The United States Ninth Circuit Court of Appeals also vacated an injunction that would have required Qualcomm to change its intellectual property licensing practices.
The decision amounted to a near complete victory for Qualcomm which was fighting a May 2019 decision by US District Judge Lucy Koh in San Jose, California. That judge sided with antitrust regulators, writing that Qualcomm's practice of requiring phone makers to sign a patent licence agreement before selling them chips "strangled competition" and harmed consumers.
According to the ruling , Judge Callahan disagreed with the Federal Trade Commission’s core argument that Qualcomm was pushing out rival chipmakers by effectively adding a tax whenever phone makers bought rival chips, forcing them to pay royalties for Qualcomm’s standards-essential patents even when they weren’t using Qualcomm products — which, the FTC argued, made rival products seem more expensive than the bundles of chips and patents that Qualcomm was offering.
It is still possible that Qualcomm is violating the concept of fair, reasonable, and non-discriminatory (FRAND) licensing terms that it agreed to by making its patents standards-essential to begin with. Those terms are supposed to keep companies like Qualcomm from using patents unfairly and provide a level playing field for other chipmakers that might want to make modems and processors, too. But Judge Callahan suggests that’s a matter for a different court and a different kind of lawsuit to decide.
Unless this goes to the Supreme Court next — Qualcomm’s successful appeal means that the chipmaker doesn’t have to stop these practices, and it might go on with the cunning plan. The district court’s original ruling for the FTC would have stopped Qualcomm immediately, but Bloomberg reports that Judge Lucy Koh’s order was held to give Qualcomm time to appeal.
“The court’s ruling is disappointing and we will be considering our options”, reads part of a statement from the FTC’s Bureau of Competition, according to Bloomberg.