The chip company requires customers to acquire a license for its patents because they want to use the company's products such as 5G modems. In 2019, a US court thwarted the business model, now the next instance follows.
San Francisco (dpa) - Business with smartphone chips continues according to the rules of world market leader Qualcomm. The provider of smartphone processors may make the purchase of chips dependent on the acquisition of a far-reaching patent license.
A judgment from the previous year with conditions for Qualcomm was overturned by a US appeals court. It decided that the company's approach does not distort competition. This means that there is no expected reorganization in the smartphone chip business.
In the judgment that has now been overturned in the spring of last year, a district court in California also prohibited Qualcomm from entering into exclusive agreements for chip deliveries. The decision was based on a lawsuit brought by the US competition authority FTC. In an unusual move, the US Department of Justice sided with Qualcomm and argued that the conditions would undermine America's position in the promising future of 5G data communications.
Qualcomm is, among other things, the central supplier of 5G-compatible modem chips. Conditions for the group could therefore have influenced the development of the industry for years. The South Korean antitrust authority and the EU Commission had previously imposed competition fines on Qualcomm.
The FTC had accused Qualcomm, among other things, of threatening smartphone vendors with the suspension of chip deliveries if they do not acquire a far-reaching patent license. Qualcomm denied this - the district court found, however, that internal emails from top managers of the chip company supported the allegation. The patent licensing business is Qualcomm's second - and more lucrative - pillar alongside chip sales.
The Court of Appeal has now ruled that the FTC has failed to prove that Qualcomm's actions went beyond a legal attempt to maximize profits. Qualcomm always argued that the strong market position was rightfully achieved through the development of innovative technology.
The FTC was disappointed with the decision and announced that it would review its options. The authority could go as far as the US Supreme Court.
© dpa-infocom, dpa: 200812-99-135633 / 2
Judgment of the Court of Appeal
District Court judgment of 2019
