Federal Trade Commission v. Qualcomm Inc., No. 19-16122 (9th Cir. 2020)Annotate this Case
The FTC alleged that Qualcomm violated the Sherman Act by unreasonably restraining trade in, and unlawfully monopolizing, the code division multiple access (CDMA) and premium long-term evolution (LTE) cellular modem chip markets.
The Ninth Circuit vacated the district court's judgment, and reversed the district court's permanent, worldwide injunction prohibiting several of Qualcomm's core business practices. The panel noted that anticompetitive behavior is illegal under federal antitrust law, but that hypercompetitive behavior is not. The panel explained that its role was to assess whether the FTC has met its burden under the rule of reason to show that Qualcomm's practices have crossed the line to "conduct which unfairly tends to destroy competition itself." The panel concluded that the FTC has not met its burden.
The panel held that Qualcomm's practice of licensing its standard essential patents (SEPs) exclusively at the original equipment manufacturers (OEM) level does not amount to anticompetitive conduct in violation of section 2 of the Sherman Act, as Qualcomm is under no antitrust duty to license rival chip suppliers; Qualcomm's patent-licensing royalties and "no license, no chips" policy do not impose an anticompetitive surcharge on rivals' modem chip sales; rather, these aspects of Qualcomm's business model are "chip-supplier neutral" and do not undermine competition in the relevant antitrust markets; Qualcomm's 2011 and 2013 agreements with Apple have not had the actual or practical effect of substantially foreclosing competition in the CDMA modem chip market; and because these agreements were terminated years ago by Apple itself, there is nothing to be enjoined.
This opinion or order relates to an opinion or order originally issued on August 23, 2019.