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Federal judge rules against Qualcomm in antitrust trial

Report: Trump blocks Qualcomm takeover
Posted at 4:24 PM, May 22, 2019
and last updated 2019-05-22 19:24:05-04

SAN DIEGO (CNS) - Qualcomm announced today that it would seek a stay and appeal of a ruling handed down by a federal judge, who found that the San Diego-based company violated antitrust laws by charging excessive licensing fees to cellphone makers, harming competition among chip suppliers.

U.S. District Court Judge Lucy Koh, in a ruling issued late Tuesday, found that Qualcomm forced cellphone companies to accept excessive fees for the ability to use Qualcomm patents, and would threaten to withhold access to its chips if companies did not agree to its terms.

Koh ordered Qualcomm to renegotiate license terms with its customers and refrain from any threats to withhold chips from future agreements. The ruling -- the latest chapter in Qualcomm's legal battles regarding antitrust allegations -- stems from a case brought by the U.S. Federal Trade Commission in 2017.

The commission accused Qualcomm of operating as a monopoly that ``engaged in exclusionary conduct that taxes its competitors' baseband processor sales, reduces competitors' ability and incentive to innovate, and raises prices paid by consumers for cell phones and tablets.''

Closing arguments in the trial were delivered around five months ago in a San Jose courtroom. Don Rosenberg, executive vice president and general counsel of Qualcomm, said: ``We strongly disagree with the judge's conclusions, her interpretation of the facts and her application of the law.''

In a statement issued Wednesday morning, as its stock price plummeted as a result of the ruling, Qualcomm said it would ``immediately seek a stay of the district court's judgment and an expedited appeal to the U.S. Court of Appeals for the 9th Circuit.''

Bruce Hoffman, director of the FTC's Bureau of Competition, said the ``decision that Qualcomm's practices violate the antitrust laws is an important win for competition in a key segment of the economy.''

In another federal case brought against Qualcomm by Apple, the two companies reached a settlement in the form of a six-year licensing agreement as a trial was getting underway in San Diego federal court.

In that case, Apple accused Qualcomm of using its powerful position in the industry to charge cellphone makers exorbitant fees to license its patents. Qualcomm, in turn, accused Apple of breaching its licensing agreements to use Qualcomm's intellectual property by refusing to pay billions in fairly charged royalties.