Apple, Qualcomm spat intensifies, manufacturers drawn in

Why Apple and Other Smartphone Makers Are Ganging Up on Qualcomm

Unlike other smartphone companies, Apple doesn't have a direct license with Qualcomm and instead pays contractors to make its devices, parts of which are used to cover royalties such as those owed under agreements struck before the first iPhone appeared.

The chipmaker said the manufacturers were refusing to pay royalties on the Apple products produced. Qualcomm adds that Apple has promised to contribute towards any damages that the contract manufacturers are hit with, as a result of them not paying Qualcomm's royalty fees.

Apple doesn't have a patent license directly with Qualcomm, relying instead on licenses held by the contract manufacturers, whom Apple reimburses.

The fight between Apple and Samsung is getting uglier.

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. Further, the defendants are continuing to pay Qualcomm royalties for use of Qualcomm's technology in non-Apple products, under the very same agreements that apply to the Apple products.

Qualcomm's shares were marginally lower at $55.66 in premarket trading.

"Pay for what you take and if you don't want to pay for it, don't take it", he said.

Qualcomm has accused Apple of "strong arming" the contract manufacturers to stop paying the licensing fees they legally owe Qualcomm, which is a breach of the contract between Qualcomm and the manufacturers. Those contract manufacturers in turn had stopped paying Qualcomm by the same amount.

Apple joined the assault shortly after the FTC and perhaps has been the most aggressive in maneuvers against Qualcomm, which believes that Apple is behind a "global attack on the company".

Qualcomm pioneered a good portion of 3G/4G cellular radio technology and holds thousands of patents on its inventions.

"We are suing to get our money", Rosenberg said. Its technology is inside almost every smartphone.

Apple and regulators claim Qualcomm abuses its market power to overcharge for "standard-essential patents" and block competition.

"Qualcomm seeks an order that would require the defendants to comply with their long-standing contractual obligations to Qualcomm, as well as declaratory relief and damages", the company said in a news release. Apple filed its suit in California in January. A hearing on the dismissal motion is slated for mid-June.

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