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FTC urges judge to enforce antitrust sanctions against Qualcomm during appeal

Mike Freeman, The San Diego Union-Tribune on

Published in Business News

The U.S. Federal Trade Commission has opposed Qualcomm's request to put on hold enforcement of a federal judge's sanctions for violating monopoly laws – arguing that a delay would allow the San Diego company to continue to levy an artificial surcharge on rival chip makers.

In a legal brief filed with the U.S. District Court in San Jose on Tuesday, the FTC said Qualcomm failed to show how renegotiating hundreds of patent licenses agreements as required by U.S. District Judge Lucy Koh would cause the company irreparable harm -- a legal hurdle for granting a stay.

"Licenses can take months to negotiate, and should the court stay its order, negotiations free from anti-competitive practices will not begin until Qualcomm's appeal has run its course," FTC lawyers wrote in a brief. "This would adversely affect competition at a critical time, just as the cellular industry is transitioning to 5G technology."

Qualcomm could not be reached for comment.

On May 21, Koh found that Qualcomm had violated anti-monopoly laws, which the FTC first alleged in a lawsuit brought two years ago.

The ruling was a major victory for the FTC, with Koh adopting many of its arguments and rejecting all of Qualcomm's defenses.

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The FTC case, brought in the waning days of the Obama administration, has been controversial. Two FTC commissioners, one former and one current, have spoken out publicly against the case and its result. The U.S. Justice Department's antitrust division views patent licensing disputes as contract law issues that don't raise to the level of antitrust violations.

In her ruling, Koh required Qualcomm to take sweeping actions that could significantly revamp its business model, as well as the cellular industry's practice of licensing patents based on the percentage of the cost of the smartphone, not the chips inside it.

Qualcomm is appealing Koh's ruling to the U.S. Ninth Circuit Court of Appeals. In the meantime, it asked for a delay in imposing remedies until its appeal could be heard.

The FTC was expected to oppose Qualcomm's stay request. If Koh eventually rejects it, Qualcomm can seek a stay from the Ninth Circuit pending appeal.

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