Qualcomm faces FTC charges over monopolistic 'no license, no chips' claim

Qualcomm faces FTC charges over monopolistic 'no license, no chips' claim

The FTC's redacted complaint (PDF), filed today, says that Qualcomm maintains a "no license, no chips" policy that forces cell phone to pay high royalties to Qualcomm. The agency's complaint, filed in the U.S. District Court in the Northern District of California, said the San Diego-based chipmaker used its dominant position to maintain an illegal monopoly over its phone partners like Apple.

As we've seen play out before when cellular-essential patents are contested, those who hold such rights are expected to license them on so-called FRAND terms.

The complaint specifically addresses a deal with Apple in which Qualcomm required Apple to exclusively use its modems from 2011 to 2016 in exchange for lower patent royalties.

Another tactic Qualcomm used, the FTC said, is that it would threaten to limit phone manufactures' access to its cellular chips and then hike up royalties payments.

"Qualcomm's exclusive supply arrangement with Apple denied other baseband processor suppliers the benefits of working with a particularly important cell phone manufacturer and hampered their development into effective competitors", the FTC wrote in its complaint. The company is also accused of suppressing competition by charging Apple reduced patent royalties from 2011 to 2016 to keep the company loyal.

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The FTC seeks a court order to prevent Qualcomm from anticompetitive behavior. Though the case has been filed, one of the FTC commissioners, Maureen K. Ohlhausen, dissented. It described the USA complaint as a politically opportunistic move that got the facts wrong and is based on flawed legal theory.

Meanwhile, Qualcomm also highlights the fact that the FTC complaint does not accuse it of actually attempting to charge above "fair and reasonable" royalties, despite the FRAND references in the suit. In dissenting comments she said the decision was "based on a flawed legal theory...that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine US intellectual property rights in Asia and worldwide".

The US Federal Trade Commission has charged Qualcomm with violating the FTC Act. It said that it has neither withheld nor threatened to withhold its chips in order to get "unfair or unreasonable licensing terms".

According to Rosenberg, Qualcomm intends to fight the accusations in the federal court.