Qualcomm must license patents to competing chipmakers, court rules

Qualcomm was held a major loss in one of its many ongoing legal matches this afternoon with a federal verdict that decided that the company should license its counterparts to competing chipmakers that potentially weaken its wrestling game on the market.

The harassment came from a federal lawyer's lawsuit against Qualcomm, filed in early 2017. The core of the trial – Qualcomm used anti-competitive practices to maintain a monopoly over smartphone modems – is not about this. However, the court addressed a single question in the question: if Qualcomm is to license standard core patents to competitors.

In this case, the court has decided. Qualcomm accepted two separate policies that said it would offer selected patents on a non-discriminatory basis. These patents were crucial to wireless standards – and accepted only the standards because of Qualcomm's agreement to grant licenses to all. After looking at the contracts, the court said it was "unequivocal" that Qualcomm was wrong here. Qualcomm did not respond immediately to a request for comment.

If Qualcomm was allowed to retain its standard major patents for itself, the court wrote that it would enable the company "to gain a monopoly on the modem chip market and restrict competing implementations of these components." This wording may relate to Qualcomm, as if it had used anti-competitive practices to maintain a monopoly, it is for the rest of the trial.

The license means that Qualcomm must license patents that are necessary to build a smartphone modem for competing companies, such as Intel. Up to now Qualcomm has only offered these licenses to companies that directly manufacture smartphones, and it seems that Qualcomm only did it because it directly sells chips to them.

This means that a company such as Intel, who badly wants to compete with Qualcomm in this market, has had to work around Qualcomm's patents to sell its own modems. And that means that a company like Apple or Samsung, who wants to sell lots of smartphones, has almost had to rely on Qualcomm's chips to do it.

It's bad news for Qualcomm, but good news for the rest of the industry. If the decision is held, it could allow more companies to build modems or to make the modem more competitive than they are today. Intel, for example, produces competing modems, but they have never been as fast as Qualcomms.

What apparently does not change, however, is how much Qualcomm can charge for these patents. The FTC has also accused Qualcomm of charging excessive fees for its patents, despite the same agreements requiring it to impose only "reasonable" fees. Apple claims Qualcomm over the same problem, but courts have not yet ruled.

Qualcomm faces similar legal matches across the globe. Apple claims in several places over cumbersome license fees, while Qualcomm has already been fined in South Korea, Taiwan, the EU and China for issues relating to anti-competitive licensing practices.