In January, the Federal Trade Commission (FTC) brought chipmaker Qualcomm to court. It’s business practices, from its “no license, no chip” policy, to its refusal to license standard-essential patents, to the use of a phone’s retail price to calculate royalties, were on trial. And in May, the decision of Judge Lucy Koh ruled in favor of the FTC. Qualcomm sought a suspension of the decision until it is able to completely overcome the appeal procedure. This makes sense since the decision would require Qualcomm to renegotiate contracts with phone manufacturers. The company says it could end up changing all the terms it has with its customers and then winning on appeal. Qualcomm would be a difficulty to reverse all the changes made. At the same time, the company is committed to finalizing contracts with 5G chipset manufacturers.
Qualcomm asked Judge Koh to suspend the decision, which she declined. And this led Qualcomm to request a stay in the 9th Circuit Court of Appeal. The US Justice Department (DOJ) is involved and asks the Court of Appeals to grant Qualcomm the requested suspension. In making its request known to the appeals court, the Defense Department said it had the support of the Department of Energy and the Department of Defense. The Department of Defense states that, in the short term, Qualcomm is an important technological innovator and its role in the construction of 5G technology cannot be replaced. The Department of Energy uses wireless communication to protect national energy and nuclear infrastructure and believes that Qualcomm is a major supplier of 4G and 5G chips to the industry.
“For DoD, Qualcomm is a key player both in terms of its trusted supply chain and as a leader in innovation, and it would be impossible to replace Qualcomm’s critical role in 5G technology in the short term. (The Defense Department) firmly believes that any measure that inappropriately limits Qualcomm’s technological leadership, ability to invest in research and development, and market competitiveness, even in the short-term, could harm national security.” “- Ellen M. Lord, Under Secretary for Defense for Acquisition and Sustainment
Qualcomm Says Judge Koh Made A Mistake By Excluding Some Evidence
Qualcomm states that Judge Koh made a mistake in making her decision because she excluded the evidence dated from March 2018. This means that it does not include the iPhone 2018 models, which contained exclusively Intel modem chips. This, according to Intel, shows that Qualcomm has not completely controlled the market for such chips. This could be important because Koh’s decision essentially defined Qualcomm as a monopoly that violated antitrust laws with its anti-competitive practices.
This has been a year for Qualcomm. After confronting Apple in a couple of patent cases abroad, both companies met in a court in San Diego in April with billions of dollars up for grabs. During the final comments, the two technology giants announced an agreement that granted Apple a six-year license (with a two-year option) and a multi-year chip contract. Qualcomm received a sum from Apple, believed to be $4.5 billion. Apple and Qualcomm withdrew each of the remaining legal actions they had filed against each other. And then, a month later, Judge Koh’s decision blew up the company’s bubble.
- Judge’s Decision is Awful for Qualcomm, Useful for Phone Manufacturers
- Qualcomm will get at Least $4.5 billion from Apple as Part of its Patent Settlement
- Qualcomm tries to postpone a court decision that could change the way it sells chips
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