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Apple accused of threats and lying to regulators in legal dispute with US chipmaker Qualcomm

Tuesday, April 11, 2017 2:09
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Qualcomm Inc (NASDAQ:QCOM) has accused Apple Inc (NASDAQ:AAPL) of inciting regulatory investigations of the US chipmaker by mispresenting facts and making false statements.

In a legal response filed late today in California, Qualcomm also claims Apple threatened it to cover up the use of inferior parts in some iPhones, breached contractual pledges and interfered with royalty payments.

Qualcomm is seeking “significant” damages after Apple sued it for at least US$1bn in January on claims it charged royalties for technology that the iPhone maker has “nothing to do with”.

Apple does not pay Qualcomm directly for its technology. It instead pays through contract manufacturers in Asia, such as Foxconn, which build the iPhone.

The legal battle centres around a commercial dispute on how much Qualcomm is entitled to charge phone makers to use its patented technology, regardless of whether they use its chips.  

Most of Quantum’s profit comes from licensing technology that covers the barebones of smart phone systems.

Apple claims that it has been overcharged billions of dollars indirectly by Qualcomm.

Qualcomm contends that Apple withheld a similar amount from four contract manufacturers, which as a result held back from payments to Qualcomm.

“The prospect of Apple’s continued interference threatens significant additional injury to Qualcomm,” the chipmaker said in today’s filing.

In December South Korea’s antitrust regulator fined Qualcomm 1.03trn won for violating antitrust laws.

A month later, the company was accused by the US Federal Trade Commission of forcing Apple to use its chips exclusively in return for lower licensing fees and cutting out rivals.

Apple filed a lawsuit against Qualcomm in the US in January for allegedly trying to control the chips market and withholding more than US$1bn in rebates as retribution for talking to Korean regulators. Apple is also suing Qualcomm in China, the UK and Japan.

Qualcomm fired back in today’s legal response, claiming Apple provided “false and misleading statements to induce regulators to take action against us because it would be in their commercial interests”.

The company also claims that Apple chose to limit the performance of iPhones that used Qualcomm chips so that consumers would not realise they performed better than those supplied by rival Intel.

Chips from Qualcomm and Intel were both included in different models of the iPhone 7.

Qualcomm said Apple told the media there was no difference in the wireless performance of the devices. Apple then allegedly threatened Qualcomm against disputing the statement by saying its position as a chip supplier to the tech giant would be jeopardised.

Apple responded to today’s filing by repeating its earlier claims that Qualcomm has been using “exclusionary tactics and excessive royalties”.

 “We are extremely disappointed in the way Qualcomm is conducting its business with us and…we have no choice left but to turn to the courts,” the iPhone maker said in January.

Story by ProactiveInvestors


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