Qualcomm headquarters in Sorrento Valley. Courtesy of the company

An appeals court Tuesday overturned an antitrust ruling against Qualcomm stemming from a lawsuit alleging the San Diego-based company violated antitrust laws by charging excessive licensing fees to cellphone makers and harmed competition among chip suppliers.

A three-justice panel of the 9th Circuit Court of Appeals reversed U.S. District Judge Lucy Koh’s 2019 ruling in a lawsuit brought by the Federal Trade Commission.

Koh 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.

Dubbed “no license, no chips,” the FTC argued Qualcomm illegally leveraged its position in the mobile chip market to strong-arm licensees into paying for access to its chips.

The agency called the practice `anticompetitive and “an assault on our core values of fair competition in the economy” in a statement issued last year following Koh’s ruling, which could have forced the company to renegotiate its licensing terms with cellphone makers.

The appeals court panel wrote in its ruling that Qualcomm had no obligation to license its chips to rival chip makers.

“Anticompetitive behavior is illegal under federal antitrust law. Hypercompetitive behavior is not,” the 56-page opinion reads. “Our job is not to condone or punish Qualcomm for its success, but rather to assess whether the FTC has met its burden under the rule of reason to show that Qualcomm’s practices have crossed the line to `conduct which unfairly tends to destroy competition itself.’ We conclude the FTC has not met its burden.”

Qualcomm issued a statement saying the company is “pleased with the Court of Appeals’ complete, unanimous reversal of the district court’s judgment. The decision validates our business model and licensing program and underscores the tremendous contributions that Qualcomm has made to the industry. We thank the panel for its thoughtful consideration of this important case.”

— City News Service

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