Qualcomm wins appeal in FTC antitrust suit ruling

Posted:
in General Discussion
Qualcomm has won its appeal against an antitrust ruling in a long-running Federal Trade Commission antitrust case, one where the chipmaker was alleged to have abused its dominance in the modem business.




In the 2019 ruling, Qualcomm was determined to have violated federal antitrust laws and unlawfully suppressed competition in the cellular modem business. Over one year later, Qualcomm has successfully managed to overturn the ruling.

The Tuesday ruling by a three-judge panel agreed with the appeal to reverse the decision, making Qualcomm free from having to perform remedial actions. Shortly after the ruling was made, Qualcomm's shares shot up more than 5% from the news, according to Bloomberg.

The 2019 ruling had U.S. District Judge Lucy Koh declaring Qualcomm's licensing fees charged to device vendors as "unreasonably high." Qualcomm was ordered to work with its customers "in good faith" to renegotiate licensing agreements, but Koh's order was delayed pending the appeal.

In its appeal argument, Qualcomm proposed its licensing business was beneficial to the modem business in general, as it forced an acceleration in improvements to both smartphones and related services. At the same time, Qualcomm stressed it didn't prevent other chip makers from using its technology, but did charge fees for each smartphone sold using its modems.

The ruling will be of interest to device vendors around the world, including Apple. Shortly before the May 2019 antitrust ruling, Apple and Qualcomm reached a six-year license agreement for Qualcomm to supply chips to Apple, an agreement that also ceased a high-stakes patent licensing trial that was set to start in April 2019.

Comments

  • Reply 1 of 6
    gatorguygatorguy Posts: 23,175member
    I never seriously doubted QC would be successful with their appeal.  Now will come the appeal of the appeal ruling. 

    It doesn't matter to Apple anyway as they already came to an agreement with Qualcomm that both parties are satisfied with. No doubt QC was already aware of Apple plans for building their own chipset to replace them and getting a 6 year revenue contract with Apple was a good move considering they wouldn't be needed by then anyway except for essential patent licenses.
    edited August 2020 lkruppflyingdpmuthuk_vanalingamjony0
  • Reply 2 of 6
    qwerty52qwerty52 Posts: 311member
    This is for sure a good news for Apple and for all companies making their money with hardware products. I am sorry Facebook....

    watto_cobra
  • Reply 3 of 6
    gatorguy said:
    I never seriously doubted QC would be successful with their appeal.  Now will come the appeal of the appeal ruling. 

    It doesn't matter to Apple anyway as they already came to an agreement with Qualcomm that both parties are satisfied with. No doubt QC was already aware of Apple plans for building their own chipset to replace them and getting a 6 year revenue contract with Apple was a good move considering they wouldn't be needed by then anyway except for essential patent licenses.
    There was no agreement ... Apple caved due to their need for 5G in the iPhone 12.

    Apple should never have withdrawn their FTC complaint and testified to Qualcomm's extortion in the Smartphone industry. Qualcomm's gotten away with their abuse of standards bodies and FRAND terms for much too long.

    This will come back to haunt Apple later on when they attempt to manufacture and distribute phones using their own chips.
    watto_cobra
  • Reply 4 of 6
    Apple wanted to charge Samsung a $50 per device fee over TRADE DRESS and you are upset over Qualcomm wanting about $2 per device over VITAL FUNCTIONALITY WITHOUT WHICH THE DEVICE WOULD NOT WORK AT ALL THAT THEY INVESTED BILLIONS OF R&D DEVELOPING? Man you people are sick ...

    verne arase said:
    gatorguy said:
    I never seriously doubted QC would be successful with their appeal.  Now will come the appeal of the appeal ruling. 

    It doesn't matter to Apple anyway as they already came to an agreement with Qualcomm that both parties are satisfied with. No doubt QC was already aware of Apple plans for building their own chipset to replace them and getting a 6 year revenue contract with Apple was a good move considering they wouldn't be needed by then anyway except for essential patent licenses.
    There was no agreement ... Apple caved due to their need for 5G in the iPhone 12.

    Apple should never have withdrawn their FTC complaint and testified to Qualcomm's extortion in the Smartphone industry. Qualcomm's gotten away with their abuse of standards bodies and FRAND terms for much too long.

    This will come back to haunt Apple later on when they attempt to manufacture and distribute phones using their own chips.

    gatorguy
  • Reply 5 of 6
    Apple wanted to charge Samsung a $50 per device fee over TRADE DRESS and you are upset over Qualcomm wanting about $2 per device over VITAL FUNCTIONALITY WITHOUT WHICH THE DEVICE WOULD NOT WORK AT ALL THAT THEY INVESTED BILLIONS OF R&D DEVELOPING? Man you people are sick ...

    verne arase said:
    gatorguy said:
    I never seriously doubted QC would be successful with their appeal.  Now will come the appeal of the appeal ruling. 

