Qualcomm Now Facing Lawsuit From U.S Regulators in Addition to Ongoing Apple Feud

[MacRumors]

In January, the United States Federal Trade Commission filed a complaint against Qualcomm that accused the company of using anticompetitive tactics to remain the dominant supplier of baseband processors for smartphones, violating the FTC Act. This week, U.S. District Judge Lucy Koh of San Jose, California ruled that the FTC's antitrust lawsuit against Qualcomm can proceed, forcing the supplier to face legal battles both from U.S. regulators and in an ongoing $1 billion lawsuit from Apple (via Reuters).

Judge Koh denied Qualcomm's motion to dismiss the FTC's lawsuit, because the FTC had so far "adequately alleged" anticompetitive tactics were being used by Qualcomm. Don Rosenberg, executive vice president and general counsel of Qualcomm, said that the "FTC will have the burden to prove its claims, which we continue to believe are without merit."

The Federal Trade Commission's antitrust lawsuit against Qualcomm Inc can proceed, a federal judge ruled late on Monday, meaning the iPhone chip supplier must now wage a fight with U.S. regulators even as it contests a separate $1 billion lawsuit filed by Apple Inc.

The FTC highlighted Qualcomm's "no license, no chips" policy under which the San Diego company refuses to sell chips unless customers also sign a patent license agreement and pay Qualcomm fees. Qualcomm refused to grant licenses to its rivals in order to keep a monopoly, the FTC alleged.

Although a final ruling is still far away, Rosenberg mentioned that Qualcomm looks forward to "further proceedings in which we will be able to develop a more accurate factual record." In response to the FTC's original complaint from January, Qualcomm cited a "flawed legal theory, a lack of economic support, and significant misconceptions about the mobile technology industry" in its first legal defense.

For Apple's lawsuit, the Cupertino company sued Qualcomm for $1 billion days after the FTC filed its first complaint in January, arguing the company had charged unfair royalties for "technologies they have nothing to do with." As the case continued throughout the year, in mid June Apple broadened its claims against Qualcomm, stating that Qualcomm wrongly bases its royalties on a percentage of the entire iPhone's value, despite supplying just a single component of the device.

Referred to as Qualcomm's "double dipping, extra reward system," Apple argued that these tactics were the same kind that the U.S. Supreme Court recently forbade in a lawsuit between Lexmark and a small company reselling its printer cartridges. After Qualcomm set its sights on four major Apple suppliers for failing to pay royalties on the use of Qualcomm's technology in the assembly of Apple's devices, Apple said that Qualcomm had revealed "its true bullying nature."

Article Link: Qualcomm Now Facing Lawsuit From U.S Regulators in Addition to Ongoing Apple Feud

 

[Michaelgtrusa]

This has now open a pandora's box that has me worried for the safety of this American company. I wonder if this is deliberate.

 

[djcerla]

The free lunch is over.

 

[newyorksole]

This is soooo messy. Damn...

 

[thisisnotmyname]

maybe they'll counter sue US regulators now too

 

[Fall Under Cerulean Kites]

This has now open a pandora's box that has me worried for the safety of this American company. I wonder if this is deliberate.

I’m not so sure how “American” it is to extort exorbitant royalties simply because one maintains a monopoly.

I’m not smart enough to understand the nuances of these pending cases. What seems to be the recurring theme is Qualcomm was living high on the hog for some time and may have been using questionable tacticts to remain so.

 

[Michaelgtrusa]

I’m not so sure how “American” it is to extort exorbitant royalties simply because one maintains a monopoly.

I’m not smart enough to understand the nuances of these pending cases. What seems to be the recurring theme is Qualcomm was living high on the hog for some time and may have been using questionable tacticts to remain so.

Many companies and nations do this but we need to look at the real threats and that one is communist china being allowed to steal, cheat, buy and move out.

 

[rictus007]

Can we still blame Tim Cook for this?

 

[PinkyMacGodess]

Interesting, because just yesterday I read an article on the reticence of regulators (and democrats) to prosecute and punish corporations for 'antitrust' violations, and that's why Google was sued in by the EU.

An interesting article...
[doublepost=1498655165][/doublepost]

I’m not so sure how “American” it is to extort exorbitant royalties simply because one maintains a monopoly.

I’m not smart enough to understand the nuances of these pending cases. What seems to be the recurring theme is Qualcomm was living high on the hog for some time and may have been using questionable tacticts to remain so.

Sounds like Microsoft...

 

[joueboy]

Time to kiss ass Apple if you want that new fingerprint sensor.

