Text size
Pau Barrena / AFP via Getty Images
Shares of mobile device maker Qualcomm jumped into trading on Tuesday after the U.S. Court of Appeals for the Ninth Circuit ruled against the Federal Trade Commission in a major anti-trust case.
Qualcomm (ticker: QCOM) stock gained 3.6% to $ 110.24 in midday trading.
The three-judge panel overturned the 2019 ruling that sparked a tempest, ending the chip industry. In it, Judge Lucy Koh said that because Qualcomm refused to sell chips to companies such as Apple (AAPL), unless they also licensed its patents, it held an illegal monopoly in smartphone semiconductors.
The ruling is a blow to the case of the FTC, which last year threatened to reorganize the chip market because it forced Qualcomm to negotiate with more than 300 equipment manufacturers. It was not immediately clear whether the FTC intends to appeal the decision.
Finally, Koh’s order was seized pending the appeal, after the Department of Justice backed Qualcomm against the FTC, at a time when it claimed the decision could harm U.S. competitiveness in various types of semi-reading-related technology.
In a note to customers Tuesday, Raymond James analyst Chris Caso wrote that after securing licensing agreements with every major production of original equipment and the apparent conclusion to this matter, Qualcomm’s licensing is “now safer than ever.” Caso notes that because the company recently signed two more licensing agreements, a negative decision would have a muted effect on the company, but that in winning the appeal, the issue is essentially the same. Its estimate for annual licensing is now $ 5.5 billion.
The Ninth Circuit ruled that Qualcomm has not violated any anti-trust laws because the company is not required to license rival suppliers of competing semiconductors.
“The panel maintained that royalties from patent licensing and ‘no license, no chips’ policies did not impose any anti-competitive duty on the sale of rival modem chips,” the Ninth Circuit panel wrote in the court opinion. . “Instead, these aspects of Qualcomm’s business model were ‘chip delivery neutral’ and did not undermine competition in the relevant markets.”
In July, Qualcomm said Huawei had signed a license agreement and paid the company a backlog of patent license fees. Huawei in China had opposed the payment of Qualcomm license fees.
“The unanimous reversal of the Court of Appeals, freeing up the District Court’s decision in full, validates our business model and patent licensing program and underscores the enormous contributions Qualcomm has made to the sector,” said Don Rosenberg, EPP and General lawyer for Qualcomm, in an email to Barron’s. “We thank the panel for their insight into this important issue.”
The FTC did not immediately return a request for comment.
Write to Max A. Cherney at [email protected]
.
