US takes action against Qualcomm

Alan Burkitt-Gray
Published on:

Federal Trade Commission starts last-minute lawsuit against Qualcomm over supply of semiconductors to mobile phone makers

The US trade regulator has charged Qualcomm with using anti-competitive tactics to maintain a monopoly in supplying semiconductor chips for mobile phones.

The Federal Trade Commission (FTC) said that Qualcomm forced phone makers to pay more to use its patents if they used rival suppliers’ chips. And the company stopped Apple from using rivals’ chips, said the FTC.

Qualcomm rejected the charges and complained that the FTC had made them in the last days of the Obama administration on a two-to-one vote by the commissioners, who are two down on their usual strength of five.

Commissioner Maureen Ohlhausen – who voted against the filing – said the decision to sue Qualcomm was “an enforcement action based on a flawed legal theory”.

Qualcomm followed up her words by saying it believed “the complaint is based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry”.

The company added: “The complaint seeks to advance the interests and bargaining power of companies that have generated billions in profit from sales of products made possible by the fundamental 3G and 4G cellular technology developed by innovators like Qualcomm.”

The FTC complained that “Qualcomm holds patents that it has declared essential to industry standards that enable cellular connectivity. These standards were adopted by standard-setting organisations for the telecommunications industry, which include Qualcomm and many of its competitors. In exchange for having their patented technologies included in the standards, participants typically commit to license their patents on what are known as fair, reasonable, and non-discriminatory, or ‘FRAND’, terms.”

It added: “By excluding competitors, Qualcomm impedes innovation that would offer significant consumer benefits, including those that foster the increased interconnectivity of consumer products, vehicles, buildings, and other items commonly referred to as the internet of things.”

Qualcomm complained about “midnight legislation”, taken just before the US administration changes and the FTC chairwoman, Edith Ramirez, is due to leave her post so that new president Donald Trump can appoint his own person.

Don Rosenberg, Qualcomm’s general counsel, said: “We have grave concerns about the two commissioners’ decision to bring this case despite a lack of evidence supporting the allegations and theories in the complaint. We look forward to defending our business in federal court, where we are confident we will prevail on the merits.”

Only three weeks ago Korea’s Fair Trade Commission imposed an $890 million fine after a three-year investigation. Qualcomm said it would appeal against that decision.