 

[maflynn]

This has now open a pandora's box that has me worried for the safety of this American company. I wonder if this is deliberate.

You reap what you so, and it seems they've gotten greedy. If they're smart, they'll start settling the cases with the government and apple, otherwise it will be a very long and drawn out ordeal for them (and expensive). Hard to be focused as a company when you're spending so much to focusing on suing or being sued

 

[thasan]

Many companies and nations do this but we need to look at the real threats and that one is communist china being allowed to steal, cheat, buy and move out.

if u were in the academia, you would have seen how fast china is coming up with fundamental and applied research as well as engineering. give it another 5-10 years... if there is no world war III, china will lead the world in innovation.

 

[isomorphic]

Many companies and nations do this but we need to look at the real threats and that one is communist china being allowed to steal, cheat, buy and move out.

So America should ignore indigenous corporate rule-breaking because China?

No, the US should apply its law consistently across all companies, foreign or domestic.

If your point is that the US' FTC is ignoring Chinese-company monopolies, fine, but that does not absolve Qualcomm. (Or Apple. Or Google, Amazon, Microsoft, Facebook...)

 

[nutmac]

The free lunch is over.

Yeah, from what I can gather, Qualcomm clearly double charged Apple and many other companies by selling its own chipsets (whose cost already factors in IP license) and also charging for IP licenses.

 

[kdarling]

This week, U.S. District Judge Lucy Koh of San Jose, California ruled that the FTC's antitrust lawsuit against Qualcomm can proceed,

Although I've spent a lot of time defending Koh before, I wish they had picked a different judge to make this decision.

The FTC highlighted Qualcomm's "no license, no chips" policy under which the San Diego company refuses to sell chips unless customers also sign a patent license agreement and pay Qualcomm fees.

"No license, no chips." Well, duh. Why would Qualcomm sell someone their baseband chips if the buyer won't pay for the IP needed to use those chips?

Despite Apple's clever wording, those two phrases separated by a comma are not transitive and do not apply when reversed.

Yet apparently some simple minded regulators can't see the grammatical difference between a common sense business action, and an actual illegal action... such as having a "no chips, no license" policy where you had to buy Qualcomm chips to get a license to use chips from other companies. But Qualcomm has no such illegal policy.

Yeah, from what I can gather, Qualcomm clearly double charged Apple and many other companies by selling its own chipsets (whose cost already factors in IP license) and also charging for IP licenses.

There was no double charge, as no license fee is included with the chip prices... from either Qualcomm or any other supplier.

Just as with cellular patents from Nokia, Ericsson and hundreds of other contributors who do not sell Apple chips, the royalty is being paid for the IP, not for what it costs to make a piece of silicon that runs that IP. (Although Apple loves to push that bogus idea.)

 

[themachugger]

Time to kiss ass Apple if you want that new fingerprint sensor.

"that finger print sensor" isn't Qualcomm's tech going into the new iPhone. If most rumors are true, Apple has developed their own.

 

[nutmac]

There was no double charge, as no license fee is included with the chip prices... from either Qualcomm or any other supplier.

Just as with cellular patents from Nokia, Ericsson and hundreds of other contributors who do not sell Apple chips, the royalty is being paid for the IP, not for what it costs to make a piece of silicon that runs that IP. (Although Apple loves to push that bogus idea.)

Is that spelled out?

I find it hard to believe that Qualcomm sells a product that does not include licenses it owns. It would be like buying a Mac that does not grant you a license to use it.

 

[kdarling]

Is that spelled out?

No need. You won't find any claims that they do. It is why they separated their chip sales into a separate company. That way, it's clear that licensing the IP from their IP company is a different transaction.

I find it hard to believe that Qualcomm sells a product that does not include licenses it owns. It would be like buying a Mac that does not grant you a license to use it.

Ah. That's because buying a silicon chip is NOT the same as buying software that runs on those chips.

E.g. buying a computer chip from Intel does not grant me a license to the VxWorks realtime OS, which Intel also owns.

Likewise, if I were able to buy a bunch of replacement ARM chips from Apple, they would not come with a license for iOS which Apple owns. I'd have to negotiate such a deal separately.

Note that buying a baseband chip from Intel _does_ exhaust the patents for the Qualcomm IP that they licensed to help them create that chip. But that's only chip IP, not code IP.

 

[afawcett]

As someone who lives in San Diego, many of my friends work at Qualcomm. It saddens me to see how ugly things have got. It's a shame since they make the best modems.