USA antitrust agency sues Qualcomm over patent licensing
00:40, Jan 21, 2017
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But if Apple bought modem chips from another chip supplier during that time, the FTC said Apple would face large penalties by losing out on Qualcomm's rebate payments. The KTFC levied similar charges of failing to license standards-essential patents to competitors and forcing customers to agree to unfair terms including "making them provide [the customer's] patents for free".
The FTC, which works with the Justice Department to enforce antitrust law, said that Qualcomm used its dominance in supplying baseband processors used in smartphones and tablets to extract elevated royalties for patents in what the complaint dubbed a "no license-no chips" policy.
According to the FTC, Qualcomm uses its position and its portfolio of patents to impose "onerous and anticompetitive supply and licensing terms on cell phone manufacturers", negatively impacting its competitors.
Qualcomm's motivation was to keep competitors out of the iPhone.
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The exclusivity arrangement ended in September 2016, and it appears Apple has already started breaking out of Qualcomm's clutches: Some versions of the iPhone 7, released in September 2016, contains modem chips from Qualcomm's rival, Intel. The FTC also claimed that Qualcomm paid Apple billions of dollars in rebates to use its chips in the iPhone and iPad.
The filing seeks to, "order Qualcomm to cease its anticompetitive conduct and take actions to restore competitive conditions". The Commission voted 2-1 to file the complaint, with Commissioner Maureen K. Ohlhausen taking the unusual step of issuing a written statement (PDF) along with her dissent. Conditions allegedly included not using a competitive wireless technology backed by Intel, agreeing not to sue Qualcomm over royalties, and using Qualcomm chips in forthcoming iPhones and iPads. It said that it has neither withheld nor threatened to withhold its chips in order to get "unfair or unreasonable licensing terms".
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"This is an extremely disappointing decision to rush to file a complaint on the eve of Chairwoman Ramirez's departure and the transition to a new Administration, which reflects a sharp break from FTC practice", Don Rosenberg, executive vice president and general counsel at Qualcomm, said in a statement. "We have grave concerns about the two Commissioners' decision to bring this case despite a lack of evidence supporting the allegations and theories in the complaint". A date is yet to be set for that appearance.
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