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, potentially shaking up the smartphone industry.
In a ruling issued Tuesday night, Judge Lucy Koh of the Federal District Court for the Northern District of California found that Qualcomm’s patent-licensing practices violated antitrust law.
Her decision is 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 industry-standard patents that are supposed 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 monitoring by the F.T.C. for seven years.
Qualcomm said on Wednesday that it would immediately seek a stay of the district court’s judgment and an expedited appeal to 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 executive vice president and general counsel of Qualcomm, said in a statement.
Qualcomm is considered the industry leader in wireless modem chips, and that market position is likely to become more important as the race to develop next-generation 5G wireless networks accelerates.
The ruling comes weeks after Qualcomm agreed to settle a lawsuit filed by Apple over its licensing fees.