FTC says antitrust suit against Qualcomm should continue, Samsung concurs

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in General Discussion
Responding to Qualcomm's recent bid to dismiss a U.S. Federal Trade Commission antitrust lawsuit concerning chip licensing practices, the governmental trade body in a court filing on Friday called the company a monopoly and said the case should proceed.




In April, Qualcomm lodged a motion to dismiss an antitrust complaint the FTC filed with the U.S. District Court of Northern California earlier this year. Alleging the chipmaker takes part in anticompetitive practices, the FTC in its January complaint said Qualcomm forced Apple into an exclusive deal relating to baseband modems.

According to the FTC, Qualcomm levies a tax on customers when they use a rival's products by implementing a "no license-no chips" strategy. This tax, a decidedly monopolistic practice, is disguised as royalties on Qualcomm's standard-essential patents, which the company is required to offer under fair, reasonable and nondiscriminatory (FRAND) terms.

Further, Qualcomm abuses its monopoly position to coerce customers like Apple into paying a "royalty overcharge" when purchasing chips from rival manufacturers, the FTC said in Friday's filing. Further, Qualcomm subsequently denies competing firms access to licenses on FRAND terms.

"Beyond threatening all OEMs with the 'stick' of a supply disruption, Qualcomm offered some OEMs the 'carrot' of funds conditioned on their acceptance of inflated royalties that raise rivals' costs," the FTC filing reads.

In particular, Qualcomm's de facto exclusive deals effectively blocked competitors from selling their wares Apple, a "uniquely important customer."

Taken alone, arguments against Qualcomm's royalty overcharge, denial of licenses on FRAND terms and exclusive deals with Apple would make for a strong antitrust case, but together "easily surpass the plausibility threshold at the pleading stage," the FTC said. For these reasons, the body suggests Qualcomm's motion to dismiss be denied.

In an amicus brief also filed today, Samsung said it concurs with the FTC's assessment.

"This case presents a simple question: By excluding would-be competitors from making and selling licensed chipsets and cementing its market power by forcing downstream customers to accept onerous licensing terms, has Qualcomm harmed competition?" Samsung's statement reads. "As the Complaint makes clear, the answer is yes--not only does this conduct violate Qualcomm's FRAND commitments, but it also contravenes the Sherman Act by eliminating competition."

Qualcomm's chip licensing practices have come under fire from a number of governmental oversight bodies, including probes originating in China and South Korea.

Apple is also suing the chipmaker over unfair licensing terms. A complaint lodged in January claims Qualcomm withheld a nearly $1 billion rebate in retaliation for Apple's participation in the South Korean investigation.

Going further, Apple accuses Qualcomm of price-gouging, extortion and other unsavory business practices.

Qualcomm fired back last month in a countersuit claiming Apple is in breach of contract, has interfered with contract manufacturers, withheld licensing fees and wrongly induced regulatory action in a number of jurisdictions. The suit also alleges Apple purposely cast Qualcomm chipsets in a bad light by not activating certain high-performance features in iPhone 7 modems, then prevented the company from revealing mismatched performance metrics compared to Intel modems.

Apple and its suppliers have halted royalty payments to Qualcomm until the legal spat is resolved.
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Comments

  • Reply 1 of 31
    stukestuke Posts: 82member
    Irwin Jacobs siblings...are they currently running the company?  I wonder when things started to go south for Qualcomm...a name that may drift away in history in shame.  Was it started under Irwin's leadership that built the company, or after he stepped down and handed over the reigns.  
    brakkenbadmonk
  • Reply 2 of 31
    ericthehalfbeeericthehalfbee Posts: 4,025member
    Uh, oh.

    What are all the trolls going to say now that Samsung is also against Qualcomm (previously siding with Qualcomm against Apple)?

    caliwatto_cobrawlymbadmonk
  • Reply 3 of 31
    gatorguygatorguy Posts: 20,292member
    Uh, oh.

    What are all the trolls going to say now that Samsung is also against Qualcomm (previously siding with Qualcomm against Apple)?

    I can't recall anyone here siding with Qualcomm so you may have a long wait. 
    SpamSandwich
  • Reply 4 of 31
    Uh, oh.

    What are all the trolls going to say now that Samsung is also against Qualcomm (previously siding with Qualcomm against Apple)?

    One of the nice things about Qualcomm is they screw everyone equally.  The downside of that practice is they have no friends...


