A federal appeals court recently sided with Qualcomm ending a years-long battle over patent licensing practices, but a cohort of companies on Monday asked the Federal Trade Commission to keep its fight against the chip giant alive.
Twenty-one companies, including Intel and MediaTek, trade groups, and automakers Ford, Honda, and Tesla, among others sent a letter (PDF) to the FTC urging it to seek an “en banc” rehearing of the appeal panel’s August 11 decision in favor of Qualcomm.
The group asserts that the decision undermines the role of standards in facilitating competition, and could “destabilize the standards ecosystem by encouraging the abuse of market power acquired through collaborative standard-setting.”
Reached by a three-judge Ninth Circuit Appeals Court panel, the August ruling was a major win for Qualcomm and reversed a May 2019 decision by District Court Judge Lucy Koh. Judge Koh had sided with the FTC and found that Qualcomm violated competition laws related to licensing practices, charging high patent royalties that “strangled competition.” The San Diego-based company would have been forced to renegotiate licensing agreements and license technology patents to rival chipmakers.
The appeals panel, however, determined Qualcomm’s practice of not selling chips to any handset maker that didn’t license its patents wasn’t the same as putting an illegal surcharge on chipsets from competitors. Qualcomm also doesn’t have to negotiate new licensing deals.
“If it becomes precedent, this decision would endanger domestic competitiveness, as well as weaken the ability of the FTC to protect consumers through future enforcement actions,” the letter stated. Foreign entities might refuse to license standard essential patents (SEPs) to U.S. competitors, the group added.
While Qualcomm makes money collecting royalties, the company also pumps a large amount of dollars into technology R&D. CCS Insight’s Geoff Blaber, in a July column for Fierce, pointed out that Qualcomm spends around 20% annually on its R&D budget.
MediaTek and Intel compete in the chip space, though Intel exited the 5G smartphone modem business in 2019 after Qualcomm and Apple settled all litigation between each other in their own related disputes.
In addition to smartphones, Qualcomm is also involved in developing new Cellular Vehicle to Everything (C-V2X) tech. It offers its 9150 C-V2X chipset and Snapdragon automotive platforms for 4G and 5G.
According to Bloomberg Law, the FTC has until Sept. 25 to request a rehearing by the full Ninth Circuit.