    It doesn't matter to Apple anyway as they already came to an agreement with Qualcomm that both parties are satisfied with. No doubt QC was already aware of Apple plans for building their own chipset to replace them and getting a 6 year revenue contract with Apple was a good move considering they wouldn't be needed by then anyway except for essential patent licenses.
    There was no agreement ... Apple caved due to their need for 5G in the iPhone 12.

    Apple should never have withdrawn their FTC complaint and testified to Qualcomm's extortion in the Smartphone industry. Qualcomm's gotten away with their abuse of standards bodies and FRAND terms for much too long.

    This will come back to haunt Apple later on when they attempt to manufacture and distribute phones using their own chips.

    1. Qualcomm had already been paid for the "vital functionality" by the actual manufacturer of the chip, who then sold it to Apple. If there's a portion of the end product sales price (manufactured by someone else!) included in the licensing for an individual component, which seems an extraordinary provision in any licensing agreement, then realistically that money should be included in the price of the chip to Apple, and then forwarded by the chip manufacturer to Qualcomm.
    2. Trade dress is extraordinarily valuable because it plays a pivotal role in the decision to buy for the average consumer (who is assumed to be as thick as two short planks). Duplication of trade dress can destroy the value capture of the original creator, who is pricing their goods so as to recoup more than the cost of research and development on top of the cost of manufacture, distribution and sales. This dramatically reduces the incentive to develop something new while increasing the incentive to just copy more of what already exists.

    So, there are two harms in play. The first involves a creator trying to get money from "downstream" use of something they created - something they already got paid for by the person they directly sold it to - which in the majority of cases causes more harm than good to society. There are some things, like a musical recording, where society has said, OK, if I buy a recording for personal use that's different to buying a recording for hosting a dance party where I charge people for entry, so I should pay more for the recording. But by and large it's recognised that once property is sold it is entirely under the auspices of the purchaser. IP is nowadays licensed, not sold, but it still gets treated as property and most people agree that once something is paid for, that's the transaction done. THAT is why people are upset over Qualcomm's actions.

    The second harm involves a creator being denied financial reward for taking a risk. It's all very good to argue that the iPhone was obvious in hindsight and that Apple was trying to be compensated for coming up with a rounded rectangle, but nobody denies that the iPhone was new and exciting to the vast majority of consumers. Society broadly agrees that the creator of something new deserves to profit from that invention (whether or not they actually do profit is subject to the vagaries of business), and to the average consumer it was Apple who invented the device with the whole-face touchscreen that runs apps and is called an iPhone. Given the incredibly subtle differences in trade dress (not just the hardware, but the UI that Samsung in particular adopted) between the iPhone and the various "knock-offs" and the widely-adopted practice of salespeople telling consumers "[This] is exactly like [that], only cheaper" and people calling their Android device an "iPhone" and you can see why people broadly agree that Samsung owed Apple money for copying an original invention.

    For as long as people ascribe more value to the look of something than to its functionality, there will be a difference in price between the perceived types of harm involved here - so I don't see anything "sick" about the reasoning of the people on this forum.
    jony0watto_cobra
  • Reply 6 of 6
    mjtomlinmjtomlin Posts: 2,446member
    Apple wanted to charge Samsung a $50 per device fee over TRADE DRESS and you are upset over Qualcomm wanting about $2 per device over VITAL FUNCTIONALITY WITHOUT WHICH THE DEVICE WOULD NOT WORK AT ALL THAT THEY INVESTED BILLIONS OF R&D DEVELOPING? Man you people are sick ...

    verne arase said:
    gatorguy said:
    I never seriously doubted QC would be successful with their appeal.  Now will come the appeal of the appeal ruling. 

    It doesn't matter to Apple anyway as they already came to an agreement with Qualcomm that both parties are satisfied with. No doubt QC was already aware of Apple plans for building their own chipset to replace them and getting a 6 year revenue contract with Apple was a good move considering they wouldn't be needed by then anyway except for essential patent licenses.
    There was no agreement ... Apple caved due to their need for 5G in the iPhone 12.

    Apple should never have withdrawn their FTC complaint and testified to Qualcomm's extortion in the Smartphone industry. Qualcomm's gotten away with their abuse of standards bodies and FRAND terms for much too long.

    This will come back to haunt Apple later on when they attempt to manufacture and distribute phones using their own chips.


    Umm, Trade Dress is an attempt by a company to design their product to look like another in order to fool consumers into thinking they are buying something they are not. It hurts both the consumer and the company that created the original design.

    That "vital" functionality is not 100% Qualcomm's. It is a standard developed and brought to market by MANY companies. Qualcomm did not just want $2 per device, they wanted a percentage of the sale price of the device as well - they wanted Apple to buy the component ($2) and then pay a fee to use it (% of device sale price). This is why they have not released Macs with built-in mobile radios. Furthermore, whether that functionality is considered vital or not, it should not matter. It is but a single component of the device.
    edited August 2020 jony0watto_cobra
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