Qualcomm must license SEPs on FRAND terms, FTC tells court
The US Federal Trade Commission (FTC) has asked District Judge Lucy Koh to rule that semiconductor company Qualcomm must license its wireless standard-essential patents (SEP) to competitors.
The FTC filed its motion for partial summary judgment at the US District Court for the Northern District of California, San Jose Division, on Thursday, August 30.
Qualcomm’s competition dispute with the FTC is due to be heard at trial in January 2019.
However, four months before the trial is due to commence, the FTC has asked the court for partial summary judgment that, under the fair, reasonable, and non-discriminatory (FRAND) licensing obligations Qualcomm committed to when it participated in setting wireless standards, Qualcomm must license its SEPs to rival chip makers.
The commission’s lawsuit, submitted in January last year, alleged that Qualcomm had unlawfully maintained a monopoly in the market for baseband processors.
Baseband processors are semiconductor devices that enable communications in products such as mobile devices.
Qualcomm is a licensor of SEP patents related to mobile communication standards. According to the commission, the semiconductor company has “consistently refused” to license its SEPs to competitors, in violation of FRAND commitments.
The FTC accused Qualcomm of engaging in “exclusionary conduct that taxes its competitors’ baseband processer sales, reduces competitors’ ability and incentive to innovate, and raises prices paid by consumers for cell phones and tablets”.
It asked the court to undo and prevent the unfair methods of competition, which include Qualcomm refusing to license patents on a FRAND basis to baseband processor competitors and, instead, dealing exclusively with Apple.
In response, Qualcomm said it never withheld or threatened to withhold chip supplies in order to “obtain agreement to unfair or unreasonable licensing terms”, and accused the FTC of basing the complaint on “significant misconceptions about the mobile technology industry”.
The motion filed by the FTC last week emphasised Qualcomm’s contractual commitments to make SEP licences available on FRAND terms, including to those entities which are considered competitors.
Foss Patents, a patent blog, said the motion is “legally extremely simple, yet has the potential for truly transformative impact on the marketplace”.
It explained that, if Koh grants the motion, companies such as Samsung and Intel are likely to ask Qualcomm for a licence to its wireless SEPs on FRAND terms.
Qualcomm would then receive royalties representing a FRAND percentage of chip prices, rather than that of an entire mobile device, and prices for competitors and device makers would be reduced, according to Foss Patents.
Earlier this year, the European Commission fined Qualcomm €997 million ($1.4 billion) for violating EU competition law. It said that Qualcomm “illegally shut out rivals from the market for long-term evolution baseband chipsets for over five years, thereby cementing its market dominance”.
Meanwhile, Qualcomm is involved in patent disputes with Apple in the US and the UK. Apple recently filed a series of inter partes reviews in the US relating to Qualcomm’s patents, and the two companies have also been embroiled in a FRAND dispute at the English High Court.
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