Today, Qualcomm shares are heading the opposite direction after a US judge ruled that the company's patent licensing practices are both unlawful and anticompetitive.
Koh also issued a permanent injunction that orders Qualcomm to sell its chips to companies without requiring them to license its patents.
"Qualcomm's licensing practices have strangled competition" in parts of the chip market for years, harming rivals, smartphone makers, and consumers, Koh wrote in a 233-page decision. The company must also license its patents to rival chip makers at fair prices and can't sign exclusive supply agreements with smartphone makers like Apple that block competitors from access to that market.
A US federal judge has reportedly ruled that Qualcomm violated antitrust laws with its patent licensing practices.
"Qualcomm must not condition the supply of modem chips on a customer's patent license status and Qualcomm must negotiate or renegotiate license terms with customers in good faith under conditions free from the threat of lack of access to or discriminatory provision of modem chip supply or associated technical support or access to software", the ruling explains. This FTC case is similar to the legal battles between Apple and Qualcomm, but those were all abruptly settled earlier this year. But Bloomberg News reported that the company hit a wall with US officials in February, failing to win over a majority of the FTC and its top officials despite extensive negotiations. Placing stringent conditions on the company would "reduce competition and innovation in markets for 5G technology", the agency said. "Qualcomm's licensing practices are an unreasonable restraint of trade".
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Koh of the northern district of California ordered Qualcomm to change its pricing and sales practices, after finding it "engaged in anticompetitive conduct" towards customers like Sony, Samsung and China's Huawei.
But the Court found that Qualcomm did not meet that bar at all. That ruling could give chip customers more leverage in negotiations over patent terms and result in lower royalty rates for Qualcomm. As FOSS Patents notes, the document is damning for Qualcomm on a number of levels, including the fact that Judge Lucy Koh "largely discounted" the testimonies of Qualcomm executives because they differed so much from "these witnesses' own contemporaneous emails, handwritten notes, and recorded statements to the IRS".
Koh also said Qualcomm must license its patents to rival chipmakers like MediaTek Inc.
A U.S. District Court has ruled that Qualcomm's patent licensing practices violate U.S. antitrust laws by harming competition.
Qualcomm's licensing business, which provides the majority of corporate profits, funds an industry-leading research and design effort that has made its chips the central technology in shifts between generations of mobile phone technology.