Qualcomm is hitting Apple in a totally new way starting today, with the mobile giant suing four of Apple's Taiwan-based contract manufacturers: Foxconn, Compal, Wistron, and Pegatron.
Forbes reports that Qualcomm is suing these four manufacturers for not paying royalities to Qualcomm for the patents on its smartphone tech, including IP on cellular modems - you know, 3G/4G are a big thing. Don Rosenberg, Executive Vice President and General Counsel of Qualcomm said: "It is unfortunate that we must take this action against these long-time licensees to enforce our agreements, but we cannot allow these manufacturers and Apple to use our valuable intellectual property without paying the fair and reasonable royalties to which they have agreed".
Qualcomm has accused Apple of "strong arming" the contract manufacturers to stop paying the licensing fees they legally owe Qualcomm, which is a breach of the contract between Qualcomm and the manufacturers. Qualcomm adds that Apple has promised to contribute towards any damages that the contract manufacturers are hit with, as a result of them not paying Qualcomm's royalty fees.
Rosenberg continued: "As Apple continues to collect billions of dollars from consumer sales of its Qualcomm-enabled products, it is using its market power as the wealthiest company in the world to try to coerce unfair and unreasonable license terms from Qualcomm in its global attack on the company. Our license agreements with Apple's manufacturers remain valid and enforceable. The manufacturers must continue to live up to their obligations under these agreements and Apple should immediately cease its tortious interference".
I talked to Founder & Principal Analyst of Moor Insights & Strategy, Patrick Moorhead, and he said: "Apple does not have an IP license with Qualcomm, but rather Qualcomm has IP licenses with Apple's ODMs, so it makes sense that Qualcomm would need to sue the ODMs for payment due to their breach of contract. As immersed as the larger dispute between Apple and Qualcomm is in IP, the suit between Qualcomm and Apple's ODMs is about breach of contract due to non-payment which, ironically, is slated to be heard in San Diego, Qualcomm's home town".
This could get ugly, and Qualcomm might see some more 0s and 1s enter its accounts, real soon.