FTC Defends Their Monopoly Case Against Qualcomm

Qualcomm Logo 2016 AH 1

The US Federal Trade Commission argued today that a court should not obey Qualcomm’s request to dismiss a suit brought against them in January regarding anti-competitive and monopolistic practices. According to the FTC, Qualcomm’s licensing practices have stifled competition, and practically forced important clients, such as Apple, to sign deals with them in order to make and sell phones. Most of the case revolves around Qualcomm’s use of standard essential patents, which are patents regarding technology that is necessary to do business in a given industry, to manipulate the business. Qualcomm has promised in the past to license out their standard essential patents for 3G and 4G networks according to terms following a guideline of being fair, reasonable and non-discriminatory, or FRAND. The FTC, among others, say that Qualcomm has not honored that promise. Both Apple and Samsung are backing the FTC in pushing the case forward.

As part of the case, Apple claimed that Qualcomm forced them into an exclusive deal that would lock them into purchasing only Qualcomm chipsets, but it was Apple’s version of the Transition Agreement which includes the terms of their complaint. Qualcomm also states that the Transition Agreement did not require Apple to only purchase Qualcomm’s chipsets, and that while the amended Transition Agreement was still in effect Apple had begun purchasing chipsets from Intel. It’s also been reported yet not confirmed that Apple has stopped paying Qualcomm licensing royalties, which caused Qualcomm to seek an injunction against Apple’s flagship iPhone product being imported and sold in the US. Qualcomm has also been accused of refusing to license out their standard essential patents to rival chipmakers, an accusation that Samsung stepped forward to back up. They filed an official amicus document stating, among other things, that Qualcomm has been extremely unfair in their licensing practices, and has kept competitors, such as them, from competing on level and in the same markets as far as smartphone chip manufacturing and sale.

Qualcomm has come under fire for similar reasons in the past, especially overseas. Not too long ago, South Korea fined the chip giant for anti-competitive practices, in a move similar to what China did around a couple of years ago. Thanks to their uniquely essential patent portfolio and large worldwide customer base, it’s not hard for Qualcomm to step out of line, and their licensing practices, such as demanding royalties based on the full price of a device that their technology is used in, don’t help make a case for them.