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FTC v. Qualcomm Inc.

United States District Court for the Northern District of California, San Jose Division

November 6, 2018, Decided; November 6, 2018, Filed

Case No. 17-CV-00220-LHK

Opinion

ORDER GRANTING [*8]  FTC'S MOTION FOR PARTIAL SUMMARY JUDGMENT

Re: Dkt. No. 792

Plaintiff Federal Trade Commission ("FTC") sues Defendant Qualcomm, Incorporated ("Qualcomm") for violation of § 5 of the Federal Trade Commission Act ("FTCA"), 15 U.S.C. § 45. Before the Court is the FTC's motion for partial summary judgment on the issue of whether two industry agreements obligate Qualcomm to license its essential patents to competing modem chip suppliers. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS the FTC's motion for partial summary judgment.

I. BACKGROUND

A. Factual Background

This case presents the complicated interaction between cellular communications standards, standard essential patents ("SEPs"), and the market for baseband processors, or "modem chips." In the Complaint, the FTC alleges that Qualcomm is a "dominant supplier" of modem chips and the holder of SEPs essential to "widely adopted cellular standards." ECF No. 1 ("Compl.") ¶ 2. The FTC alleges that Qualcomm has harmed competition and violated § 5 of the FTCA via several interrelated policies and practices. First, Qualcomm does not sell its modem chips unless a customer accepts a license to Qualcomm's SEPs, [*9]  which the FTC alleges Qualcomm offers for "elevated royalties." Id. ¶ 3a. Second, Qualcomm refuses to license its SEPs to competitors in the modem chip supplier market, in violation of industry agreements. Id. ¶ 3c. Third, the FTC alleges that Qualcomm has entered "exclusive dealing arrangements" with Apple, an important cell phone manufacturer. Id. ¶ 3d.

The parties refer interchangeably to the companies that manufacture and sell modem chips as "modem chip suppliers," "modem chip manufacturers," and "modem chip sellers." For simplicity and consistency, the Court uses the term "modem chip suppliers" in this Order.

The FTC alleges that because of those practices, customers for Qualcomm's modem chips must pay elevated royalties while Qualcomm's refusal to license its SEPs to competing modem chip suppliers ensures that Qualcomm's customers must depend on Qualcomm for their modem chip supply. Id. ¶¶ 4, 6. The FTC further alleges that Qualcomm's exclusive arrangements with Apple preclude other modem chip suppliers from working with "a particularly important cell phone manufacturer," which harms competition. Id. ¶ 8.1

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2018 U.S. Dist. LEXIS 190051 *; 2018-2 Trade Cas. (CCH) P80,578; 2018 WL 5848999

FEDERAL TRADE COMMISSION, Plaintiff, v. QUALCOMM INCORPORATED, Defendant.

Prior History: FTC v. Qualcomm Inc., 2017 U.S. Dist. LEXIS 98632 (N.D. Cal., June 26, 2017)

CORE TERMS

license, modem, policies, patent, holder, suppliers, judicial notice, Guidelines, cellular, chips, partial summary judgment, parties, assurances, manufacturers, technology, terms, documents, portions, non-discriminatory, implementing, rights, practices, products, motion to exclude, courts, extrinsic evidence, expert testimony, summary judgment, expert report, patent holder