Qualcomm has escalated its long-running dispute with Apple, claiming the iPhone maker stole software and shared it with rival chipmaker Intel.
Qualcomm Inc. (Nasdaq: QCOM) is widely reported to have filed court papers against Apple Inc. (Nasdaq: AAPL) alleging it ran a "multiyear campaign of sloppy, inappropriate and deceitful conduct to steal Qualcomm's information and trade secrets."
Apple's aim, Qualcomm argues, was to boost the performance of Intel Corp. (Nasdaq: INTC)'s products and make them a viable alternative to Qualcomm, which has been Apple's main supplier of modem chips for iPhones since 2011.
The stolen software is said to include computer source code, software development tools and data about the performance of Qualcomm chips, according to a report from The New York Times.
Apple and Qualcomm have long been at loggerheads over the royalties that smartphone makers pay Qualcomm for its intellectual property. Apple kicked off proceedings in early 2017 when it sued Qualcomm for $1 billion, claiming it had been overcharged for years and that Qualcomm had resorted to "exclusionary tactics and excessive royalties" to build a dominant position. (See Qualcomm, Apple Trade Blows Over Licensing.)
Qualcomm's immediate response was to accuse Apple of trying to upset its agreements with licensees and deliberately misrepresenting the performance of Qualcomm modems. (See Qualcomm Blasts Apple for Disrupting Deals in Legal Dispute.)
In a filing in April last year it said Apple chose not to use high-performance features of Qualcomm chipsets in the iPhone 7. It further argued that Apple "falsely claimed there was 'no discernible difference' between iPhones with Qualcomm's chipsets and iPhones with Intel's."
The intention, according to Qualcomm, was 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 $760 billion in phone sales."
Qualcomm's latest charge comes shortly after a "teardown" of the latest iPhones revealed Intel modems inside. According to speed tests from SpeedSmart, the latest iPhones provided significantly faster 4G connections than older devices during early testing. (See New iPhones Have Intel Inside.)
While contentious, the move to Intel had been anticipated by Qualcomm. "We believe Apple intends to solely use our competitor's modems rather than our modems in its next iPhone release," said Qualcomm CFO George Davis during an earnings call in July. "We will continue to provide modems for Apple legacy devices."
Nevertheless, in the context of the latest legal challenge, Apple's shift toward Intel in its latest devices will attract even more scrutiny than it already had.
Apple appears to have referred The New York Times to its legal dispute over device royalties when approached about Qualcomm's filing, while Intel declined to comment to the newspaper.
The iPhone maker is not the only legal challenger that Qualcomm has faced in recent years. Apple's move to sue Qualcomm in early 2017 came days after the US Federal Trade Commission accused Qualcomm of threatening to withhold processors unless customers signed up to its stringent licensing terms. (See Qualcomm Abused Dominance, Say US Authorities.)
In Europe, it was fined $997 million in January for antitrust violations dating back several years, while South Korea's Fair Trade Commission fined the company 1.03 trillion Won ($786 million, at today's exchange rate) in late 2016 for breaching the country's competition laws. (See Qualcomm to Appeal $865M Fine by South Korea's Fair Trade Commission.)
In 2015 Qualcomm agreed to pay a $975 million fine in China for similar abuses. (See Qualcomm to Pay $975M in China Antitrust Spat.)
— Iain Morris, International Editor, Light Reading