Enforcing FRAND Commitments

FTC v. Qualcomm (N.D. Cal. 2018)

In an important decision, Judge Koh granted partial summary judgment for the Federal Trade Commission (FTC) that will require Qualcomm to license its Standard-EssentialPatents (SEPs) for 3G Mobile (and other) communication standards on fair, reasonable, and nondiscriminatory (FRAND) terms.  [FTC v Qualcomm]

Qualcomm agreed that it was subject to its prior FRAND commitment, but argued that it only applied to “complete devices like cellular handsets” and not to components like modem chips.  In other words, Qualcomm was happy to license to its chip customers, but not to its competitors. This decision follows other cases, including Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012) where the 9th Circuit held that “FRAND commitments include an obligation to license to all comers, including competing modem chip suppliers.”

The FTC sued Qualcomm alleging unfair competition under Section 5 of the FTCA — alleging that the failure to license represented anti-competitive behavior.

Although this particular issue is resolved, the case is moving forward on other antitrust allegations — including allegations that Qualcomm used its market dominance to negotiate higher royalties and terms, including exclusivity requirements, from handset makers.

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