Qualcomm, the company that designs chips for the iPhone, has been accused by four Apple contractors of violating antitrust laws.
The accusing companies, who are involved in the assembly of Apple products, include Hon Hai Precision Industry Company (also known as Foxconn), Wistron Corporation, Compal Electronics, and Pegatron Corporation. In a lawsuit filed in a Southern California district court this Tuesday, the companies allege that Qualcomm violated two sections of an antitrust law known as the Sherman Act. The suit seeks to counter claims made against the four companies by Qualcomm this May.
The legal action taken by the contractors is the latest development in a dispute between Apple and Qualcomm which began this January when Apple sued Qualcomm for $1 billion over a dispute about royalty payments. The San-Diego based chip designer then retaliated in April, bringing a suit against the Cupertino company for allegedly making misleading claims about chip performance. A month later, Qualcomm took legal action against the four previously mentioned contractors for withholding patent royalties under Apple's instruction. As such, the lawsuit filed by the contractors acts as a counterclaim opposing Qualcomm's May filing.
With regards to this latest lawsuit, the lawyer representing the four companies, Theodore J. Boutrous, stated:
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.
A senior Apple official has reportedly confirmed that the Cupertino company is providing financial support for the legal defence of the contractors, with Apple having been formally added as a defendant in the case. The President of Qualcomm, Derek Aberle, noted Apple's influence in the dispute during a conference call, stating:
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.
The legal battle between Apple and Qualcomm has had adverse financial effects on the latter company, which had to lower its third quarter revenue forecasts in April and is expected to bring in about 13% less revenue in the June quarter than it made in the same period last year.