UK chip designer opens dispute with Apple

A UK graphics chip designer has opened a legal dispute with Apple over use of its technology. Imagination Technologies has begun proceedings in relation to the use of its chips in the iPhone. An out-of-court settlement failed to materialise after months of negotiations, forcing the chip manufacturer to open an official dispute.

The British company said it has ‘commenced the dispute resolution procedure’ following Apple’s decision to ditch the contract which currently exists between the two firms. Imagination Technologies had hoped to reach a new deal with Apple, however the US giant has instead decided to focus on producing its own technology within the next two years. Currently, every iPhone and iPad features chips manufactured by Imagination Technologies.

Imagination – which relies on Apple for half of its revenue – has also revealed that it is selling off two of its three major businesses in a desperate bid to shore up cash.

The UK manufacturer argues that Apple will not be able to create its own chips without using some of Imagination’s technology. A spokesman for Imagination said: "We have been unable to make satisfactory progress with Apple to date regarding alternative commercial agreements" and hoped to reach a deal "through a more structured process. Imagination has been unable to make satisfactory progress with Apple to date regarding alternative commercial arrangements for the current licence and royalty agreement.

"Imagination has therefore commenced the dispute resolution procedure under the licence agreement with a view to reaching an agreement through a more structured process. Imagination has reserved all its rights in respect of Apple’s unauthorised use of Imagination’s confidential information and Imagination’s intellectual property rights."

Apple is not shy of a legal wrangling. Last month, chip maker Qualcomm slapped Apple with a counter-lawsuit after the iPhone maker took the chip manufacturer to court for breaching an agreement between the two firms. Apple accused the chip manufacturer of overcharging them and refusing to pay a whopping $1 billion in promised rebates. However, the legal wrangling has now taken a sudden U-turn, with Qualcomm coming out swimming and counter-suing Apple. The chip manufacturer alleged that Apple has ‘encouraged regulatory attacks’ on its business by making ‘false statements’ around the world.