Intel and Samsung have each filed an amicus brief in favor of the FTC’s argument for sustaining its anticompetition lawsuit against Qualcomm. The defendant is currently motioning for the case, which is to take place in early 2019, to be dismissed.
In its brief, Samsung claims that the San Diego-based semiconductor company has not held up its end of a reciprocal practice to offer standard-essential patents to the mobile industry’s “standards-setting organizations” under FRAND (fair, reasonable and non-discriminatory) terms: instead of offering FRAND terms to all industry actors, it blocks out competing chipmakers and “taxes” device OEMs with to keep them stuck on Qualcomm licenses.
Challenge the agreement by picking up a competitor’s silicon? An OEM could risk losing supply from Qualcomm and get a tightening of terms on those SEPs. Intel explains the tit-for-tat procedure in its amicus brief:
An unprecedented “no-license-no-chips” policy, whereby Qualcomm refuses to sell OEMs any chipsets unless those manufacturers also purchase separate patent licenses that require them to pay exorbitant royalties for every handset they sell, regardless of whether the handset contains a Qualcomm chipset […]
A complicated kickback system is set up where those manufacturers pay Qualcomm royalties for the patents, a portion of which get returned in honoring this mechanism.
Clauses in those agreements also called for cross-licensing deals of the OEM’s intellectual property and a prohibition on litigation against Qualcomm.
Qualcomm has commissioned the chaebol to manufacture its major Snapdragon chipsets in recent years as Samsung itself has been developing and producing its Exynos chipsets while also utilizing the Snapdragon chips in its phones. It’s not clear if and how that production agreement could that be related to this suit, but the mere fact of being a competitor and customer to Qualcomm has left Samsung, it alleges, in a particular double jeopardy.
Florian Mueller, who writes the FOSS Patents blog, thinks that with Apple’s audacity has a tech company with high leverage taking legal action against Qualcomm and with Samsung’s amici curae on the shoulders of the FTC, smaller manufacturers may be more willing to speak out about the issue and, perhaps, sue, even in the face of a potential countersuit for infringement and the pending financial and operational disruptions.
Without the fears described above, I’m sure Qualcomm would face even more antitrust lawsuits than it currently has to deal with (the FTC case plus complaints by Apple in several jurisdictions around the globe). It’s too early to tell, but it could be that Qualcomm itself will at some point conclude that certain practices (such as entering into agreements under which other companies are not allowed to take antitrust action) aren’t advisable.
The contracts in question will have to be revealed in court, but Qualcomm has options to hide them.
Late last month, a consortium of tech and automotive companies signed an open letter to President Trump urging support on keeping the environment safe for SEPs.