Qualcomm wins in FTC lawsuit appeal

Qualcomm 5G MWC 2019

Qualcomm has won its appeal against the FTC.

Corinne Reichert/CNET

Qualcomm has won its appeal against the US Federal Trade Commission, with the court finding that Qualcomm’s licensing policies are not anticompetitive. In a judgment published Tuesday, the Court of Appeals for the Ninth Circuit vacated the previous judgment, reversing the district court’s permanent worldwide injunction against Qualcomm’s business practices, which required it to renegotiate fees with rivals.

According to the ruling, Qualcomm did not impose an anticompetitive surcharge on its competitor phone chip suppliers, and did not undermine competition by charging royalties. The court also said Qualcomm’s Apple contracts in 2011 and 2013 did not substantially foreclose competition to maintain its monopolies in the CDMA and LTE chip markets. 

“Anticompetitive behavior is illegal under federal antitrust law. Hypercompetitive behavior is not,” the court said. “Qualcomm has exercised market dominance in the 3G and 4G cellular modem chip markets for many years, and its business practices have played a powerful and disruptive role in those markets, as well as in the broader cellular services and technology markets. The company has asserted its economic muscle ‘with vigor, imagination, devotion and ingenuity.'”

Read more: Qualcomm-FTC lawsuit: Everything you need to know

Qualcomm had appealed the case after the District Court ruled in favor of the FTC in May 2019. That ruling said Qualcomm wrongfully suppressed competitors in the phone chip market by using its dominance to force rivals to pay high licensing fees.

The case began with the FTC accusing Qualcomm three years ago of forcing customers like Apple to work with it exclusively, and of charging excessive licensing fees for its technology. 

“The Court of Appeals’ unanimous reversal, entirely vacating the District Court decision, validates our business model and patent licensing program and underscores the tremendous contributions that Qualcomm has made to the industry,” said Don Rosenberg, Qualcomm EVP and general counsel. “We thank the panel for its thoughtful consideration of this important case.”

The FTC didn’t immediately respond to a request for comment.

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