Yesterday, CCIA and ACT filed an amicus brief in the FTC’s case against Qualcomm in the Northern District of California. As explained in the brief, the FRAND obligation which patent owners voluntarily agree to when they participate in the development of a standard requires the owners of standard-essential patents to license their patents on “fair, reasonable, and non-discriminatory terms.” And the “non-discriminatory” portion of that obligation means precisely what it states—that the patent owner may not discriminate amongst willing licensees, but has to license anyone who wants a license.
Given Qualcomm’s historical unwillingness to license competitors, this is critically important. By refusing to license competing chipset vendors, Qualcomm can force the customers of those chipset vendors to license Qualcomm’s patents from Qualcomm, thereby allowing Qualcomm to exert control over their competitors’ business relationships. It also allows Qualcomm to benefit from use-based licensing, charging more money depending on the end-use of their patent—even though the relevant technology is the same in either case. There’s no reason for a 3G patent to be more or less valuable when it’s used for the navigation system in a $100,000 car versus a $20,000 car, or when it’s used for a $100 low-end smartphone versus an $800 flagship phone.
Qualcomm’s actions threaten competition in the cellular market and thereby threaten potential innovation and American competitiveness in new areas of cellular technology like 5G. Judge Koh should enforce the agreement Qualcomm agreed to abide by when it chose to participate in cellular standardization activities, including ensuring that they license all willing licensees.