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Wednesday, May 17, 2017
Qualcomm Sues Apple Contract Manufacturers


Qualcomm filed a lawsuit against four Apple contract manufacturers - Hon Hai Precision Industry, Pegatron, Wistron and Compal Electronics - for not paying royalties, as its legal battle with the iPhone maker intensifies.

Qualcomm said in its complaint that Apple had advised the contract manufacturers to withhold royalty payments and agreed to indemnify them against any damages resulting from the breach of their agreements with Qualcomm.

In the complaint filed in the United States District Court for the Southern District of California, Qualcomm did not disclose the quantum of royalty owed to it by the manufacturers.

Qualcomm said last month that Apple had decided to withhold royalty payments to its contract manufacturers that are owed to the chipmaker, for sales made in the first quarter of 2017, until the dispute is resolved in court.

Qualcomm added in the filing that Apple is trying to force the company to agree to a "unreasonable demand for a below-market direct license".

"It is unfortunate that we must take this action against these long-time licensees to enforce our agreements, but we cannot allow these manufacturers and Apple to use our valuable intellectual property without paying the fair and reasonable royalties to which they have agreed," said Don Rosenberg, executive vice president and general counsel of Qualcomm. "As Apple continues to collect billions of dollars from consumer sales of its Qualcomm-enabled products, it is using its market power as the wealthiest company in the world to try to coerce unfair and unreasonable license terms from Qualcomm in its global attack on the company. Our license agreements with Apple's manufacturers remain valid and enforceable. The manufacturers must continue to live up to their obligations under these agreements and Apple should immediately cease its tortious interference."

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.

Qualcomm said it sought an order that would require the manufacturers to comply with their long-standing contractual obligations to the company, as well as declaratory relief and damages.

Apple sued Qualcomm in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.



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