U.S. district judge Lucy Koh has ruled that some of Qualcomm’s practices to beat competitors in the smartphone chip market violated antitrust laws.
Judge Koh has sided with the Federal Trade Commission’s (FTC) allegations that Qualcomm charged unreasonably high royalties for its patents, which has “strangled competition” and “harmed rivals, OEMs, and end consumers in the process,” she said in her ruling.
In a statement, Qualcomm said it would “immediately seek a stay of the district court’s judgment and an expedited appeal to the U.S. Court of Appeals for the 9th Circuit.”
“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” Don Rosenberg, EVP and general counsel of Qualcomm, said.
The FTC brought a suit against Qualcomm in January 2017, accusing the chipmaker of using anti-competitive tactics to “maintain its monopoly” as the dominant vendor of semiconductors for phones and other mobile gadgets. The allegations include entering into exclusive agreements with smartphone makers and refusing to sell its standard-essential patents to competitors.
Qualcomm filed to dismiss the FTC’s charges in April 2017. The request was heard by Judge Koh, who ruled against the company and allowed the FTC to pursue the complaint.
The FTC’s allegations are similar to those brought by Apple against Qualcomm in 2017. Apple accused Qualcomm of charging high royalties rates and refusing to license patents to other chipmakers. Apple alleged Qualcomm also refused to supply chips to Apple in 2018, which caused the phone maker to rely exclusively on Intel for iPhone XS, iPhone XS Max and the iPhone XR.
Apple was forced to settle with Qualcomm about a month ago, as Intel’s 5G modem chips began to slip behind schedule. Apple agreed to pay its high royalty rates in order to have access to Qualcomm’s 5G modems.
In Judge Koh’s most recent ruling, she has asked Qualcomm to renegotiate its licensing agreements with customers without relying on what she called “unfair tactics,” such as threatening to cut off access to chips. She also ruled that Qualcomm cannot enter into exclusive agreements with smartphone makers.