Qualcomm abused its position as a giant of the semiconductor industry to harm competition and charge cellphone makers excessive licensing fees, a federal judge has ruled, striking at the heart of the company’s business and potentially shaking up the smartphone industry.
In a decision issued late Tuesday, Judge Lucy Koh of Federal District Court in San Jose, Calif., found that Qualcomm’s patent-licensing practices violated antitrust law.
The decision was a victory for the Federal Trade Commission, which sued Qualcomm in 2017 over its patent practices. The agency accused the chip maker of charging “onerous” fees for the use of its patents, some of which were considered industry standards meant to be licensed on fair, reasonable terms.
“Qualcomm’s licensing practices have strangled competition” in the market for wireless modem chips for years, Judge Koh wrote in the public version of her ruling, parts of which were redacted to protect trade secrets.
Judge Koh ordered Qualcomm to strike new licensing agreements without the onerous terms, and said that the company must submit to seven years of monitoring by the trade commission.
Qualcomm said on Wednesday that it would immediately seek a stay of Judge Koh’s decision and an expedited appeal at the United States Court of Appeals for the Ninth Circuit.
“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” Don Rosenberg, the company’s executive vice president and general counsel, said in a statement.