Thursday, 23 May 2019 09:57

Judge finds Qualcomm violated anti-trust law; company to appeal Featured

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Judge finds Qualcomm violated anti-trust law; company to appeal Image by FlitsArt from Pixabay

American multinational semiconductor and telecommunications equipment company Qualcomm has been found to have illegally suppressed competition for smartphone processors by holding out the threat of limiting supplies and obtaining excessive licensing fees.

US District Judge Lucy Koh made the ruling late on Tuesday night US time in San Jose, California, leading to a 12.5% plunge in the company's shares on Wednesday.

Justice Koh said Qualcomm's licensing strategy had "strangled" competition and ordered the company to cut new, reasonable licensing deals without threats of cutting off supplies. She also said Qualcomm would have to be monitored for seven years to ensure that it was staying compliant.

The case against Qualcomm was brought by the US Federal Trade Commission which, in 2017, accused the company of violating anti-trust laws.

Qualcomm's executive vice-president and general counsel Don Rosenberg said the company "strongly disagreed" with Justice Koh's "conclusions, her interpretation of the facts and her application of the law".

He said Qualcomm would seek an immediate stay of the judgment and an expedited appeal to the US Court of Appeals for the Ninth Circuit.

The court verdict follows a surprise end last month to litigation between Apple and Qualcomm. The two firms announced an end to all litigation on 16 April, a day which was expected to mark the beginning of a long and brutal fight over Qualcomm's patent-licensing practices.

In a judgment that ran to 233 pages, Justice Koh said the company had "engaged in extensive anti-competitive conduct against OEMs".

"In practices that are unique within Qualcomm and unique in the industry, Qualcomm refuses to sell its modem chips exhaustively and to sell modem chips to an OEM until the OEM signs a separate patent licence agreement. To enforce those licensing practices, Qualcomm has cut off OEMs’ chip supply, threatened OEMs’ chip supply, withheld sample chips, delayed software and threatened to require the return of software, withheld technical support, and refused to share patent claim charts or patent lists," she said.

"In addition, Qualcomm has required OEMs to grant QCT [Qualcomm CDMA Technology] cross-licences (often royalty-free) to OEMs’ patent portfolios and charged OEMs higher royalty rates on rivals’ chips. All of these tactics ensure that OEMs will sign Qualcomm’s licence agreements and generally result in exclusivity."

The OEMs Justice Koh referred to included Apple, BlackBerry, Huawei, Lenovo, LG, Motorola, Samsung, and Sony.

"With practices that result in exclusivity and eliminate opportunities to compete for OEM business, Qualcomm undermines rivals in every facet," Justice Koh wrote.

"Qualcomm attempts to eliminate competition in certain markets; eliminates competing standards; deprives rivals of revenues to invest in research and development and acquisitions; forecloses rivals from establishing technical and business relationships with OEMs; prevents rivals from field testing with OEMs, network vendors, and operators; and ensures that Qualcomm retains influence in SSOs, so that Qualcomm can maintain its time-to-market advantage and its unlawful monopoly.

"By so hobbling rivals, Qualcomm’s practices 'unfairly tend to destroy competition itself'.”

Thanks to The Register for a link to the ruling.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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