Deep Dive Episode 94 – FTC v. Qualcomm
In January 2017, the Federal Trade Commission (FTC) filed an antitrust complaint against Qualcomm in the Northern District of California. The FTC alleged that Qualcomm had unlawfully monopolized the market for certain semiconductors important in smartphone technology. Among other things, the FTC claimed that Qualcomm had maintained its market position by requiring chip customers to license their chips separately (known as the “no license, no chips” policy) and had refused to license its standard-essential patents (SEPs) to competitors.
Judge Lucy Koh held a bench trial in January 2019 and issued a decision in favor of the FTC in May 2019. In a lengthy opinion, the court determined that Qualcomm’s “no license, no chips” policy violated antitrust law and that Qualcomm had a separate antitrust duty to deal with its competitors. Judge Koh then issued an injunction that, among other things, prohibited Qualcomm from conditioning the supply of chips on a customer’s patent-license status and required Qualcomm to negotiate and make available licenses on FRAND terms.
Qualcomm appealed to the Ninth Circuit. In August 2019, the Ninth Circuit issued an order partially staying Judge Koh’s injunction. According to the Ninth Circuit, “Qualcomm has shown, at a minimum, the presence of serious questions on the merits” of the district court’s opinion. Additionally, the Ninth Circuit needs to decide whether the district court’s “order and injunction represent a trailblazing application of the antitrust laws, or instead an improper excursion beyond the outer limits of the Sherman Act.”
While these issues alone would be interesting, this case is even more intriguing because the Department of Justice (DOJ) has intervened in the case – in favor of Qualcomm. The DOJ filed an amicus brief in favor of the stay of injunction, as well as an amicus brief on the merits. The Ninth Circuit has also granted DOJ’s request for five minutes of oral argument time. Oral argument in the Ninth Circuit is set for February 13, 2020.
This Litigation Update will recap the district court’s decision, discuss the arguments likely to be made on appeal, and explore the bigger issues this case brings up for antitrust policy.
Fred C. Stevenson Research Professor of Law and Director, Planning and Publications, Center for Law, Economics, & Finance
George Washington University Law School
Austin E. Owen Research Scholar & Professor of Law
University of Richmond School of Law
Federalist Society’s Intellectual Property Practice Group