
