First, the FTC alleged that Qualcomm had considerable market power in the premium LTE modem chip market. [6] Main Opinion, Page 85, Line 18-26 Finally, the FTC accused Qualcomm of engaging in certain exclusive deals, foreclosing competition. Dissenting Statement of Commissioner Maureen K. Ohlhausen regarding the FTC filing a case against Qualcomm. A judge rules the chipmaker is a monopoly, dealing a blow to Qualcomm. FTC v. Qualcomm Inc., 935 F.3d 752 (9th Cir. In the complaint, the FTC raised several issues. This leaves intact the panel’s unanimous decision which reversed and vacated the district court ruling in its entirety. [10] The Antitrust Division's unusual entry into the FTC case highlights the current DOJ's concerns about regulatory overreach by antitrust authorities. 2021 Cornerstone Research, Bankruptcy and Financial Distress Litigation, Employee Retirement Income Security Act (ERISA), Labor, Discrimination, and Algorithmic Bias, Telecommunications, Media, and Entertainment. Automobile makers Ford, Honda, Daimler AG and Tesla, joined by chip makers Intel and MediaTek, called for a rehearing of the FTC case against Qualcomm in what is called an “en banc hearing.” According to the companies, the reversal of the FTC case against Qualcomm by the U.S. Ninth District Court in … The FTC alleged that Qualcomm had unlawfully monopolized the market for certain semiconductors important in smartphone technology. 2019). The FTC also stressed testimony by industry executives, including Apple, Inc. Chief Operating Officer Jeff Williams, who testified that Apple ended up paying a licensing fee five times higher than anticipated after being strong-armed in negotiations with Qualcomm over licensing.1 [6] Based on this evidence, Judge Koh concluded that Qualcomm had wrongfully suppressed competitors in the premium LTE modem chip market to demand unnecessary licensing fees from its customers. © 2019 White & Case LLP. The court denied Qualcomm's motion to dismiss and found that the FTC had alleged a valid antitrust complaint, and they agreed to the FTC's motion for partial of summary judgment, finding that Qualcomm did have a duty to provide licenses on fair, reasonable, and nondiscriminatory, or FRAN terms, for any patents declared to a couple of certain standard development organizations. The Court noted that many of Qualcomm's premium LTE modem chips are required by "OEMs- producing premium handsets" and that there are no "available sub… Docket for FTC v. Qualcomm Inc., 19-16122 — Brought to you by the RECAP Initiative and Free Law Project, a non-profit dedicated to creating high quality open legal information. A wave of setbacks for the FTC. Font Size: A A A; A significant federal court decision expands on the relationship between antitrust and intellectual property law. 2021 Cornerstone Research, Copyright © At that time, we characterized the district court’s order and injunction as either “a trailblazing application of the antitrust laws” or “an improper excursion beyond the outer limits of the Sherman Act.” Id. I . FTC v. Qualcomm Case Not Quite Done by Chris Taylor | Sep 11, 2020. Qualcomm's fight with the FTC ran concurrent with its legal battle with Apple. In an ongoing series of posts by both regular bloggers and guests, Truth on the Market offers analysis of the FTC v.Qualcomm antitrust case. The FTC alleged that these … Just days before leaving office, the outgoing Obama FTC left what should have been an unwelcome parting gift for the incoming Commission: an antitrust suit against Qualcomm. 3 The FTC, after getting a full contingent of Commissioners, reconsidered the wisdom of bringing the case. Judge Koh rules that Qualcomm violated FTC Act (FTC v. Qualcomm) By David Long on May 22, 2019. Qualcomm-FTC lawsuit: Everything you need to know. However, as demonstrated by the DOJ's involvement here, the antitrust agencies are not necessarily aligned, and the exact contours of the Trump Administration's enforcement priorities remain unclear. FTC v. Qualcomm Inc., 935 F.3d 752 (9th Cir. Yesterday, Judge Koh of the U.S. District Court Northern District of California entered a Judgment following the January 2019 trial based on her Findings of Fact and Conclusions of Law that Qualcomm violated the Federal Trade Commission Act. Judge Lucy Koh's ruling found that Qualcomm's licensing practices have "strangled competition in the CDMA and premium LTE modem chip markets for years and harmed rivals, OEMs and end-consumers in the process." For example, Professor Nevo explained that any supposed “surcharge” would be chip neutral, meaning that the royalty was the same regardless of whether the original equipment manufacturer (OEM) used a Qualcomm chip or a competitor’s chip. Qualcomm is also very pleased that the full Ninth Circuit Court of Appeals has denied the FTC’s petition for rehearing. Jan 17, 2019. more about our use of cookies on Federal Trade Commission v. Qualcomm Incorporated United States District Court Northern District of California, San Jose Division No. at 757. §§ 1, 2, by unreasonably restraining trade in, and … This appears to be the end of the FTC's case against Qualcomm, and a win for the company. Coverage of federal case FTC v. Qualcomm Inc., case number 19-16122, from Appellate - 9th Circuit Court. This publication is protected by copyright. Qualcomm appealed the decision to the Ninth Circuit. Qualcomm patented processors … [11] Main Opinion, Page 226, Line 20 This week the FTC — under a new Chairman and with an entirely new set of Commissioners — finished unwrapping its present, and rested its case in the trial begun earlier this month in FTC v Qualcomm. The case FTC v. Qualcomm Inc. dealt with this issue where the United States’ Federal Trade Commission (FTC) sued Qualcomm for anti-competitive and monopolistic practices. 2019). Federal Trade Commission v. Qualcomm Inc. At that time, we characterized the district court’s order and injunction as either “a trailblazing application of the antitrust laws” or “an improper excursion beyond the outer limits of the Sherman Act.” Id. The FTC alleged that Qualcomm abused its dominant position in two modem chip markets by refusing to license its standard essential patents (SEPs) in wireless technology to rival chip manufacturers. Among other things, the FTC claimed that Qualcomm … The case is Federal Trade Commission v Qualcomm Inc., 19-16122, U.S. Court of Appeals for the 9th Circuit (San Francisco). The former case settled in April 2019 just as trial began. May 22, 2019 10:08 a.m. PT. On May 21, 2019, Judge Lucy Koh of the US District Court for the Northern District of California issued her decision in the case. FEDERAL TRADE COMMISSION, Plaintiff, v. QUALCOMM INCORPORATED, Defendant. Qualcomm is one the leading companies in modem chip manufacturing, especially 5G technology. 1 Last month, Apple and Qualcomm resolved their dispute over Qualcomm's same "no license, no chips" strategies at issue in this case. But the litigation failed to elicit a cogent economic theory explaining how the tactics Qualcomm used to obtain higher royalties had the effect of undermining competition among modem chip suppliers, as the FTC alleged. Substantively, the FTC on January 17, 2017 filed suit against Qualcomm, alleging that it violated the Sherman Act and separately the FTC ACT, engaging in anticompetitive behavior, partially because it licensed only to original equipment manufacturers, or OEMs—these OEMs are making smartphones—and not to direct competitors. The appellate court’s rulings on both the logical flaws in the FTC’s “surcharge theory” and the reasonableness of Qualcomm’s procompetitive justifications closely follow Professor Nevo’s testimony. Shara Tibken. On May 21, 2019, the United States District Court for the Northern District of California found that Qualcomm violated the Federal Trade Commission (FTC) Act, in an antitrust decision significant to licensing standard-essential patents (SEPs) under fair, reasonable and non-discriminatory (FRAND) terms. In a highly unusual move, the U.S. Department of Justice Antitrust Division (DOJ) recently filed a statement of interest in the Federal Trade Commission (FTC)’s unfair competition case against Qualcomm. The FTC alleged that Qualcomm conditioned the sale of its modem chips on its product manufacturers' willingness to license its patents and enter into exclusive chip deal agreements. Parties, docket activity and news coverage of federal case Federal Trade Commission v. Qualcomm Incorporated, case number 5:17-cv-00220, from California Northern Court. The ruling, by Judge Lucy Koh, … The FTC argued that if Qualcomm was not subject to an antitrust duty to deal under Aspen Skiing, the company still engaged in anticompetitive conduct in violation of Section 2 … 5:17-cv-00220, Document 1487, Page 5, Line 6 Prior results do not guarantee a similar outcome. Close, Economic and Financial Consulting and Expert Testimony, For more information on this case, contact, Copyright © For the latter case, Professor Nevo testified before the Seoul High Court in May 2019. The standardized