Court orders Qualcomm to offer patent licenses to all including chip-making rivals
08 Nov 2018
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Qualcomm’s woes continue to mount with a federal judge now directing it to offer patent licenses to all including chip-making competitors.
San Jose-based US district judge Lucy Koh ruled that the company would be obstructing or limiting competing implementations of patented components if it did not license its patents for building modems to rivals including Intel, Samsung and Huawei.
The company sells cellular chips to smartphone manufacturers and licenses its portfolio of 130,000 international patents. But Qualcomm refuses to license competitors including Intel and MediaTek.
The American Federal Trade Commission (FTC) asked the district judge to rule that Qualcomm’s pledges to two standard-setting bodies require it to offer patent licenses to all including other chip-makers.
The company had promised the Telecommunications Industry Association and the American National Standards Institute that it would offer licenses to chip-makers; by not giving it to competitors, it was violating its commitment.
While agreeing with the FTC contention, the judge also referred to an earlier patent-infringement case in which Qualcomm had said that Ericsson, the network equipment-maker, was discriminating by not giving it a license.
Qualcomm has just reported a fiscal fourth-quarter loss of nearly $500 million. If it is forced to license chip suppliers, it would no longer get patent royalties based on the price of a smartphone.
If the latest verdict becomes final, others including Intel and Samsung are expected to break into the market and build their modems, boosting competition and hurting Qualcomm.
Interestingly, even Apple is engaged in a legal war with Qualcomm and is seeking chip-level licensing. Apple had earlier used Qualcomm’s modem chips in its iPhone models to help subscribers to connect to wireless data networks.
Last year, however, Apple sued Qualcomm in the federal court in San Diego, accusing it of illegally imposing a patent license fee by taking a part of the cost of an iPhone.
Denying the charges, Qualcomm has said that Apple owes it $7 billion in unpaid royalties. The case will go for trial in a few months.
