Sweeping decision would have forced Qualcomm to renegotiate deals with customers and licence essential patents to rivals
Qualcomm has been granted a partial stay against the enforcement of an antitrust ruling that would have dramatically changed its business practices, as it prepares to appeal the case brought by the Federal Trade Commission.
On Friday the Ninth Circuit Court of Appeals granted the chip maker a stay on certain remedies imposed by a lower court in May, when it found that Qualcomm had “strangled competition” in order to maintain “unreasonably high” royalty rates.
The unusual case comes at a critical juncture for Qualcomm, as it competes with Huawei and other rivals to take the lead in 5G, and for this reason the Pentagon and the Department of Energy both made filings saying that enforcing the decision would harm national security.
The Department of Justice also said during the initial trial that it disagreed with the legal theory the FTC employed in making its case.
“The government itself is divided about the propriety of the judgment and its impact on the public interest,” the appeals court said in its ruling.
“While the FTC prosecuted this antitrust enforcement action, the DOJ filed a statement of interest expressing its stark disagreement that Qualcomm has any antitrust duty to deal with rival chip suppliers.
“We are satisfied that Qualcomm has shown, at minimum, the presence of serious questions on the merits of the district court’s determination that Qualcomm has an antitrust duty to license its (standard essential patents) to rival chip suppliers.”
The stay means Qualcomm will not have to make new licensing agreements with its customers, make standard essential patent licences available to its competitors or cease its practice of requiring customers to purchase patent licences before they can buy its chips.
FTC competition bureau director Bruce Hoffman said he was “disappointed” about the decision and noted that some of the remedies imposed by the district court remained intact.
“While I am disappointed in the decision of the Ninth Circuit Court of Appeals to stay part of the district court’s order, we respect the decision and look forward to defending the district court’s decision on the merits,” Hoffmain stated.
Qualcomm general counsel Don Rosenberg said the stay “keeps intact Qualcomm’s patent-licensing practices”.
“We are pleased that the Ninth Circuit granted our request and believe the district court decision will be overturned once the merits of our appeal have been considered,” he stated.