    EsquireCatscalibadmonk
  • Reply 5 of 31
    sergiozsergioz Posts: 223member
    Hopefully, we'll get an update, for thus high-performance features in iPhone 7 modems, when they sort this Qualcomm mess!
  • Reply 6 of 31
    SpamSandwichSpamSandwich Posts: 30,860member
    Looks like Qualcomm stepped in it now.
    magman1979pscooter63badmonk
  • Reply 7 of 31
    bloggerblogbloggerblog Posts: 1,822member
    Samsung concurs?! Weren't they the ones who also pulled FRAND license crap against Apple?

    Oh the irony 
    caliwatto_cobra
  • Reply 8 of 31
    mobiusmobius Posts: 377member
    gatorguy said:
    Uh, oh.

    What are all the trolls going to say now that Samsung is also against Qualcomm (previously siding with Qualcomm against Apple)?

    I can't recall anyone here siding with Qualcomm so you may have a long wait. 
    Unsurprisingly, there were an awful lot of them at MacRumors.
    watto_cobrabadmonk
  • Reply 9 of 31
    Rayz2016Rayz2016 Posts: 4,556member
    Right, a "no license, no chips" strategy. That sound familiar. 

    One of the practises Microsoft was eventually convicted of was its habit of charging PC vendors for a Windows license whether they installed Windows on a machine or not. This was one of the reasons that Linux was unable to get a foothold in the desktop market. 

    The other reason was that you needed an engineering degree to use it. 

    Qualcomm is using its monopoly position in one market to increase its standing in another. 

    Allegedly. 
    edited May 2017 brakkenbadmonk
  • Reply 10 of 31
    wonkothesanewonkothesane Posts: 1,344member
    If Apple stops paying royalties, can Qualcomm simply stop delivering chips?
    Is this not potentially endangering the delivery of iOS devices?
  • Reply 11 of 31
    brakkenbrakken Posts: 677member
    If Apple stops paying royalties, can Qualcomm simply stop delivering chips?
    Is this not potentially endangering the delivery of iOS devices?
    For some, living in fear is no option at all, and tyranny must be stopped.
    badmonk
  • Reply 12 of 31
    davidwdavidw Posts: 957member
    If Apple stops paying royalties, can Qualcomm simply stop delivering chips?
    Is this not potentially endangering the delivery of iOS devices?
    I would think that Qualcomm can stop producing their own chips. But they can't stop other chip makers from using Qualcomm's  SEP patents. So long as the other chip makers are willing to negotiate a license under FRAND. The courts will step in if Qualcomm is not willing to bargain. This is only for their SEP's.

    So it would be suicide for Qualcomm to stop making chips because once users switch to other chip makers, they may not want to return to Qualcomm, when the dust settles. As it stands now, even if they are not getting any royalties for their chips now, they eventually will get all the royalties due when the courts determines how much they can charge for the license. It'll probably be less than what they were going to charge, but it won't be zero. And they are allowed to make a profit on the chips, regardless of what the courts decides. 
    jony0
  • Reply 13 of 31
    wood1208wood1208 Posts: 1,879member
    FTC leave this American company alone. Are you anti-american ? Qualcomm worked hard to create intellectual property and they can charge reasonably to whomever they want. No one asking to use their tech... Atleast Qualcomm is not like those patent trolls who did not create patients in first place and than don't use patents to create products. You need to go after them.
    edited May 2017
  • Reply 14 of 31
    wood1208 said:
    FTC leave this American company alone. Are you anti-american ? Qualcomm worked hard to create intellectual property and they can charge reasonably to whomever they want. No one asking to use their tech... Atleast Qualcomm is not like those patent trolls who did not create patients in first place and than don't use patents to create products. You need to go after them.
    Exactly.  What is being litigated here is whether the royalties are "reasonable?
  • Reply 15 of 31
    wood1208wood1208 Posts: 1,879member
    Rayz2016 said:
    Right, a "no license, no chips" strategy. That sound familiar. 

    One of the practises Microsoft was eventually convicted of was its habit of charging PC vendors for a Windows license whether they installed Windows on a machine or not. This was one of the reasons that Linux was unable to get a foothold in the desktop market. 

    The other reason was that you needed an engineering degree to use it. 

    Qualcomm is using its monopoly position in one market to increase its standing in another. 

