Qualcomm has officially filed for a preliminary injunction against Apple suppliers who are allegedly withholding royalty payments to Qualcomm on Apple’s orders. The list includes Compal, Wistron, Hon Hai Precision, also known as Foxconn, and Pegatron. According to Qualcomm, Apple is having these suppliers follow in its own footsteps and withhold any sort of payment to Qualcomm until the lengthy court battle that the two are currently embroiled in blows over. Qualcomm says that its request will merely keep the named parties’ activities within the terms of their agreements with Qualcomm, and will prevent “irreparable harm” to Qualcomm’s business interests.
Apple has said in the past that it won’t pay Qualcomm until the court case is cleared up because the amount that it owes to Qualcomm may wind up changing due to the case. Apple’s suppliers, on the other hand, have their own independent deals with Qualcomm. Whether this changes its obligation to follow Apple’s lead or lack thereof is essentially up to the courts, at this point. Apple, for its part, seems to imply with its actions that its suppliers are at liberty to wait until they know how much they have to pay for sure before paying out. Qualcomm, on the other hand, is looking to enforce its contracts. Should the courts side with Qualcomm, it could set a precedent that may affect how the rest of the case between Apple and Qualcomm goes.
This case runs alongside lawsuits over anticompetitive behavior in multiple territories, including the US, thanks to one lawsuit from the Federal Trade Commission. Apple has filed similar suits against Qualcomm in the UK and China. Apple is arguing that Qualcomm’s contract terms are unfair and that its licensing fees are far too high. Qualcomm’s response, of course, was to protect its business interests by attempting to collect on the amounts named in the original terms of relevant contracts. Should the courts side with Apple in the end, Qualcomm could find that the precedent set there puts it in a slippery situation, potentially forcing it into multiple renegotiations. If the courts side with Qualcomm, renegotiations may still happen, but Qualcomm’s contracts will be found valid and enforceable, allowing it to pursue collection measures in the mean time.