Apple Inc. (NASDAQ:AAPL) has decided to file a lawsuit against the San Diego-based Qualcomm, which is one of Apple’s largest suppliers. The lawsuit was filed in the Southern District of California U.S. District Court.
Apple’s Charge Against Qualcomm
Qualcomm has been accused of charging “excessive royalties” and not giving $1 billion worth of rebates that were promised earlier to Apple, after the iPhone maker decided to work with antitrust regulators in South Korea, currently investigating the chip maker. Qualcomm supplies chips to both Samsung and Apple that are used for connecting phones to wireless networks. Together, these two companies account for 40 percent of the $23.5 billion revenue of Qualcomm.
Apple says Qualcomm (NASDAQ:QCOM) did more than just that. They started to extort the business by changing their response, and providing false information to the Korea Fair Trade Commission, putting them up as a wager against the promised rebates to Apple, which they refused.
Plus, according to Apple, Qualcomm asked them to pay a separate licensing fee for the same chips they were selling to Apple. This “no license, no chip” policy is unjust, they say. Qualcomm even put pressure on network carriers not to support or sell to Apple. According to their “no license, no chip” policy, Qualcomm will provide their baseband processors only when cellphone makers agree to their license terms.
Don Rosenberg, Qualcomm’s General Counsel, however, denies these charges, saying they are “baseless”. The statement also said, “Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, by misrepresenting facts and withholding information”.
Qualcomm Welcomes the Apple Lawsuit
The relationship between the two businesses has broken down so much that Qualcomm even welcomed the lawsuit against them saying, “We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s (NASDAQ:AAPL) practices and a robust examination of the merits”.
Further, the company says the rebates offered to Apple were conditional, based on them using the chips, and not pushing litigation, which accused Qualcomm of unfair licensing practices.
Last month, South Korean regulators fined the chip maker about $850 million for forcing unfair patent licensing agreements on phone makers and making them buy their modem chips. Qualcomm has also been in trouble in China, having paid a $975 million fine, and the European Union too has accused them of abusing their market power for thwarting business rivals.