Qualcomm faces a massive setback due to a US federal judge’s court ruling in favor of the Federal Trade Commission (FTC).
The chip maker was facing a lawsuit by the FTC which declared that “two industry agreements obligate Qualcomm to license its essential patents to competing modem chip suppliers.”
District Court Judge Lucy Koh agreed with FTC and passed a ruling in the commission’s favor yesterday. She wrote in her ruling,
Undisputed evidence in Qualcomm’s own documents demonstrates that a modem chip is a core component of the cellular handset, which only underscores how a [standard essential patent] license to supply modem chips is for the purpose of practicing or implementing cellular standards and why Qualcomm cannot discriminate against modem chip suppliers.
Background and Significance
When a manufacturer uses Qualcomm’s chips or technology in their smartphone, they’re required to pay a royalty to the company based on the value of the phone they’re selling.
However, Qualcomm also owns patents related to 3G and 4G. Almost every smartphone sold in the world supports both 3G and 4G, so the smartphone companies and chip manufacturers are required to pay royalties to Qualcomm even when they don’t use a Qualcomm SoC or processor.
This ruling ensures that Qualcomm will have to license said technologies and modems to rival companies. This means that they won’t be able to take royalties from non-Qualcomm devices that support 3G/4G.
This is far from the only lawsuit the chipmaker is facing. Qualcomm is embroiled in a legal battle with Apple, one of its biggeest former customers, as well as against regulatory bodies in both China and South Korea.
Even though the trial between US’s FTC and Qualcomm was to commence next year – with both entities asking the judge to delay the ruling so they could discuss settlements – the judge issued her ruling yesterday.