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The conflict is but one aspect of the global legal battle
between regulators, Apple and Qualcomm, which supplies modem
chips that help phones connect to wireless data networks.
Last week, Qualcomm secured a preliminary victory in a patent
lawsuit in China that would have banned sales of some Apple
iPhones there. Apple later said it believed it was already in
compliance but would change its software "to address any
possible concern" about its compliance.
But Qualcomm was also handed a setback in an antitrust lawsuit
brought against it by the U.S. Federal Trade Commission when a
judge said it will not be able to mention that Apple ditched
Qualcomm chips for competing ones from Intel Corp when the case
goes to trial next month.
Qualcomm representatives did not immediately return a request
for comment on Sunday outside of U.S. business hours.
The group of contract manufacturers - which includes Foxconn
parent Hon Hai Precision Industry Co Ltd, Pegatron Corp, Wistron
Corp and Compal Electronics Inc - became embroiled in the
dispute between Apple and Qualcomm last year.
In the supply chain for electronics, contract manufacturers buy
Qualcomm chips and pay royalties when they build phones, and are
in turn reimbursed by companies like Apple. Qualcomm sued the
group last year, alleging they had stopped paying royalties
related to Apple products, and Apple joined their defense.
The contract manufacturers have since filed claims of their own
against Qualcomm, alleging the San Diego company's practice of
charging money for chips but then also asking for a cut of the
adjusted selling price of a mobile phone as a patent royalty
payment constitutes an anticompetitive business practice.
They are seeking $9 billion in damages from Qualcomm for
royalties they allege were illegal. That figure could triple if
the manufacturers succeed on their antitrust claims.
Ted Boutrous, a high-profile partner at Gibson, Dunn & Crutcher
LLP who is representing the contract manufacturers, told Reuters
that statements from Qualcomm executives suggesting there were
meaningful settlement talks with the contract manufacturers were
"false."
"To the extent Qualcomm has indicated there have been licensing
discussions with the contract manufacturers, they've basically
made the same sort of unreasonable demands that got them to
where they are right now, which impose significant preconditions
to even discuss a new arrangement," Boutrous said.
In July, Qualcomm CEO Steve Mollenkopf told investors on the
company's quarterly earnings call that Qualcomm and Apple itself
were in talks to resolve the litigation.
At a hearing in the case in San Diego on Nov. 30, one of Apple's
attorneys disputed that notion, saying there had not been "talks
in a number of months. So the parties are at loggerheads and are
going ... to have to go into trial."
(Reporting by Stephen Nellis in San Francisco; Editing by Chris
Reese and Himani Sarkar)
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