FTC sues Qualcomm over FRAND tactics
The US Federal Trade Commission (FTC) has sued Qualcomm, accusing the telecoms equipment company of using anti-competitive tactics.
In an announcement published yesterday, January 17, the FTC claimed Qualcomm had used the tactics to “maintain its monopoly” in the supply of a key semiconductor devices used in cell phones and other consumer products.
The FTC filed the lawsuit at the US District Court for the Northern District of California, alleging that Qualcomm had violated the FTC Act.
It claimed that Qualcomm had obtained elevated royalties and other licence terms for its standard-essential patents by “threatening to disrupt cell phone manufacturers’ supply of baseband processors”.
According to the commission, the telecoms equipment company is the world’s dominant supplier of baseband processors, devices that manage cellular communications in mobile products.
The FTC alleged that Qualcomm has used its dominant position to “impose onerous and anti-competitive supply and licensing terms on cell phone manufacturers and to weaken competitors”.
Qualcomm also owns patents that it has declared essential to industry standards that enable cellular connectivity, said the FTC.
“In exchange for having their patented technologies included in the standards, participants typically commit to license their patents on what are known as fair, reasonable, and non-discriminatory, or FRAND terms,” it said.
However, Qualcomm allegedly refused to license these standard-essential patents to competitors, despite its FRAND commitments.
The telecoms equipment company also allegedly “extracted exclusivity” from Apple in exchange for reduced patent royalties. Qualcomm allegedly precluded Apple from sourcing baseband processors from Qualcomm’s competitors from 2011 to 2016.
But Qualcomm bit back in a statement, published yesterday, claiming that the complaint is based on a “flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry”.
It added that it had never withheld or threatened to withhold chip supplies in order to “obtain agreement to unfair or unreasonable licensing terms”.
The commission’s vote to file the complaint was 2-1, with Commissioner Maureen Ohlhausen dissenting and issuing a statement.
Ohlhausen explained, in what she noted is a rare dissenting statement, the commission’s decision to sue Qualcomm is “an enforcement action based on a flawed legal theory”.
She added that the complaint was brought on the eve of a new presidential administration, and that, “by its mere issuance, [it] will undermine US intellectual property rights in Asia and worldwide”.
