Ninth Circuit won’t review Qualcomm victory over FTC
The US Court of Appeals for the Ninth Circuit won’t review its decision in favour of Qualcomm in a major antitrust suit brought by the US Federal Trade Commission (FTC).
The court’s decision was announced in a court filing yesterday, October 28. The Ninth Circuit handed Qualcomm a victory against the FTC in July, when it ruled that the California-based company was not obligated to license its IP to rival chipmakers.
Qualcomm attracted the attention of the FTC with the way it leveraged its strength in two different sectors, patent licensing and modem chip manufacturing.
The chipmaker licenses its standard-essential portfolios (SEPs) exclusively to end-product manufacturers of smartphones and cars.
In the case of rival chipmakers, Qualcomm refused to license its SEPs unless they agreed not to sell to unlicensed end-product manufacturers.
Qualcomm also refuses to sell its chips to smartphone manufacturers unless they also agree to license its SEP portfolio, a practice known as ‘no licence, no chips’.
The FTC argued that this model was effectively shutting Qualcomm’s competitors out of the market. The competition regulator was initially successful, prevailing over Qualcomm at the US District Court for the Northern District of California in May 2019.
But in July, a panel of three Ninth Circuit judges reversed that decision, finding that Qualcomm’s model raised no antitrust issues.
The FTC had pointed out that Qualcomm was obligated as an SEP owner to make that IP available to all interested parties on fair, reasonable, and non-discriminatory terms (FRAND) terms. But the Ninth Circuit concluded that this was not an issue that US antitrust law could resolve.
“Even if the district court is correct that Qualcomm is contractually obligated via its [FRAND] commitments to license rival chip suppliers—a conclusion we need not and do not reach—the FTC still does not satisfactorily explain how Qualcomm’s alleged breach of this contractual commitment itself impairs the opportunities of rivals,” the Ninth Circuit decision said.
The FTC then opted to seek an en banc review of the decision, involving the full Ninth Circuit panel, in a narrow 3-2 vote.
“The panel’s errors have cast doubt on fundamental matters of antitrust principle and will encourage monopolists to cloak anticompetitive practices beneath false invocations of patent law and the appearance of neutrality. Any one of these errors would justify en banc review; in combination, they cry out for the full court’s intervention,” the FTC argued.
But the Ninth Circuit denied the FTC’s request, meaning the Supreme Court is the only route left available to the FTC to have the decision overturned.
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