Apple Funds Manufacturers in Legal Battle Against Qualcomm

Apple Funds Manufacturers in Legal Battle Against Qualcomm

With big corporations like Apple, litigation comes with the territory. Recently, Apple sued and began withholding payment to Qualcomm after being charged excess royalties. Qualcomm quickly countersued Apple and four iPhone manufacturers. The four manufacturers countersued Qualcomm, and Apple is footing their legal bills. (As IBTimes reports, Apple clearly has the resources to help these companies out because it has a cash reserve of $250 billion.)

The companies suing Qualcomm are iPhone manufacturers Hon Hai Precision Industry, Wistron Corp, Compal Electronics, and Pegatron Corp. In addition to alleging antitrust violations, these companies are also claiming that Qualcomm is violating the Sherman Act, the federal law that protects free trade.

If you’re not familiar with Qualcomm, it owns the chip technology that lets iPhones connect to cellular data networks. As Reuters reports, Apple and Qualcomm have been battling each other for a while. Apple sued Qualcomm first in January for about a billion dollars over unpaid rebates for smartphone components.

As the suit progressed, Apple stopped making license payments to Qualcomm in April. Apple also urged its manufacturing partners to stop paying the company. Qualcomm struck back in May, trying to force its contractors to pay. Qualcomm also tried to get U.S. regulators to halt the sale and importation of iPhones.

Theodore J. Boutrous, who represents the four companies Apple is backing, told Reuters that the Qualcomm suit was a retaliatory strike: “Qualcomm has confirmed publicly that this lawsuit against our clients is intended to make a point about Apple and punish our clients for working with Apple. The companies are bringing their own claims and defenses against Qualcomm.”

Derek Aberle, president of Qualcomm, responded, “It is clear that Apple is controlling all of the contract manufacturers’ statements and actions in the litigation. If Apple hadn’t interfered with the licenses and instructed the contract manufacturers to take these actions, the contract manufacturers would not be contesting the licenses now.”