When Intel and Samsung joined the fray last Friday by filing amicus briefs in support of the FTC's complaint against, matters went from bad to worse for Qualcomm
What apparently started out as a royalty negotiation gone wrong between Qualcomm and Apple is now taking on a life of its own.
This is no longer just a two-team legal hassle. When Intel and Samsung joined the fray last Friday by filing amicus briefs in support of the Federal Trade Commission’s complaint, matters went from bad to worse for Qualcomm.
The case is starting to look like Qualcomm v. The World.
Amidst a hail of legal actions, Qualcomm Wednesday shot back. It filed a lawsuit against four ODMs who manufacture Apple’s products for not paying royalties. The contract manufacturers listed in the filing by Qualcomm are Foxconn, Pegatron, Wistron and Compal Electronics.
Qualcomm said in a complaint filed in the U.S. District Court for the Southern District of California that Apple had advised the contract manufacturers to withhold royalty payments. Apple agreed to indemnify them against any damages resulting from breaching their agreements with Qualcomm.
Under the arrangement, Apple would compensate royalty payments ODMs must make to Qualcomm. But last month Qualcomm claimed 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.
Twists and turns
Complaints filed against Qualcomm are many. Beyond Apple’s $1 billion lawsuit against filed Jan. 20, Qualcomm is also battling regulatory agencies.
Last December, a ruling by South Korea’s Fair Trade Commission, for example, fined Qualcomm $854 million for violating competition laws. Qualcomm appealed on Feb. 21, seeking a stay of the fine.
Arguably Qualcomm's biggest worry right now is an FTC’s anti-trust case. On January 17 in federal court, the FTC charged Qualcomm with "using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products."
In that filing, the FTC laid out three major allegations, charging that Qualcomm 1) maintains a “no license, no chips” policy under which it will supply its baseband processors only on the condition that cell phone manufacturers agree to Qualcomm’s preferred license terms, 2) refuses to license standard-essential patents to competitors, and 3) extracts exclusivity from Apple in exchange for reduced patent royalties.
Qualcomm filed a motion to dismiss the FTC suit on April 3. Qualcomm lawyers said that the FTC’s legal theories are flawed, and that it failed to prove harm to Qualcomm competitors.
FTC's antitrust case
The FTC’s case will be heard in federal court in San Jose on June 15.
The FTC charges took a sudden new turn last Friday (May 12), when both Intel and Samsung filed amicus briefs against Qualcomm.
Next page: Clear imminent danger to Qualcomm