wireless technology is based on CDMA (3G) and LTE (4G) modem chips. Judge Koh issued an injunction requiring Qualcomm not only to renegotiate its existing chip supply and licensing agreements with its customers, but also begin negotiating licenses with its competitors, i.e., other chip manufacturers, which Qualcomm had previously excluded. Yesterday, Judge Koh of the U.S. District Court Northern District of California entered a Judgment following the January 2019 trial based on her Findings of Fact and Conclusions of Law that Qualcomm … 17-CV-00220-LHK FINDINGS OF FACT AND CONCLUSIONS OF LAW Plaintiff Federal Trade Commission (“FTC”) brings suit against Defendant Qualcomm Incorporated (“Qualcomm”) for allegedly violating Section 5(a) of the FTC Act, 15 U.S.C. Case No. 21 months ago. The FTC also … Instead, these aspects of Qualcomm’s business model are ‘chip-supplier neutral’ and do not undermine competition in the relevant antitrust markets.” The Ninth Circuit also found that Qualcomm presented reasonable procompetitive justifications that were consistent with industry practices. After some initial success at the United States District Court for the Northern District of California (US District Court), FTC has constantly seen setbacks, and at times, very harsh rebukes at the Ninth Circuit. This has been a saga of a lot of time and pain. FTC V. QUALCOMM 9 OPINION CALLAHAN, Circuit Judge: This case asks us to draw the line between anticompetitive behavior, which is illegal under federal antitrust law, and hypercompetitive behavior, which is not. The FTC challenged several of Qualcomm’s patent licensing practices and sought to reduce the royalties it collected from makers of cellular devices. The recent Ninth Circuit panel decision reversing the district court’s judgment in FTC v.Qualcomm, Inc., has important implications for the role of antitrust in standard essential patent (SEP) licensing. Read Counsel for Qualcomm retained Cornerstone Research to support the expert testimony of Aviv Nevo of the University of Pennsylvania, who is also a Senior Advisor to Cornerstone Research. This publication is provided for your convenience and does not constitute legal advice. Erik Hovenkamp. The Court noted that many of Qualcomm's premium LTE modem chips are required by "OEMs- producing premium handsets" and that there are no "available substitutes" for these chips. Qualcomm patented processors and other standard-essential technology used in mobile devices, mobile operating systems and cellular networks, and licensed its technology to more than 340 product companies, including phone vendors. The FTC case, filed in 2017, is among numerous challenges to Qualcomm’s practices from competitors, customers and regulators worldwide. Professor Nevo testified to several shortcomings in the FTC’s theory of harm and to several procompetitive justifications for Qualcomm’s practices. The FTC challenged several of Qualcomm’s patent licensing practices and sought to reduce the royalties it collected from makers of cellular devices. The FTC sued Qualcomm under Section 5 of the FTC Act, which has broader latitude to find an “unfair methods of competition” violation than the … 1 The Court concluded that as a result of its licensing practices, Qualcomm is a monopoly, and that its conduct is an "unreasonable restraint of trade" constituting "exclusionary conduct" under the Sherman Act, and therefore the FTC Act. The FTC only issued the original complaint after a split vote by the FTC Commissioners in the last days of the Obama Administration, with a rare dissenting written statement by then Commissioner Ohlhausen. 17-cv-220 “[T]he plaintiff has the initial burden to prove that the challenged restrainthas a substantial anticompetitive That ruling said Qualcomm wrongfully suppressed competitors in the phone chip market by … The vote, 2-1, was the least likely to signal a meritorious case in the data set, while bringing it in the lame duck period suggests political considerations produced it. [10] Case No. The case involves a novel confluence of standard-setting and IP issues with some bedrock antitrust subjects, namely tying (conditioning one sale on another) and exclusive dealing (restraining … The analysis of Qualcomm’s exclusive dealing is sound and very likely correct. [3] Judge Koh found the lack of alternatives was a result of Qualcomm's refusal to license its SEPs to its competitors. Further, the FTC argued that Qualcomm violated its SEP obligations by refusing to license its patents on FRAND terms. FEDERAL