Last week Qualcomm reached an agreement with the Taiwanese Fair Trade Commission (TFTC), overturning the $778 million penalty the TFTC levied in October. Qualcomm promised to invest $700 million in Taiwan and commit to certain process safeguards over their licensing arrangements with handset makers. In exchange, the original TFTC ruling is wiped away. Qualcomm will not be required to pay the majority of the fine and—far more important—Qualcomm can continue to ignore license requests from other baseband chip manufacturers.
As covered before, the ability to refuse to license competitors—in violation of Qualcomm’s commitment to license their standard-essential patents on non-discriminatory terms—is an anti-competitive act that provides Qualcomm with the ability to raise competitors’ costs and obtain more than the value of their patents in licensing.
The TFTC’s failure to require Qualcomm to license competitors on fair terms will hurt competition in the development of 5G technology, allowing Qualcomm to hold up manufacturers who created products based on Qualcomm’s broken FRAND promises. This, in turn, leads to more expensive 5G products for consumers. In the U.S., the FTC v. Qualcomm is ongoing, with trial expected early in 2019. It remains to be seen whether the Federal Trade Commission will continue to pursue real remedies for Qualcomm’s anti-competitive conduct or whether it will retreat, as the TFTC did, allowing Qualcomm to pay a fine in order to be able to continue to exclude competitors.