Following accusations by the South Korean government that Qualcomm is engaging its customers in licensing deals that detract from competition, the US Federal Trade Commission has now filed a suit of its own.
The case, filed in the district court in San Jose, California, alleges that Qualcomm is maintaining “a monopoly in baseband processors, semiconductor devices that enable cellular communications in cell phones and other products,” achieved through product licensing deals that exert higher fees on clients that use competitors’ chips, a refusal to license standard-essential patents to competitors and cornering all of Apple’s business in regards to said products.
When Apple sought relief from Qualcomm’s excessive royalty burden, Qualcomm conditioned partial relief on Apple’s exclusive use of Qualcomm baseband processors from 2011 to 2016. Qualcomm’s exclusive supply arrangement with Apple denied other baseband processor suppliers the benefits of working with a particularly important cell phone manufacturer and hampered their development into effective competitors.
The alleged acts come under the FTC’s jurisdiction to rectify “unfair practices.”
Qualcomm responded in a press release saying that the commission’s case is based on the “flawed theory” that the company threatened to or actually withhold chips from suppliers to obtain these agreements. It also claims that the suit is fortuitously timed right before a change in administration, with business-friendly Donald Trump set to become President on Friday.
Executive vice president and general counsel to Qualcomm Don Rosenberg said about the company’s licensing practices:
The intellectual-property-rights policies of the cellular standards organizations do not require licensing at the component level, and the FTC does not have the authority to rewrite industry policy. That is for the industry, not a regulator, to decide.
The company has been under fire from Chinese regulators after they found the chipmaker to be unfairly dealing its products to clients at the cost of competition. It has had to renegotiate patents with the nation’s top manufacturers.