A federal appeals court on Friday handed Qualcomm a temporary victory with its decision to stay parts of a judge’s ruling that chipmaker Qualcomm used its expansive market power to shut out rivals and overcharge for its products in violation of federal antitrust laws.
The 9th Circuit Court of Appeals ruled that portions of the earlier decision should be stayed because Qualcomm showed it had a reasonable chance of winning its appeal and that the decision risks irreparable harm to the company.
{mosads}”We are satisfied that Qualcomm has shown, at minimum, the presence of serious questions on the merits of the district court’s determination that Qualcomm has an antitrust duty to license its [standard-essential patents] to rival chip suppliers,” the appeals court ruled.
The lawsuit was brought by the Federal Trade Commission (FTC) in the final days of the Obama administration and has since created remarkable and unusual rifts within the federal government.
“We are pleased that the Ninth Circuit granted our request and believe the district court decision will be overturned once the merits of our appeal have been considered,” Qualcomm general counsel Don Rosenberg said in a statement. “The stay, which remains in effect through the course of the appeals process, keeps intact Qualcomm’s patent-licensing practices. This will allow Qualcomm to continue to invest in inventing the fundamental technologies at the heart of mobile communications at this critical time of transition to 5G.”
“While I am disappointed in the decision of the Ninth Circuit Court of Appeals to stay part of the district court’s order, we respect the decision and look forward to defending the district court’s decision on the merits,” Bruce Hoffman, the director of the FTC’s Bureau of Competition, said in a statement.
Still, Hoffman noted that parts of the district court decision remain in effect, including a prohibition against Qualcomm entering into any exclusive supply agreements and a requirement for the chipmaker to submit to compliance monitoring. The firm is also barred from trying to prevent any of its partner companies from providing information to regulators.
“The Bureau of Competition will monitor Qualcomm’s conduct relating to the on-going injunctive provisions, and we stand ready to evaluate any information from industry participants relating to whether Qualcomm is complying with its obligations,” Hoffman said.
Meanwhile, the Department of Justice (DOJ) has essentially sided with Qualcomm and against its antitrust-enforcer counterpart, filing a brief earlier this year that argued Qualcomm’s work is vital to national security.
The DOJ did not respond when asked for comment.
The DOJ argued in favor of a stay in a brief filed in May, saying that Qualcomm supplies the government with key technology and that the company’s research and development work helps keep the U.S. a leader in new technologies.
“Immediate implementation of the remedy could put our nation’s security at risk, potentially undermining U.S. leadership in 5G technology and standard-setting, which is vital to military readiness and other critical national interests,” the Justice filing reads. The agency also included statements from the Pentagon and Department of Energy testifying that they rely heavily on Qualcomm as a contractor.
The appeals court will hear oral arguments from both sides in January.
—Updated at 1:53 p.m.