Chip maker hits back, says U.S. watchdog’s complaint is based on flawed legal theory and misconceptions about the mobile industry.
The U.S. Federal Trade Commission (FTC) late on Tuesday accused Qualcomm of using anticompetitive practices to protect its monopoly in the supply of mobile baseband processors, an accusation refuted by Qualcomm.
The watchdog claims that Qualcomm operates a ‘no licence, no chips’ policy, under which it refuses to supply baseband processors unless handset makers agree to Qualcomm’s preferred terms, which includes paying Qualcomm higher royalties for products that incorporate a competitor’s baseband processors.
Qualcomm is also accused of refusing to license its standard-essential patents to rivals on fair, reasonable and non-discriminatory (FRAND) terms. Qualcomm also allegedly consistently refuses to license its standard-essential patents to competitors at all.
In addition, the FTC claims Qualcomm precluded Apple from sourcing baseband processors from competing suppliers between 2011 and 2016 by obtaining an exclusive deal with the iPhone maker in return for lower royalties.
"By excluding competitors, Qualcomm impedes innovation that would offer significant consumer benefits" the FTC said.
The regulator is seeking a court order to undo Qualcomm’s alleged unfair practices, which it claims violate the FTC Act.
In a statement, Qualcomm rejected the FTC’s accusations, claiming the complaint is "based on flawed legal theory, a lack of economic support and significant misconceptions about the mobile industry."
Qualcomm insisted it has never withheld, nor threatened to withhold chips in order to secure unfair on unreasonable licensing terms.
The company also claims the FTC complaint was rushed out ahead of the imminent inauguration of Donald Trump as president.
"In our recent discussions with the FTC, it became apparent that it still lacked basic information about the industry and was instead relying on inaccurate information and presumptions," said Qualcomm EVP and general counsel Don Rosenberg.
Indeed, it is worth noting the FTC voted two-to-one in favour of filing the complaint.
Commissioner Maureen Ohlhausen dissented, claiming in a separate statement that the FTC’s action is "based on a flawed legal theory…that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide."