FTC's suit against Qualcomm to proceed after judge denies move to dismiss

Gavel
The FTC has accused the chipmaker of using anticompetitive tactics.

A Federal Trade Commission lawsuit against Qualcomm will move forward after a U.S. federal judge denied the company’s move to dismiss the case late Monday.

In January, the FTC accused the chipmaker of using anticompetitive tactics to “maintain its monopoly” as the dominant vendor of semiconductors for phones and other mobile gadgets. In a 32-page complaint (PDF), the FTC claims the chipmaker imposed “onerous and anticompetitive supply and licensing terms” on hardware manufacturers, violating the FTC Act on several fronts: Qualcomm maintains a “no license, no chips” policy, selling its baseband processors only to manufacturers that agree to its licensing terms, the agency has said, and it refuses to license standard-essential patents to competitors despite committing to do so.

In a separate legal battle, Qualcomm is accused of offering Apple reduced patent royalties in an exclusive agreement preventing the iPhone vendor from working with Qualcomm’s competitors over a five-year span.

Qualcomm claimed in an April filing in a Northern California federal district court that the lawsuit “failed to support even basic elements of an antitrust violation,” as The Wall Street Journal reported early this morning (sub. req.). But U.S. District Judge Lucy Koh ruled against the company yesterday, allowing the FTC to pursue the complaint.

Dan Rosenberg, Qualcomm’s general counsel, said the San Diego-based vendor will continue to fight the case.

“In deciding Qualcomm’s motion to dismiss, the Court was required to accept all of the FTC’s factual allegations as true and construe the complaint in the light most favorable to the FTC,” Rosenberg said in a prepared statement. “We respect the Court’s decision, which is based on the legal standards that apply at this early stage of the case. We look forward to further proceedings in which we will be able to develop a more accurate factual record and the FTC will have the burden to prove its claims which we continue to believe are without merit.”

The complaint stems from an FTC probe Qualcomm first acknowledged in late 2015. Qualcomm rejected key elements of the complaint, arguing that the FTC was acting without all the information and was trying to rush the investigation ahead of the arrival of President Trump's incoming administration.

“This is an extremely disappointing decision to rush to file a complaint on the eve of Chairwoman Ramirez’s departure and the transition to a new Administration, which reflects a sharp break from FTC practice,” Rosenberg said in a release from the company at the time.