US court backs FTC in antitrust claim against Qualcomm
A US court has found that Qualcomm’s “no licence, no chips” business practice violates antitrust laws and gives the mobile chip maker an unlawfully dominant position in the market.
The judgment, which was handed down on Tuesday, May 21, by the US District Court for the Northern District of California, comes after the US Federal Trade Commission ( FTC) filed a complaint against Qualcomm in 2017.
It alleged that Qualcomm was not compliant with fair, reasonable, and non-discriminatory (FRAND) obligations and was charging “onerous” upfront fees for licences to its mobile phone chips, as well as excessive royalties on handsets.
The district court agreed, finding that Qualcomm’s licensing practices and “unreasonably high royalty rates have strangled competition in the market for years”.
Additionally, the court said, Qualcomm violated the law by providing discounts to companies such as Apple if they exclusively purchased Qualcomm modem chips.
The court ordered Qualcomm to strike new licensing agreements on its standard-essential patents with fairer terms, and said it must comply to seven years of monitoring by the FTC.
Qualcomm must also renegotiate licence terms with customers in good faith under conditions “free from the threat of lack of access”.
Without this injunction, the court added, Qualcomm was “likely to replicate its market dominance during the transition to 5G, the next generation of modem chips”.
Morgan Reed, president of trade body the App Association, said the ruling was “not only a rebuke of anti-competitive and discriminatory licensing practices, but it’s also a clear victory for innovation, consumers, and America’s 5G ambitions”.
He added that the judgment forces Qualcomm to live up to its voluntary FRAND licensing commitments.
“We appreciate the FTC’s commitment to fight this case to the end and to establish this precedent for all stakeholders,” said Reed.
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
Today's top stories:
Certifying Good Business Practices
