Judge Rules Against Qualcomm in Antitrust Case

A federal judge has ruled in favor of the FTC in its case claiming that Qualcomm harmed competition in two markets for modem chips through a combination of high royalty fees and predatory licensing practices.

Phil Harvey, Editor-in-Chief

May 22, 2019

2 Min Read
Judge Rules Against Qualcomm in Antitrust Case

On its website, Qualcomm says we're in the "Age of Invention." Now it may be forced to reinvent its business as a federal judge has ruled that Qualcomm violated antitrust law with its patent-licensing practices and the fees it charges cellphone makers.

The Federal Trade Commission began investigating Qualcomm in 2014 and, governments in Asia and Europe have been investigating the company since around 2009, according to court documents. The FTC, in 2017, sued Qualcomm and, late yesterday, US District Judge Lucy Koh in San Jose made her ruling in the case public.

Koh found that Qualcomm is harming the market because it charges exorbitant royalties for its patents and pressures cellphone makers to buy all of its chips from Qualcomm, thus eliminating competition.

In the court documents, Qualcomm's dealings with Samsung were called out as an example its tough tactics in action.

"Qualcomm has engaged in anticompetitive conduct toward Samsung by threatening Samsung's chip supply, reducing the royalty rate if Samsung purchased at least 85% of its chipsets from Qualcomm, delaying the delivery of software, threatening to withhold technical support, offering Samsung chip incentive funds if Samsung purchased 100% of its premium chips from Qualcomm, and paying to extinguish Samsung's antitrust claims and to silence Samsung," the court filings state.

Qualcomm, of course, denies the FTC's accusations and says it will keep fighting. "We strongly disagree with the judge's conclusions, her interpretation of the facts and her application of the law," said Don Rosenberg, executive vice president and general counsel of Qualcomm, in a statement issued this morning.

Why this matters
Qualcomm is the market leader in supply chips to smartphones and it looks to continue that dominance in the market for 5G phones and other devices. Judge Koh's ruling might force Qualcomm to give up some royalties and prevent it from only selling chips to companies that are willing to license a whole group of its cellular technology patents. That could help competitors, but not in the 5G market, where even Intel didn't want to compete.

While Qualcomm makes more revenue from its chip sales, its patent licensing business is more profitable -- and that's been under threat since Apple and others have refused to play ball. Qualcomm shares are down $8.10 (10.41%) to $69.65 in late morning trading on Wednesday.

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Phil Harvey, US Bureau Chief, Light Reading

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About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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