Qualcomm violated antitrust rules, US federal judge rules

Qualcomm ordered to renegotiate its business deals and to license patented technology to rivals with reasonable terms

Qualcomm violated antitrust rules by using its monopoly power to bully companies into overcharging for its patents, US District Court Judge Lucy Koh has ruled.

In her decision in the district court in San Jose, California, Koh ordered Qualcomm to renegotiate its business deals with customers and to license its patents to rival companies at reasonable terms.

According to the New York Times, Koh barred the San Diego-based company from signing exclusive deals with other smartphone makers that prevent customers from purchasing modem chips from other firms.

We strongly disagree with the judge's conclusions, her interpretation of the facts and her application of the law

The ruling further states that Qualcomm will submit to the Federal Trade Commission's (FTC) monitoring for the next seven years to ensure its compliance with the court's decision.

Qualcomm said that it will appeal to the US Court of Appeals for the 9th Circuit against the decision. "We strongly disagree with the judge's conclusions, her interpretation of the facts and her application of the law," Qualcomm's general counsel, Don Rosenberg, said in a statement.

Following the decision, Qualcomm shares fell by 11 per cent.

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Judge Koh also presided over the first intellectual property infringement case between Apple and Samsung. Her ruling this week followed a 10-day non-jury trial earlier this year and represents a major victory for the FTC, which sued Qualcomm in 2017, accusing it of violating antitrust law.

In its suit, the FTC argued that Qualcomm was overcharging customers and unlawfully obstructing competition in the modem chip market.

Qualcomm's customers, including Samsung and Apple, have repeatedly accused the company of using its effective monopoly powers to force other companies to agree to its licensing terms and fees.

Qualcomm charges two types of fee: the first is for the chip it sells to companies, and the second is the patent licensing fee of about five per cent of the total cost of the device.

In the FTC case, Apple argued in the court that Qualcomm's license fee overvalues its chips compared to other technologies used in a smartphone and that the company threatens to stop chips' supply when asked to renegotiate patent licensing fees.

Last month, Qualcomm and Apple surprised the industry by announcing a deal following a long-running legal battle in several countries. In the deal, Apple agreed to use Qualcomm chips in its iPhones.

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