Because Qualcomm's licensing deals relating to the iPhone and iPad are not with Apple itself but with the contract manufacturers that produce the devices, the maker of Snapdragon processors and wireless modems can not sue Apple directly for withholding those royalties.
In April, Qualcomm said in its second-fiscal quarter earnings results that its reported revenue had not been affected by the withheld royalties, as the suppliers continued to report the royalties and acknowledged that the money was still owed.
Qualcomm has already filed a separate claim against Apple for its unlawful interference with the license agreements between Qualcomm and these manufacturers. Our license agreements with Apple's manufacturers remain valid and enforceable. "Despite being just one of over a dozen companies that contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined". "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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The FTC brought the lawsuit against Qualcomm for anticompetitive patent-licensing practices in January in the U.S. District Court for the Northern District of California. 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.
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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.
Qualcomm said Apple has agreed to cover the costs incurred by the contract manufacturers.
"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", Qualcomm said on Wednesday. While it is not unusual for the companies and other organizations to make such filings, for the briefs to be filed at such an early stage in the process shows the interest the case is garnering in the tech community. "And we said, that is interesting, but that is between you and Apple".
Apple and regulators claim Qualcomm abuses its market power to overcharge for "standard-essential patents" and block competition.