TRADE COMMISSION v. QUALCOMM INCORPORATED. The district court ruled that Qualcomm acted with “anticompetitive malice” in its licensing tactics, and entered an injunction requiring Qualcomm to renegotiate its current license agreements and prohibiting future anticompetitive licensing practices. The case is Federal Trade Commission v Qualcomm Inc., 19-16122, U.S. Court of Appeals for the 9th Circuit (San Francisco). The FTC had argued that Qualcomm had used its monopoly power over chipset supply to coerce OEMs into agreeing to licensing terms for its SEPs that excluded rival chipset suppliers. Thus, the vote to bring FTC v Qualcomm provides the least wisdom and confidence of any vote to bring any FTC antitrust case since 1994. The dispute in FTC v. Qualcomm centered on the FTC's allegations regarding Qualcomm's "no license, no chips" policy. FTC v Qualcomm does precisely what a unanimous Court refused to do in Trinko —create a new, broader exception to the proposition that there is no duty to deal with competitors. The foundational technology and intelligence we put into 3G and 4G is bringing us 5G, connected cars, and a true Internet of Things. Posted in Antitrust, Court Orders, District Courts, Federal Trade Commission, Litigation. The statement asks the court to order additional briefing and hold a hearing on a remedy if it finds Qualcomm liable for anticompetitive abuses in connection with its patent licensing program. 59 The district court expands Aspen Skiing well beyond the ‘outer boundary’ of Section 2 by applying it to all contracts previously negotiated by the defendant firm and by inferring the firm was willing to sacrifice profits … The trial underscored the importance of contemporaneous documents and customer evidence. For more about Qualcomm, SEPP, FRAND, Apple, Intel, and the FTC case, registered subscribers can read FTC v. Qualcomm: Who Wins, Who Loses, Apple: In with Qualcomm, Out with Intel, and Qualcomm-Apple Legal Battle Threatens Innovation. [3] Main Opinion, Page 37, Line 27 [12] Main Opinion, Page 226, Line 25. The appellate court unanimously ruled in favor of Qualcomm, citing reasons that closely followed our expert’s testimony. On August 11, 2020, the Ninth Circuit Court of Appeals reversed a decision of Judge Koh sitting in the Northern District of California that certain of Qualcomm’s business practices relating to its standards essential patents (SEPs) breached the antitrust laws. 2 Federal Trade Commission v. Qualcomm Inc., 2018 WL 5848999, Nov. 6, 2018, N.D. Cal. Authors. [8]. Kevin Trainer, a law clerk at White & Case, and Samuel Vallejo, a summer associate at White & Case, also contributed to this publication. Qualcomm. Consequently, it would not affect the OEM’s decision of which chip to purchase. Additionally, Judge Koh ordered Qualcomm to negotiate license terms for its SEPs in good faith without the "threat of lack of access" or "discriminatory provisions." Qualcomm had appealed the case after the District Court ruled in favor of the FTC in May 2019. Antitrust and Competition, Telecommunications, Media, and Entertainment, Cravath, Swaine & Moore; Morgan, Lewis & Bockius; and Keker, Van Nest & Peters. On May 28, 2019, Qualcomm moved the District Court to stay its Order pending appeal to the Ninth Circuit or, in the alternative, pending resolution of its stay request. cmaier. A ten-day bench trial was held in January 2019. The FTC's lawsuit against Qualcomm has also led to the airing of an apparent conflict between the FTC and the Department of Justice's (DOJ) Antitrust Division. Regardless of a stay, this case has already provided insight into the dangers facing companies when licensing standard-essential technology and the continued willingness of US regulators to pursue even the most complicated industries. By Edward S. Whang on December 3, 2020 Posted in Antitrust, Appellate, Telecommunications. Qualcomm patented processors and other standard-essential technology used in mobile devices, mobile operating systems and cellular networks, and licensed its technology to more than 340 product companies, including phone vendors. Today’s case is the recent Ninth Circuit decision on FTC v. Qualcomm. At trial, Professor Nevo addressed numerous issues, including a number of shortcomings in the FTC’s surcharge theory. On May 2, 2019, the DOJ filed a Statement of Interest in the case, contending that if the Court finds Qualcomm liable for antitrust violations, it "should permit additional briefing and schedule an evidentiary hearing" in order to resolve disputes