    Allegedly. 
    In my opinion Microsoft was charging PC manufacturers for Windows for PC they built(unless PC is loaded with other OS with non-upgradeable bios to revert to windows) whether it was installed or not because of large scale piracy in rest of world. In those countries where piracy laws are non-existence, companies and individual users would buy PCs without OS and than install pirated free copy of windows. Means Microsoft is doing charity of software. Would you work for someone for free or provide service for free ? Even churches don't do it.
    Rayz2016
  • Reply 16 of 31
    mjtomlinmjtomlin Posts: 1,823member
    Rayz2016 said:
    Right, a "no license, no chips" strategy. That sound familiar. 

    One of the practises Microsoft was eventually convicted of was its habit of charging PC vendors for a Windows license whether they installed Windows on a machine or not. This was one of the reasons that Linux was unable to get a foothold in the desktop market. 


    Actually Microsoft charged all licensing fees based on the number of "seats" in a corporation, even if some of those "seats" sat a non-Windows computer. For this reason, not only could Linux not get in, but since the company was already paying Windows, Office and Windows Server fees, it only made sense to just get a PC, thus, making sure that it was extremely costly and difficult to get any other platform in the door.
    pscooter63
  • Reply 17 of 31
    Rayz2016Rayz2016 Posts: 4,556member
    wood1208 said:
    Rayz2016 said:
    Right, a "no license, no chips" strategy. That sound familiar. 

    One of the practises Microsoft was eventually convicted of was its habit of charging PC vendors for a Windows license whether they installed Windows on a machine or not. This was one of the reasons that Linux was unable to get a foothold in the desktop market. 

    The other reason was that you needed an engineering degree to use it. 

    Qualcomm is using its monopoly position in one market to increase its standing in another. 

    Allegedly. 
    In my opinion Microsoft was charging PC manufacturers for Windows for PC they built(unless PC is loaded with other OS with non-upgradeable bios to revert to windows) whether it was installed or not because of large scale piracy in rest of world. In those countries where piracy laws are non-existence, companies and individual users would buy PCs without OS and than install pirated free copy of windows. Means Microsoft is doing charity of software. Would you work for someone for free or provide service for free ? Even churches don't do it.

    Well, the courts didn't agree with your opinion and decided that a much more likely scenario was that Microsoft's charging scheme was designed to ensure that no other operating system would get a foothold in the desktop market place. If you need to recoup the cost of piracy then you increase the price of the license; you don't charge people who aren't using it at all.
    Habi_tweet
  • Reply 18 of 31
    fracfrac Posts: 480member
    wood1208 said:
    FTC leave this American company alone. Are you anti-american ? Qualcomm worked hard to create intellectual property and they can charge reasonably to whomever they want. No one asking to use their tech... Atleast Qualcomm is not like those patent trolls who did not create patients in first place and than don't use patents to create products. You need to go after them.
    Seriously? You think obnoxious overcharging, double dipping, spiteful disregard for existing agreements, monopolistic practices and flagrantly trashing FRAND licensing agreements affecting the worldwide mobile industry...is OK because...American!
    mobius
  • Reply 19 of 31
    SpamSandwichSpamSandwich Posts: 30,860member
    wood1208 said:
    FTC leave this American company alone. Are you anti-american ? Qualcomm worked hard to create intellectual property and they can charge reasonably to whomever they want. No one asking to use their tech... Atleast Qualcomm is not like those patent trolls who did not create patients in first place and than don't use patents to create products. You need to go after them.
    The difference is FRAND. If a patent holder never establishes an industry standard and subsequently chooses to offer licensing terms which support their industry standard position, then FRAND terms never apply.
  • Reply 20 of 31
    melgrossmelgross Posts: 31,485member
    gatorguy said:
    Uh, oh.

    What are all the trolls going to say now that Samsung is also against Qualcomm (previously siding with Qualcomm against Apple)?

    I can't recall anyone here siding with Qualcomm so you may have a long wait. 
    What did happen previously, was that Samsung attempted about the same thing against Apple. Demanding, for one thing, that Apple's OEMs not only pay the royalties, but that they also abrogate the first sale clause in their contracts so that Samsung could also charge Apple for those FRAND licenses, but not at FRAND levels. They wanted up to $9 per phone.

    their OEMs refused, Apple took Samsung to court, where Apple won. But Samsung also attempted to get Qualcomm to go along with it, and Qualcomm issued a public statement as to how they wouldn't.

    so the worm turns.
    jony0
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