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Imagination Chief Executive Officer Andrew Heath said Apple told
Imagination "at the end of March" that it would no longer need
its technology, according to an investor call on Tuesday. But
Apple said it told Imagination about its plans on Feb. 9.
Imagination ultimately notified shareholders of Apple's decision
on April 3, which sent its shares down 70 percent and eventually
forced it to put itself up for sale.
Apple's claims that Imagination sat on the news for weeks
without telling shareholders heaps more trouble on the company
and could spur regulators to examine whether Imagination
improperly withheld information from shareholders, according to
one legal expert.
Imagination's Heath told investors that Apple told Imagination
at the end of March that Apple's new products "at some point in
2018 or early 2019 would not contain our IP and therefore, they
were not required to pay us royalties on it."
Apple contested that timeline and said it warned Imagination
that it would "stop accepting new IP from them" as early as 2015
and gave a final warning a month before Imagination's CEO
claims.
"After lengthy discussions, we advised them on February 9 that
we expected to wind down our licensing agreement since we need
unique and differentiating IP for our products," Apple said in
the statement.
Imagination did not immediately respond to a request for comment
outside of normal UK business hours. Heath has said he does not
believe Apple can replace Imagination's technology without using
some of Imagination's patents that would require royalties.
Jonathan Parry, an attorney with UK law firm White & Case who is
not involved in the dispute, said European financial regulators
were likely to examine the timing of Apple's discussions with
Imagination to see whether Imagination's leaders failed to
disclose material information to shareholders.
Regulators would likely focus on when Imagination's leaders
decided it was "likely" that Apple would draw down its business
with the company, which Imagination would then be required to
disclose to shareholders. The legal bar for "likely" is
different from the word's common usage, he said.
"The wording used in judgments is 'a realistic prospect' that
something might happen," Parry said. "The judge did not assign a
percentage, but he made it clear that something doesn't have to
be 'more likely than not'" to trigger public disclosure
requirements.
(Adds missing word "to" in paragraph 4)
(Reporting by Stephen Nellis; Editing by Lisa Shumaker)
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