regarding the impact of any relief. FTC v. Qualcomm, Antitrust, and Intellectual Property. The San … Recent oral arguments heard before the Ninth Circuit in FTC v. Qualcomm signaled significant skepticism about the lower court ruling that would upend the … 19-05-21 FTC v. Qualcomm Ju... by on Scribd Tags: lawsuit, FTC, Qualcomm [ 92 comments] Top Rated Comments. By continuing to browse, you agree to our use of cookies. And lastly, the Court required Qualcomm to submit to compliance and FTC monitoring procedures for seven years. FTC v. Qualcomm Inc., 935 F.3d 752 (9th Cir. Qualcomm, an innovator in cellular technology, both licenses its patented technology and sells cellular modem chips that embody portions of its technology. The Federal Trade Commission (“FTC”) contends that Qualcomm Incorporated (“Qualcomm”) violated the Sherman Act, 15 U.S.C. The FTC’s January 2017 complaint alleged that certain of Qualcomm’s practices relating to its patent licensing and modem chipset businesses violated the federal antitrust laws. On August 11, 2020, in FTC v. Qualcomm, the U.S. Court of Appeals for the Ninth Circuit reversed a May 21, 2019 judgment by the U.S. District Court for the Northern District of California and vacated the district court's worldwide, permanent injunction prohibiting several of Qualcomm's core business practices. § FEDERAL TRADE COMMISSION v. QUALCOMM INCORPORATED. Introduction. FTC v. Qualcomm Inc., 935 F.3d 752 (9th Cir. Analysis Group was retained on behalf of Qualcomm, the defendant in an antitrust suit brought by the Federal Trade Commission (FTC). In a suit filed in the Northern District of California in January 2017, the Federal Trade Commission (FTC) alleged that Qualcomm’s business practices relating to its licensing of patents and its selling of cellular modem chips were anticompetitive. Qualcomm is a monopoly and has to change the way it does business, a US district court judge ruled late o n May 21. In this short essay, I review and evaluate the court’s decision in FTC v. Qualcomm. Attorney Advertising. The FTC filed a complaint in federal district court charging Qualcomm Inc. with using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products. 2019). The Court issued an injunction forbidding Qualcomm (i) from conditioning the supply of modem chips on a customer taking out a patent license; and (ii) from entering into exclusive dealing agreements for the supply of modem chips. The appellate court’s rulings on both the logical flaws in the FTC’s “surcharge theory” and the reasonableness of Qualcomm’s procompetitive justifications closely follow Professor Nevo’s testimony. The FTC split 2 to 2, with the Chairperson recusing himself because Chair’s former law firm had represented Qualcomm. Font Size: A A A; Mobile devices, such as smartphones and tablets, rely heavily on technical standards, which … Introduction. While the terms of the settlement remain confidential, a Qualcomm regulatory filing indicates that Qualcomm will receive at least US$4.5 billion from Apple for missed royalty and licensing payments under the terms. The latest chapter in this saga involves an antitrust suit brought by the Federal Trade Commission (FTC) against chip manufacturer Qualcomm, which the Commission recently won in district court. [8] Main Opinion, Page 232, 26 our privacy policy page. Professor Nevo also described a number of procompetitive justifications for Qualcomm’s practices. [12] Although Judge Koh found some of the remedies requested by the FTC to be "either vague or not necessary," [11] she granted the majority of the FTC's initial requests, including the imposition of monitoring procedures, a prohibition of the challenged restrictions on licensing and OEM exclusivity, and the requirement to make licenses available on fair, reasonable and non-discriminatory terms. Docket for Federal Trade Commission v. Qualcomm Incorporated, 5:17-cv-00220 — Brought to you by the RECAP Initiative and Free Law Project, a non-profit dedicated to … Among other allegations, the FTC claimed that Qualcomm’s royalty rates are unreasonably high and “impose an artificial and anticompetitive surcharge” on its chip market rivals’ sales. On Wednesday, the Ninth Circuit filed an order whereby Circuit Judge Johnnie B. Rawlinson and Circuit Judge Consuelo M. Callahan vote to deny the … The FTC relied on email communications and written notes to support their allegations. But on August 11, a three-judge panel -- Judge Rawlinson from Nevada, Judge Callahan, and Judge Stephen Murphy, III, who is a