FTC Wins Antitrust Lawsuit Against Qualcomm [Updated]

The FTC today won its antitrust lawsuit against Qualcomm over the chipmaker's anticompetitive business practices.

qualcommx55
As first reported by legal expert Florian Mueller on his blog FOSS Patents, U.S. District Judge Lucy Koh has ruled that Qualcomm's so-called "no license, no chips" model, under which the chipmaker has refused to provide chips to companies without a patent license, violates federal antitrust laws.

The ruling has significant implications for Apple, as Koh ordered that Qualcomm must negotiate or renegotiate license terms with its customers in good faith without threatening to cut off access to its cellular modem chips or related software and technical support, according to Mueller.

Qualcomm also must make patent licenses available to rival cellular modem suppliers on fair, reasonable, and non-discriminatory or "FRAND" terms, and may not enter exclusive agreements for the supply of modem chips.

Apple sued Qualcomm in early 2017 over these anticompetitive business practices, and unpaid royalty rebates, but the two companies announced an agreement to end all ongoing litigation worldwide last month. The settlement includes a six-year licensing agreement and a multiyear chipset supply agreement.

It's unclear if Apple had any hint that the FTC was likely to win its antitrust case and if that had any implications on its settlement with Qualcomm.

While it appears that Intel will remain the sole supplier of LTE modems in 2019 iPhones, Qualcomm is expected to supply Apple with its industry-leading 5G modems for 2020 iPhones now that the companies have settled, so Koh's ruling could lead to a fairer agreement between Apple and Qualcomm moving forward.

Farther down the road, multiple reports have indicated that Apple is designing its own cellular modems that would allow it to drop Qualcomm for good, although they might not appear in iPhones until as late as 2025.

Qualcomm will likely appeal the ruling, but Mueller believes the chipmaker faces an uphill battle given "such a rich and powerful body of evidence" regarding its anticompetitive business practices. Mueller has excellent, in-depth coverage of Koh's ruling on his blog FOSS Patents that is well worth a read.


Update: Qualcomm has announced that it will immediately seek a stay of the ruling and an expedited appeal to the U.S. Court of Appeals for the 9th Circuit.

"We strongly disagree with the judge's conclusions, her interpretation of the facts and her application of the law," said Don Rosenberg, general counsel of Qualcomm, in a statement shared by the Washington Post's Hamza Shaban.

Update 2: The ruling will not affect last month's settlement between Apple and Qualcomm, according to Bloomberg. "There are no provisions in the deal between Apple and Qualcomm that allowed for a reversal or change in the event the FTC won its case against the chipmaker," the report claims, citing a source.

Koh's complete ruling is embedded ahead.

Top Rated Comments

cmaier Avatar
20 months ago
How many times have I explained on here that this was the correct result under the law? And how many times was I called an apple fanboy by armchair lawyers merely for pointing out the Supreme Court precedent that required this result?
Score: 33 Votes (Like | Disagree)
macduke Avatar
20 months ago
I’ve been arguing the FRAND angle for some time. When your patents are necessary for standards, you have to follow FRAND guidelines.

The license angle was murkier, but always seemed unreasonable to not only sell your product to a user, but to also charge them again just to use it.

Then why did Apple settle so soon...?

So they could get a good deal, and then Qualcomm would be forced to give them an even better deal? Apple is pretty good at stuff like this so I wouldn’t put it past them.
[doublepost=1558528971][/doublepost]

How was it a smart move? Wouldn't the terms that Apple and Qualcomm settled with disqualify any renegotiating of licensing or royalties for the next 6 years?

I think you completely missed this part of the article:

The ruling has significant implications for Apple, as Koh ordered that Qualcomm must negotiate or renegotiate license terms with its customers in good faith without threatening to cut off access to its cellular modem chips or related software and technical support, according to Mueller.

Score: 16 Votes (Like | Disagree)
Baymowe335 Avatar
20 months ago

Then why did Apple settle so soon...?

Because Apple got terms they liked. Likely far better than people here speculated they got when so many claimed Apple “lost.”
Score: 9 Votes (Like | Disagree)
realtuner Avatar
20 months ago

How many times have I explained on here that this was the correct result under the law? And how many times was I called an apple fanboy by armchair lawyers merely for pointing out the Supreme Court precedent that required this result?

If I had a nickel....

Of course this was the correct result. I don’t know how people could support Qualcomms position in this. They literally lost every single antitrust case brought against them (5 before the FTC case) regarding their modem licensing practices. And people thought maybe they’d finally win one?
Score: 9 Votes (Like | Disagree)
Hazmat401 Avatar
20 months ago
Looks like Apple had the inside scoop on how the FTC was going to rule

Apple wanting the best components for the 2020 iPhone didn’t want to sue Qualcomm into oblivion without having a viable alternative to 5G chips

This was a smart chess move
Score: 8 Votes (Like | Disagree)
Gutwrench Avatar
20 months ago

Hey, everybody - should I tell him?

