Apple, allies seeking to misdirect regulators, says Qualcomm

Qualcomm Inc fired a strong salvo in its case against Apple Inc on Monday, accusing critics of waging a "coordinated effort aimed at misdirecting" trade regulators.

The latest barrage involves Qualcomm's request that the US International Trade Commission ban certain iPhone 7 models for infringing on six Qualcomm patents.

Earlier this month, Qualcomm filed a complaint with the US International Trade Commission seeking to ban iPhones that use chips "other than those supplied by Qualcomm affiliates" after Apple began using Intel chips in the iPhone 7.

The commission is seeking comments before deciding whether to proceed with an investigation. Late last week, Intel, the Computer & Communications Industry Association (CCIA) and others weighed in on Apple's behalf.

These groups accused Qualcomm of being a monopoly that's not trying to protect its patents but instead aims to protect its cellular modem market share by blocking competition.

''Qualcomm is already using its dominant position to pressure competitors and tax competing products,'' said Ed Black, head of the CCIA, a trade group whose members include Facebook, Google, Intel and Microsoft but not Apple. ''If the ITC were to grant this exclusion order, it would help Qualcomm use its monopoly power for further leverage against Apple, and allow them to drive up prices on consumer devices.''

On Monday, Qualcomm shot back, accusing the tech trade groups and Intel of making false, self-serving accusations – including constructing a fictional two-player market for premium LTE chips where only Qualcomm and Intel compete.

''Companies such as MediaTek, Samsung, Marvell, Leadcore, Spreadtrum and HiSilicon (a Huawei company) provide LTE baseband processors for use in mobile devices, and their global sales of these products far surpass Intel's sales of similar products,'' Qualcomm said in an ITC filing.

Qualcomm is seeking to ban only iPhone 7s that contain Intel's cellular modems, which means devices running on AT&T's and T-Mobile's networks. It is not asking the ITC to ban older model iPhones, or iPhone7s that run on Verizon's or Sprint's networks - all of which use Qualcomm modems.

Last week, CCIA argued that barring Apple from importing foreign-assembled iPhones that use Intel Corp chips would cause "significant shocks to supply" for phones and would hurt consumers.

Qualcomm supplies so-called modem chips to Apple, which help iPhones and iPads connect to cellular data networks. The two have been locked in a sprawling legal battle in which Apple has objected to Qualcomm's business model of requiring customers to sign patent license agreements before buying chips.

In turn, Qualcomm has accused Apple of directing its contract manufacturers like Foxconn to withhold license payments in a bid to hurt Qualcomm. The conflict has taken a toll on Qualcomm's profit outlook.

In its filing on Monday, Qualcomm argued that its import ban is not actually about Intel's chips, but instead concerns the patented technology that surrounds the Intel chips in current versions of the iPhone. Thus a ban on importing the phones would not hurt competition in the long term, Qualcomm argued.

"Apple can purchase and utilize any LTE modem it chooses so long as it does not infringe Qualcomm's asserted patents," the company wrote.

Asked by Reuters for comment, Apple reiterated its previous stance on Qualcomm's business model, saying that Qualcomm supplies Apple "with a single connectivity component, but for years have been demanding a percentage of the total cost of our products - effectively taxing Apple's innovation."