Qualcomm, Apple Dispute Gets Nastier

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Qualcom Inc. (NASDAQ: QCOM) on Tuesday filed a motion in San Diego Superior Court to amend a complaint filed last November charging Apple Inc. (NASDAQ: AAPL) with violating the terms of a master software agreement between the companies. Qualcomm is now asking the court to add charges that Apple stole Qualcomm’s intellectual property in order to share the information with Intel Corp. (NASDAQ: INTC), which was having trouble engineering chips that Apple used to replace Qualcomm’s modem chipsets in Apple’s iPhones.

Qualcomm has not filed a complaint against Intel.

According to a report from Reuters, Tuesday’s filing alleges that Apple stole Qualcomm’s intellectual property. The report cites the filing, claiming that the theft of trade secrets was part of a:

… multi-year campaign of sloppy, inappropriate and deceitful conduct … for the purpose of improving lower-quality modem chipsets, including those manufactured by Intel, a competitor of Qualcomm, to render such chipsets useable in Apple devices with the ultimate goal of diverting Qualcomm’s Apple-based business to Intel.

Apple began using Intel modem chipsets in some iPhone 7 models, and in July Qualcomm told investors that it believes its modem chips have been replaced from the latest generation of iPhones, the Xs, Xs Max and the Xr, that were launched last week. Reuters noted that tear-downs of the new iPhones confirm that the modem chips are indeed made by Intel.

When Qualcomm was Apple’s modem chip supplier, according to the chipmaker, it uncovered evidence that Apple’s engineers “repeatedly” used Qualcomm’s software tools to assist Intel’s engineers “improve the sub-par performance of Intel’s chipsets.”

Qualcomm wants the new charges added to the original charges filed last November, although the company’s general counsel, Donald Rosenberg, told CNBC that the new charges stand on their own, implying that they will be filed separately if this motion fails. He added:

Unlawful use of Qualcomm’s valuable trade secrets to try to help a competitor catch up irreparably harms us and must not be allowed to continue.

Apple stock traded up about 0.6% at $222.25 in late morning action Tuesday. The stock’s 52-week range is $150.24 to $229.67, and the consensus price target is $233.56.

Qualcomm shares traded down about 0.3%, at $73.39 in a 52-week range of $48.56 to $76.50. The consensus price target on the stock is $71.86.