Qualcomm has won an appeal against the US court ruling that it violated competition law with its licensing practices. A three-judge panel of the 9th Circuit Court of Appeals reversed the ruling by Judge Lucy Koh last year and threw out a worldwide injunction prohibiting Qualcomm from certain business practices, the Los Angeles Times reports.
The original case was brought by the Federal Trade Commission in 2017. The regulator claimed that Qualcomm’s “no license, no chips” threats allowed it to illegally leverage its market power and gain the upper hand in patent licensing negotiations with smartphone makers, forcing device makers to pay exorbitant royalties.
The appeals court, in a 3-0 ruling written by Circuit Judge Consuelo Callahan, ruled that Qualcomm had no duty to license its patents to rival chip suppliers and that it was not anti-competitive to require phone makers to sign a licence agreement, Reuters reports.
"Instead, these aspects of Qualcomm's business model are 'chip-supplier neutral' and do not undermine competition in the relevant antitrust markets," Callahan wrote.
The ruling further accused the FTC of going beyond the powers of competition law, the Wall Street Journal reported. Callahan said it wasn’t the court’s job “to condone or punish Qualcomm for its success, but rather to assess whether the FTC has met its burden…to show that Qualcomm’s practices have crossed the line to conduct which unfairly tends to destroy competition itself. We conclude that the FTC has not met its burden."
The FTC may ask for a rehearing or Supreme Court review of the ruling. The regulator said it was still considering its options.
The Computer and Communications Industry Association said it supported a review of the ruling, "to correct the numerous errors in the panel opinion". The industry group said in a statement that "Qualcomm’s anticompetitive business practices have driven its competitors out of the modem business and raised prices in the cellular industry. The 9th Circuit ignored those factual findings and greenlit Qualcomm’s anticompetitive business practices."
Qualcomm had argued that the FTC decision, if allowed to stand, would upend its business model by requiring it for the first time to license its technology to rival chipmakers and rework many of its patent licensing deals with phone makers.
While Qualcomm secured a pause in the ruling taking effect while its appeal was heard, the company signed new licence agreements with several major phone makers in the meantime, in attempt to insulate its business from the effects of ruling. The company welcomed the appeals ruling, saying it "validates our business model and patent licensing program".
