Judge’s Decision is Awful for Qualcomm, Useful for Phone Manufacturers

By | July 4, 2019

Back in May, Judge Lucy Koh decided that Qualcomm’s strategic policies are anti-competitive. The judge, definitely known for directing the iconic Apple v. Samsung patent trial sat through the FTC v. Qualcomm non-jury preliminary held not long ago. Judge Koh found that the chipmaker’s business practices disregarded antitrust laws. These incorporated Qualcomm’s “no license, no chips” policy and its inability to permit standard-essential patents to competitors at a reasonable, sensible and non-discriminatory (FRAND) manner. These are patents that companies need permit with the goal that their items can meet technical standards. Qualcomm was additionally called out by Judge Koh for charging royalties dependent on the retail price of a phone rather than simply the expense of its chips.


Obviously, Qualcomm says that it will offer the decision since it requires the company to renegotiate its agreements and permitting agreements with manufacturers. Qualcomm is additionally whining that all of these negotiations can make it hard for it to complete talks with phone producers who need to buy Qualcomm’s 5G modem chips. Also the ruling would force the company to work out deals with its opponents over licensing of its standard-essential patents.

Qualcomm additionally is looking a stay of the decision until it depletes the appeals process. This way it doesn’t need to experience the entire thorough renegotiation procedure and after that reverse the new deals if it wins on appeal. Reuters announced Wednesday that Judge Koh has denied Qualcomm’s request. A representative for the chipmaker says that it will quickly request a stay from the 9th U.S. Circuit Court of Appeals.

Judge Koh’s Decision Makes LG Happy

The FTC v. Qualcomm trial was held in January and included declaration from employees of several phone manufacturers. Many affirmed about Qualcomm’s burdensome terms for licensing its IP and how it bases the eminences it charges manufacturers on the whole retail price tag of a phone. So as opposed to paying a level of a $20-$40 part for each unit sold, phone manufacturers were charged a level of retail prices amounting to $400 and up for each phone rung up with a Qualcomm part. This is the contrast between the chipmaker accepting dollars per phone or pennies per phone.

Qualcomm's 5G modem chips

One of the individuals who stood up was Apple supply chain executive Tony Blevins. At the time, Apple and Qualcomm were not on talking terms and both companies had recorded numerous suits against each other. Yet that all changed in April in the wake of closing arguments were heard in a trial that hollowed Apple against Qualcomm. A settlement was declared that resulted in Apple paying Qualcomm an undisclosed sum (believed to be as much as $4.5 billion) and in return, Apple got a licensing agreement for 6 years (with a 2 year option) and a multi-year chip supply agreement. Likewise, both sides dropped all lawsuits documented against each other.

One phone manufacturer happy with Tuesday’s choice is LG. It doesn’t like to see Koh’s choice stayed on the grounds that it is at present negotiating a licensing and chip supply deal with Qualcomm and is stressed that it might be compelled to sign another “unfair” deal with the company. And needless to say, the FTC was additionally against a decision that would stay the choice.

Except the decision is stayed, LG and other phone manufacturers will likely be working out new deals with Qualcomm while the interests process goes on. It could take over a year prior to a final decision is rendered by an appellate court. Wall Street weighed in with its choice and in after-hours trading on Wednesday (the market shut regular trading ahead of schedule for the July 4th holiday), the stock dropped by $2.49 or 3.25% to $76.63.