Qualcomm forced to license its patents to other chip makers

Irving Hamilton
November 7, 2018

Qualcomm has to license its wireless chip patents to its competitors, a judge ruled Tuesday.

Judge Lucy Koh of the US District Court for the Northern District of California published her judgement yesterday as part of an ongoing lawsuit brought in 2017 by the Federal Trade Commission.

The court's ruling should not be surprising, considering what FRAND patents mean.

Each industry player may have a preferred technology that they're developing and can also have multiple patents for that technology. Standard essential patents cover technologies that are fundamental for the workings of modems. However, since then, as Qualcomm has gained a near-monopoly in the market through its integrated CPU+modem systems-on-chip (SoCs), it has also started increasing its licensing fees to both customers and competitors. The FTC had sought a ruling that declared "two industry agreements obligate Qualcomm to license its essential patents to competing modem chip suppliers".

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The FTC alleged that from 2011 to 2016, Qualcomm had offered Apple discounted licensing on the basis that Cupertino exclusively used its modems, which breached its FRAND commitments.

Opening up the patent is also a source of good news to companies like Apple and Samsung.

This court case is running parallel to a legal battle between Qualcomm and Apple. A good analogy would be if a vehicle manufacturer, let's say Ford, held patents for the engine's cylinders and pistons, forcing competitors to either use engines without cylinders and pistons (such do exist, but have many drawbacks) or pay Ford fees so high that their product isn't competitive anymore, making it cheaper to just buy engines from Ford, the de facto monopolist on the market (in this example). And the ruling's impact should be even more positive for shoppers if the court eventually rules that Qualcomm should charge reasonable rates for those modem patents.

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