Apple contractors Foxconn, Pegatron, Wistron, and Compal Electronics have filed an antitrust lawsuit against Qualcomm alleging that the company has violated two sections of the U.S. based Sherman Act. This is the latest and an ongoing battle between over wireless patent royalties.
Qualcomm is the market leader in smartphone modems and a primary supplier to Apple, yet Apple doesn’t have a direct patent deal with Qualcomm. Instead, Qualcomm requires Apple’s contractors to sign patent license agreements before purchasing chips, which the US Federal Trade Commission called in its own complaint a “no license, no chips” model.
Besides paying for the wireless chips themselves, Apple covers the licensing fees to the four manufacturers who then pay Qualcomm, this allows Qualcomm to take a percentage of the overall iPhone selling price in exchange for supplying the modem chips.
Apple stopped making royalty payments to its contractors after it sued Qualcomm in January for $1 billion. The dispute has been ongoing ever since, with Qualcomm filing a handful of countersuits of their own, accusing Apple of intentionally hindering chipsets on some iPhones, infringing on patents, and attempting to get an import ban of iPhones into the US with the FTC.
Speaking at the Fortune Brainstorm Tech conference in Aspen recently, Qualcomm CEO Steve Mollenkopf said the company's fight with Apple about patents was mostly a "fight about what to pay for the IP" that he described as the core of the industry. He expects that the Apple dispute will be resolved out of court as has been the case with similar legal battles in the 2000s.