For a moment, it looked like Qualcomm had to stop forcing phone makers to pay extra license fees for their patents to get modem and processor chip shipments for their gadgets – because a U.S. judge ruled that “no-license, no chips ”practice was anti-competitive in May 2019. But today, the Ninth Circuit completely overturned that judgment, giving Qualcomm a huge profit just as we entered the 5G cellular era.
According to the ruling (you can see the main bits in the tweet below) Judge Callahan disagreed with the Federal Trade Commission’s core archive that expels Qualcomm rival chipmakers by effectively adding a tax when phone makers buy rival chips, and they forced to pay royalties for Qualcomm’s standards-essential patents, even if they did not use Qualcomm products – which, according to the FTC, made competing products more expensive than the bundles of chips and patents Qualcomm offers.
Based on the court’s ruling, it sounds as if it is still possible that Qualcomm has violated the concept of fair, equitable and non-discriminatory (FRAND) licensing terms where it has agreed to make its patent standards essential. to begin with. These terms are intended to prevent companies like Qualcomm from unfairly using patents and provide a level playing field for other chipmakers who also want to make modems and processors. But Judge Callahan states that this is a case for a different court and a different kind of court case to decide.
As we have discussed in the past, the status of this anti-trust lawsuit has not kept a number of countries out of Qualcomm’s fine for anti-competitive practices, including $ 975 million to China in 2015, $ 854 million to Southern Korea in 2016, and $ 1.2 billion to the EU in 2018 for a specific deal with Apple. Qualcomm settled a $ 774 million fine from Taiwan around mid-2018.
But – unless this next goes to the Supreme Court – Qualcomm’s successful appeal means the chipmaker does not have to stop these practices, and it can even be built in from here on out. The original ruling of the district court for the FTC would have stopped Qualcomm immediately, but Bloomberg reports that Judge Lucy Koh’s order was upheld to give Qualcomm time to appeal. “The court’s ruling is disappointing and we will consider our options,” read part of a statement from the FTC’s Bureau of Competition, according to Bloomberg.
Unless there is another case we are missing, this seems to raise the big pending intellectual property lawsuits against Qualcomm. Apple abruptly dropped all its lawsuits last April when it finally realized that Intel would not supply the modems and it had to play nicely with Qualcomm, paying $ 4.5 billion in the process. Huawei has recently signed a long-term patent licensing agreement with Qualcomm, and Qualcomm is currently hoping to find a way through the Trump administration’s ban on selling chips to Huawei as well.
