Steve Mollenkopf, CEO of Qualcomm, at the Mobile World Congress in Barcelona on February 23, 2016.
Brad Quick | CNBC
Qualcomm stocks rose more than 4% on Tuesday after a U.S. Court of Appeals reversed the Federal Trade Commission’s 2019 anti-victory against the world’s largest smartphone modem chipmaker.
The ruling marks the end of a chapter in a saga that saw Qualcomm’s primary companies, including its lucrative patent licensing company, come under fire from regulators around the world. The FTC originally brought the case in 2017.
“We refuse to admit anti-trust liability in these dynamic and rapidly changing technology markets without clear evidence of anti-competitive effect,” wrote Consuelo M. Callahan, circuit judge for the Ninth District.
“The Court of Appeals unanimously reverses, completely dismissing the District Court’s decision, validating our business model and patent licensing program and underlining the enormous contributions Qualcomm has made to the sector,” Qualcomm General Counsel Don Rosenberg said in a statement.
Last year, U.S. District Judge Lucy Koh sat down with the FTC of the U.S., which accused the company of using “anti-competitive tactics” to license key wireless technology and monopolize the market for modem chips. At the heart of the dispute were the fees that Qualcomm charged wireless patents for needing to make a smartphone modem and how it bundled those fees with its own chips.
Koh said Qualcomm was engaging in “widespread” anti-competitive behavior against smartphone makers such as Apple and Samsung, including threatening to cut chip requirements or withhold technical support.
Koh published a mandate to limit Qualcomm’s business practices, including ordering the renegotiation of licensing agreements, which was put on hold pending appeal. The 3-0 ruling of the Court of Appeal for the Ninth District on Tuesday reversed that decision.
Apple officials, including its COO, had testified in the case, and the iPhone maker testified in its own civil trial with Qualcomm that Qualcomm’s licensing policies were anti-competitive. Apple settled its related legal battle with Qualcomm and decided last year to use Qualcomm chips in its iPhones shortly before the FTC victory.
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