U.S. District Court judge from Michigan sitting by designation -- it was a 3-0 vote. Side note: If you would like to know the full background of the case, follow this FTC vs. Qualcomm article series. Qualcomm exercised that power, the FTC contended, in the form of excessive licensing fees to product manufacturers, its customers. [1] Main Opinion, Page 215, Line 19 Apple Inc. v. Qualcomm Inc., 3:17-cv-00108 (S.D. Docket for FTC v. Qualcomm Inc., 19-16122 — Brought to you by the RECAP Initiative and Free Law Project, a non-profit dedicated to creating high quality open legal information. Cal.). The decision validates our business model and licensing program and underscores the tremendous contributions that Qualcomm has made to the industry. This website uses cookies for performance and functionality. Judge Koh eventually declined the DOJ's request to hold an evidentiary hearing on the question of remedy, concluding it would be "unnecessary" due to the "considerable testimony, evidence and argument" presented at trial and the lack of "acute factual disagreements." The case was tried over ten days in January 2019 and, in May 2019, the court issued a decision finding in favor of the FTC and issuing a permanent injunction against Qualcomm. On August 11, 2020, the Ninth Circuit Court of Appeals reversed a decision of Judge Koh sitting in the Northern District of California that certain of Qualcomm’s business practices relating to its standards essential patents (SEPs) breached the antitrust laws. Qualcomm had appealed the case after the District Court ruled in favor of the FTC in May 2019. Judges can be too demanding of plaintiffs and thereby stymie meritorious cases, but that is not what happened in FTC v. Qualcomm. The district court ruled in favor of the FTC. Qualcomm is a … On August 11, 2020, in FTC v. Qualcomm, the U.S. Court of Appeals for the Ninth Circuit reversed a May 21, 2019 judgment by the U.S. District Court… The FTC argued that if Qualcomm was not subject to an antitrust duty to deal under Aspen Skiing, the company still engaged in anticompetitive conduct … The dispute in FTC v. Qualcomm centered on the FTC's allegations regarding Qualcomm's "no license, no chips" policy. Tweet Share Post Email Print Link. We now hold that the district court went beyond the scope of the Sherman Act, and we reverse. The district court’s original ruling for the FTC would have stopped Qualcomm immediately, but Bloomberg reports that Judge Lucy Koh’s order was held to give Qualcomm time to appeal. The district court ruled that Qualcomm acted with “anticompetitive malice” in its licensing tactics, and … Over 30 years of our mobile invention has led to the Invention Age. Deep Dive Episode 94 – FTC v. Qualcomm. This is the Invention Age. The DOJ highlighted its concern that an "overly broad" remedy might "reduce competition and innovation" in markets for 5G technology, which would "exceed the appropriate scope of an equitable remedy." In a decision issued on August 11, 2020, a three-judge panel unanimously reversed the ruling, stating “the district court’s ‘anticompetitive surcharge’ theory fails to state a cogent theory of anticompetitive harm.” The panel noted that Qualcomm’s practices “do not impose an anticompetitive surcharge on rivals’ modem chip sales. However, the court’s duty-to-deal analysis sits on shakier ground, omitting consideration of potential immunity under the Patent Act and sidestepping thorny questions on the appropriate source of law. On August 11, 2020, in FTC v. Qualcomm, the U.S. Court of Appeals for the Ninth Circuit reversed a May 21, 2019 judgment by the U.S. District Court for the Northern District of California and vacated the district court’s worldwide, permanent injunction prohibiting several of Qualcomm’s … The dispute in FTC v. Qualcommcentered on the FTC's allegations regarding Qualcomm's "no license, no chips" policy. 2019). Twitter Facebook LinkedIn Email Print. In a suit filed in the Northern District of California in January 2017, the Federal Trade Commission (FTC) alleged that Qualcomm’s business practices relating to its licensing of patents and its selling of cellular modem chips were anticompetitive. FTC v Qualcomm does precisely what a unanimous Court refused to do in Trinko—create a new, broader exception to the proposition that there is no duty to deal with competitors. Counsel for Qualcomm also retained Professor Nevo for the cases Apple v. Qualcomm and Qualcomm v. Korea Fair Trade Commission (KFTC). 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