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Judge Lucy Koh of the Northern District of California gave the Federal Trade Commission an enormous victory this past week in its antitrust lawsuit against Qualcomm. Her conclusion was that “Qualcomm’s licensing practices have strangled competition” in key markets to the detriment of rivals, original equipment manufacturers (OEMs), and consumers.
Her solution was a stern edict that at a minimum forces Qualcomm to abandon its “no-license, no chip” policy in three key ways. First, as that label suggests, Qualcomm may no longer sell its chips only to parties who have already obtained a license—perfectly proper under patent law—to use chips that contain Qualcomm’s patented technology. Second, Qualcomm must renegotiate all of its contracts worldwide to make sure that it only charges “fair and reasonable rates” for all of its technology and chipsets, including now required sales to its direct competitors in the 5G market. Third, the order prohibits Qualcomm from entering into “any express or de facto exclusive dealing relationships” with its customers. As the Wall Street Journal wrote, Judge Koh’s “Qualcomm coup” effectively “kneecaps” the major American player in the 5G market.More