Qualcomm must license SEPs to competitors, in win for FTC
District Judge Lucy Koh yesterday ruled that Qualcomm must license its standard-essential patents (SEPs) to competitors, delivering a blow to the semiconductor company in its competition dispute with the US Federal Trade Commission (FTC).
Koh granted (pdf) the FTC’s motion for partial summary judgment on this point at the US District Court for the Northern District of California, San Jose Division.
The dispute dates back to January 2017, when the FTC accused Qualcomm of using unfair licensing tactics to maintain a monopoly in the supply of chips used in mobile devices.
The FTC claimed that Qualcomm has “consistently refused” to license its SEPs to competitors, in violation of fair, reasonable, and non-discriminatory (FRAND) licensing obligations.
In September, the FTC submitted a motion which argued that Qualcomm has a contractual commitment to offer SEP licences on FRAND terms, including to its competitors.
The FTC asked Koh for a partial summary judgment on this point, and Qualcomm filed a motion in opposition to the request.
Qualcomm warned that, if the FTC’s motion is granted, licensing in the cellular industry would be “radically” reshaped. The semiconductor company’s position was backed by competitor Nokia in an amicus brief filed last month.
“Complications that would likely arise from inconsistent licensing obligations advocated for in the FTC’s motion for partial summary judgment could unravel the success of SEP licensing and standards development,” Nokia said.
However, associations which represent companies including Facebook, Amazon, and Google filed an amicus brief in support of the FTC.
The Computer & Communications Industry Association and The App Association claimed it is “imperative” that wireless communications technologies are made available on FRAND terms to all market participants, in order to sustain a healthy marketplace.
Yesterday, Koh sided with the FTC.
She said Qualcomm had provided assurances that it would make licences available “under reasonable terms and conditions that are demonstrably free of any unfair discrimination to applicants desiring to utilise the licence for the purpose of implementing” the relevant standard.
Such a commitment prohibits SEP owners from refusing to license their SEPs to other entities wishing to use the inventions, Koh said.
She added that to allow discrimination in SEP licensing would enable SEP owners to achieve a monopoly in the market.
Finally, Koh explained that judicial precedent prescribes that Qualcomm’s FRAND commitments include an obligation to license SEPs to “all comers, including competing modem chip suppliers”, so Qualcomm cannot distinguish between the types of applicants seeking a licence to the SEPs.
The remainder of the competition dispute is due to proceed to trial in January 2019.
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