The FTC has won its antitrust case against Qualcomm in the Northern District of California. The loss is a significant blow to Qualcomm which managed to win back Apple as a customer just last month and signed a six-year licensing agreement with it.
The ruling by Judge Lucy Koh states that Qualcomm cannot decide not to supply modem chips to its customers depending on their patent license status. The chip maker must renegotiate the patent licensing terms with its customers for supplying modem chips without them worrying about not getting access to modem chips or proper software support.
Qualcomm must make the patent licenses available to other modem suppliers under “FRAND” terms, and it cannot enter exclusive agreements to supply modem chips with anyone. To ensure that Qualcomm follows the orders and does not fall back to its old ways, the Court has ordered the company to submit yearly compliance reports for seven years.
Other actions ordered by the court are as follows:
- Qualcomm must not condition the supply of modem chips on a customer’s patent license status and Qualcomm must negotiate or renegotiate license terms with customers in good faith under conditions free from the threat of lack of access to or discriminatory provision of modem chip supply or associated technical support or access to software.
- Qualcomm must make exhaustive SEP licenses available to modem-chip suppliers on fair, reasonable, and non-discriminatory (“FRAND”) terms and to submit, as necessary, to arbitral or judicial dispute resolution to determine such terms.
- Qualcomm may not enter express or de facto exclusive dealing agreements for the supply of modem chips.
- Qualcomm may not interfere with the ability of any customer to communicate with a government agency about a potential law enforcement or regulatory matter.
- In order to ensure Qualcomm’s compliance with the above remedies, the Court orders Qualcomm to submit to compliance and monitoring procedures for a period of seven (7) years. Specifically, Qualcomm shall report to the FTC on an annual basis Qualcomm’s compliance with the above remedies ordered by the Court.
The decision by Judge Lucy Koh comes just a month after Apple and Qualcomm ended all their patent disputes and entered into a six-year licensing agreement. Apple reportedly paid upwards of $6 billion to settle with Qualcomm, and it now has to pay anywhere between $8 to $9 per iPhone as patent royalty fees — up from $7.5 per unit. The move ensured that the Cupertino company would be able to secure 5G modem from Qualcomm for its 2020 iPhones.
With the latest court decision though, it is likely that Apple will end up renegotiating its terms with Qualcomm. The latter is going to appeal against the court decision but given the substantial evidence against it, the decision is unlikely to be reversed.