Qualcomm licensing practices are illegal, says judge Lucy Koh

“Qualcomm’s licensing practices have strangled competition,” said Judge Lucy Koh, the formidable judge who presided over the job market fixing trial of Apple, Intel, Google, Adobe, eBay and others.

The problem stems from Qualcomm’s dominance of the wireless chip industry under the US anti-trust Sherman Act, which holds dominant players to a higher standard of conduct than players in industries with robust competition.

Some of the patents for which Qualcomm claims royalties are legally required to be licensed on Fair Reasonable and Non- Discriminatory (FRAND) terms yet Qualcomm typically imposes charges amounting to 5% of a handset’s selling price.

Judge Koh said Qualcomm’s monopoly power in modem chips resulted in “unreasonably high” royalties. She said Qualcomm realised its practices stifled competion “yet continued anyway.”

“This evidence of Qualcomm’s intent confirms the court’s conclusion that Qualcomm’s practices cause anti-competitive harm because no monopolist monopolizes unconscious of what he is doing,” said Koh.

“With practices that result in exclusivity and eliminate opportunities to compete for OEM business, Qualcomm undermines rivals,” said Koh.

Some evidence given by Qualcomm execs, including the CEO, “lacked credibility”, said Koh. She said that internal Qualcomm emails and notes contradicted some of Steve Mollenkopf’s testimony.

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” said Don Rosenberg, executive vice president and general counsel of Qualcomm, in a statement.

FTC Bureau of Competition director Bruce Hoffman, said: “Yesterday’s decision that Qualcomm’s practices violate the antitrust laws is an important win for competition in a key segment of the economy.”

Qualcomm, the inventor of the CDMA form of digital communications technology that underlies modern wireless communications, has long held a commanding IP position in the industry but also long held by some to be predatory in its licensing practices. The case comes shortly after Qualcomm settled a lawsuit with Apple which revolved round the same issues of licensing practices.

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