Judge Koh Rules for FTC in Qualcomm Suit, Permanently Barring Company’s License-for-Chips Strategy

May 24, 2019

District Judge Lucy Koh of the Northern District of California has ruled for the Federal Trade Commission (FTC) in its antitrust lawsuit against Qualcomm (5:17-cv-00220). In a 233-page findings of fact and conclusions of law issued on May 21, Judge Koh found that Qualcomm had held monopoly power in the CDMA modem chip and premium LTE modem chip markets and that it had violated antitrust law by requiring that mobile device makers take licenses to its patents before they could buy chips. This, Judge Koh held, allowed the company to collect anticompetitive licensing rates that exceeded fair, reasonable, and non-discriminatory (FRAND) levels. Judge Koh also held that Qualcomm had breached its FRAND obligations by refusing to license its competitors, finding that its reasons for doing so were pretextual. As a result, Judge Koh issued a permanent injunction barring Qualcomm from requiring a license to purchase chips and ordered the company to renegotiate its licenses in good faith and without discrimination, with FRAND royalty rates to be determined through arbitration. Judge Koh further enjoined the company from entering into “express or de facto exclusive dealing agreements” with respect to modem chips and from entering into confidential agreements restricting the disclosure of antitrust violations.

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