I just burned another 50 calories rolling my eyes. Two more posts about your awesomeness and I can have a soda.
Score: 6 Votes (Like | Disagree)

Top Stories

apple briefcase

AppleCare Memo Hints at Potential Hardware Announcement Next Tuesday

Thursday December 3, 2020 9:12 am PST by
Following a busy fall season in which Apple hosted three events in as many months, the company may have one more product announcement in store this year. In an internal memo this week, obtained by MacRumors from a reliable source, Apple informed service providers that it has AppleCare-related changes planned for Tuesday, December 8 at approximately 5:30 a.m. Pacific Time. Specifically, Apple ...
iphone11colorswhitebg

Apple Launches iPhone 11 Display Module Replacement Program

Friday December 4, 2020 3:22 pm PST by
Apple today launched a new display replacement program for iPhone 11 devices to address a problem that cases a "small percentage" of iPhone 11 displays to stop responding to touch. Apple says that affected devices were manufactured between November 2019 and May 2020, and if there are touch issues, the iPhone 11 models could have a problem with the display module. Those with iPhone 11...
matte black macbook pro colorware

Apple Researching a Matte Black Finish for MacBooks

Friday December 4, 2020 9:04 am PST by
Apple has filed a patent application for an intense light-absorbant matte black finish for a range of products, including the iPhone, iPad, Apple Watch, and MacBook (via Patently Apple). Image via ColorWare The patent application, filed with the U.S. Patent and Trademark Office, is titled "Anodized Part Having a Matte Black Appearance," and outlines the characteristics of the finish and...
homepod mini amazon echo size

$99 Speaker Showdown: HomePod Mini vs. Amazon Echo and Google Nest Audio

Wednesday December 2, 2020 3:12 pm PST by
Apple recently released the HomePod mini, a new $99 version of the original HomePod that's smaller, cuter, and, most importantly, competitively priced. At $99, the HomePod mini can better compete with affordable smart speakers from companies like Google and Amazon. Subscribe to the MacRumors YouTube channel for more videos. The HomePod mini has been praised for its high-quality sound at its...
wristcam design

$299 'Wristcam' Adds a Pair of Cameras to Your Apple Watch

Thursday December 3, 2020 9:32 am PST by
The Apple Watch has never included a camera, likely due to battery life and space concerns. A new Apple Watch product aims to address that lack by introducing a wrist-worn camera that works with the Apple Watch. The Apple-certified Wristcam attaches to the Apple Watch in the form of a band that adds a rather large camera set to the top of the Apple Watch. It's quite thick and bulky, but can...
iphone 12 5g

Multiple iPhone 12 Users Report Sudden Drops in 5G and LTE Cellular Coverage

Thursday December 3, 2020 1:18 am PST by
Since Apple launched the iPhone 12 in October, an increasing number of users of the new smartphone have been reporting persistent drops in cellular coverage. Multiple reports of dropped 5G and LTE connectivity have appeared on Reddit, on Apple's support forums, and on the MacRumors forums, with many people suffering issues when walking or in transit and some seeing the same problem when...
iOS 14

Apple Releases Third Betas of iOS 14.3 and iPadOS 14.3 to Developers [Update: Public Beta Available]

Wednesday December 2, 2020 10:04 am PST by
Apple today seeded the third betas of upcoming iOS 14.3 and iPadOS 14.3 updates to developers for testing purposes, two weeks after releasing the second betas and a month after the launch of iOS and iPadOS 14.2. iOS and iPadOS 14.3 can be downloaded through the Apple Developer Center or over the air after the proper developer profile has been installed. The iOS 14.3 update brings the...
16 inch MBP Mini Led

Kuo: Two Redesigned MacBook Pros in 2021 and New MacBook Air in 2022, All With Apple Silicon and Mini-LED Displays

Wednesday December 2, 2020 5:46 am PST by
Apple plans to release two redesigned MacBook Pros in 2021 and a new MacBook Air in 2022, all with mini-LED displays and Apple Silicon chips, according to TFI Securities analyst Ming-Chi Kuo. In a research note to investors, seen by MacRumors, Kuo explained that two new MacBook Pro models equipped with an all-new form factor design are expected to launch in 2021, and a new "affordable"...
satechi magnetic charger

Satechi Debuts Magnetic Wireless Charger for iPhone 12 Models

Friday December 4, 2020 8:00 am PST by
Satechi today announced a new USB-C Magnetic Wireless Charging Cable, which is a new wireless charging option for Apple's iPhone 12 models. Designed to work with the magnets built into the iPhone 12 lineup, the Magnetic Wireless Charging Cable adheres to the back of an iPhone much like Apple's MagSafe charger. The Magnetic Wireless Charging Cable works attaches to an iPhone 12 with a...
magsafe duo design

Hands-On With Apple's New MagSafe Duo Charger for iPhone 12 and Apple Watch

Thursday December 3, 2020 2:49 pm PST by
Apple on Tuesday finally released the MagSafe Duo Charger, which is a $129 charger that combines an iPhone 12 MagSafe charger with an Apple Watch charging puck. Subscribe to the MacRumors YouTube channel for more videos. We picked up one of the new MagSafe Duo chargers to see if it's worth Apple's super high asking price. Apple first introduced the MagSafe Duo alongside the new iPhone 12...