Apple Funds Manufacturers in Legal Battle Against Qualcomm

Apple is providing legal funding to its manufacturers counter-suit 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 counter-sued Apple and four iPhone manufacturers. The four manufacturers counter-sued Qualcomm, and Apple’s is footing their legal bills. (As Ibtimes reports, Apple clearly has the resources to help these companies out because they have a cash reserve of $250Bn.)

The companies suing Qualcomm are iPhone manufacturers Hon Hai Precision Industry, Winston Corp, Compal Electronics and Pegatron Corp. In addition to charging anti-trust 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, they own the chip technology that lets iPhones hook up to cell data networks. As Reuters reports, Apple and Qualcomm have been going at it with each other for a while. Apple sued Qualcomm first in January to the tune of about a billion dollars for unpaid rebates over smartphone components.

As the suit went on, Apple stopped making license payments to Qualcomm in April. Apple also urged its manufacturing partners to stop paying the company as well. Then Qualcomm struck back in May, trying to force their contractors to pay. Qualcomm also tried to get U.S. regulators to stop selling and importing iPhones.

Theodore J. Boutrous, who represents the four companies that 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.”