Apple and Qualcomm’s license dispute is getting nasty

The legal battle started back in January when Apple sued Qualcomm for $1 billion for “abusing its clout” in the industry. Because the semiconductor giant enjoys a monopoly over important modem chips that connect devices to cellular or WiFi networks, it’s required to licence them under “fair, reasonable and non-discriminatory” terms. Apple argues it hasn’t done that, going as far as to claim that Qualcomm charges five times more than all of its other licensors combined.

Qualcomm hasn’t taken the issue lightly. Earlier this month, it responded to Apple’s lawsuits with one of its own, accusing the iPhone-maker of underutilizing its modem chips in the iPhone 7 and misrepresenting the performance disparity between Qualcomm basebands and those of its rivals.

Now, Apple is holding back money it owes to manufacturers of the iPhone. Qualcomm, for the most part, directly licenses its patents with partners, but Apple does things a little differently and pays partners like Foxconn that have their own agreements. It now expects to get no royalties during its current quarter.

“Apple is improperly interfering with Qualcomm’s long-standing agreements with Qualcomm’s licensees,” said Don Rosenberg, EVP and general counsel of Qualcomm. “These license agreements remain valid and enforceable. While Apple has acknowledged that payment is owed for the use of Qualcomm’s valuable intellectual property, it nevertheless continues to interfere with our contracts. Apple has now unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade.”

The move has forced Qualcomm to amend financial estimates it published only last week. The company now sees third quarter revenue reaching between $4.8 billion and $5.6 billion, instead of $5.3 billion to $6.1 billion.