This was followed by Qualcomm suing Apple in April for 5 reasons of its own.
Apple objects to Qualcomm's practice of charging a royalty on the price of a handset rather than the value of the chips inside it. Apple is legally bound to pay for Qualcomm's technology, as Apple itself has patents and charges for them - and to make it worse, Apple stopped paying Qualcomm their owed technology license payments. These two companies have been arguing over licensing fees and rebates, with the Federal Trade Commission (FTC) getting involved earlier this year. Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties.
The chipmaker claimed the lawsuit was baseless and accused Apple of misrepresenting facts, and countersued the iPhone maker, stating: "Apple wants to leverage its huge power to force Qualcomm into accepting less than fair value for the patented technologies that have led innovation in cellular technology and helped Apple generate more than $760bn (£590bn) in iPhone sales". This recent feud of Apple with Qualcomm could end up being profitable for Intel all the while. Qualcomm's tech is so basic and requisite to mobile devices that even smartphones that use chips made by manufacturers other than Qualcomm still have to cough up royalties to Qualcomm.
Apple relies on the iPhone to provide more than 60% of its overall sales, while Qualcomm has already been forced to cut its revenue projections by $500 million this quarter due to Apple witholding licencing fees.
According to this report published by Bloomberg, the San Diego-based California Chipmaker is basically preparing to force the International Trade Commission or the ITC, to stop the import of iPhones into the United States of America.
'To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding almost $1 billion in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them'.
Qualcomm chip inside an iPhone
The ITC has the advantage of speed, judges with experience in patent law and the ability to get an import ban.
Qualcomm, on the other hand, isn't content with receiving no royalties until the conclusion of a drawn-out battle in a USA federal court, which are notoriously slow. Each is known for being faster than USA courts.
Under the current circumstances, there seems little prospect of settlement.
During a call with analysts on Tuesday, Apple CEO Tim Cook explained Apple's reasoning for withholding the royalties.
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now. and Apple wasn't one of them! "And that's what courts are for".
Let us know what you think of the whole debacle in the comments.