Qualcomm is one of those tech companies that are involved in several lawsuits due to its products being used in numerous devices. We’re counting not dozens of smartphones, tablets, and wearables but millions being powered by Qualcomm’s processors. Just recently, the Federal Trade Commission accused the company anticompetitive patent tactics after a federal court complaint was filed.
Qualcomm is said to be employing tactics that allow them to be on top of the mobile processor business. The lawsuit said that Qualcomm used patents so it could command high royalties and license payments. You can say that’s normal for most businesses but this violates the FTC Act that “prevents businesses from engaging in monopolizing practices”.
The idea is that Qualcomm is allegedly threatening the supply of processors to phone makers if they don’t accept the prices set by the chipmaker. According to the FTC, “These royalties amount to a tax on the manufacturers’ use of baseband processors manufactured by Qualcomm’s competitors, a tax that excludes these competitors and harms competition. Increased costs imposed by this tax are passed on to consumers.”
Because of Qualcomm’s practices, OEMs and manufacturers have accepted whatever royalties are being asked. The case also included a complaint that the company doesn’t give out license for its standard-essential patents. Another accusation involves Apple who is believed to have been forced to a baseband exclusivity deal that cuts royalty demands from Qualcomm. FTC said Apple was forced to use Qualcomm and that the latter highly took advantage of the Cupertino company. FTC noted, “Qualcomm recognized that any competitor that won Apple’s business would become stronger and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.”
FTC wants a court order that would prevent Qualcomm from doing its practices. We have a feeling it will be a long deliberation but one FTC commissioner, Maureen K. Ohlhausen, already doesn’t agree with the accusations because according to her “that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide.”
Qualcomm is ready fight this case in the federal court according its EVP and General Counsel Don Rosenberg. So far, Qualcomm has only made a statement that the complaint by FTC was “based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry and that they company has “never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms.”