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PublishedFebruary 1, 2019

Qualcomm’s Patent Scheme Is On Its Heels

It hasn’t been a week full of good news for Qualcomm.  Qualcomm is losing battles on three different fronts, putting serious pressure on its global campaign to maintain the patent licensing scheme that regulators in many countries have found to have anti-competitive effects.

FTC v. Qualcomm

The FTC v. Qualcomm case, in which the FTC is arguing that Qualcomm’s licensing practices represent illegal anti-competitive conduct, has been submitted to Judge Koh.  The FTC—having already won one major victory, with Judge Koh issuing summary judgment that Qualcomm has been violating its obligations for years—put forth a compelling case that Qualcomm has engaged in a pattern of conduct that had the effect of taxing its competitors.  (Qualcomm’s reason for violating this obligation, per a discussion with the IRS? It was “humongously more lucrative” to ignore the obligation.)

During the trial, Qualcomm repeatedly made assertions about how it operated—whether claiming it didn’t threaten to stop selling chips to companies who chose not to license its patents or claiming that no one in the industry obtains chipset-level licenses, even though Qualcomm requires them when it’s the licensee—that the FTC rebutted with documentary evidence.  Qualcomm’s case—centering on the argument that the FTC had failed to show any competitive harm—lacked impact, given that the FTC showed via industry witnesses and expert testimony that Qualcomm’s practices had harmed competitors like Intel by delaying their ability to gain a foothold in the market and had allowed Qualcomm to continue charging the same percentage rate, even as their share of the technology contributed to the standards declined over time.

While we won’t know Judge Koh’s ruling for some time—even a judge with a track record of working as quickly as Judge Koh does will take some time to digest the evidence and arguments in a case of this scale—we do have a hint.  More than a year and a half ago, Judge Koh denied Qualcomm’s motion to dismiss the case.  She based her decision on certain factual claims.

None of those claims has been rebutted by Qualcomm during the course of the trial.  All remain true.

Germany

Beyond the Northern District of California, Qualcomm’s foreign adventures have also hit a significant roadblock.  While Qualcomm won an initial battle, convincing a German court to issue an injunction against several older Apple phones[1.  The German court issued this order even though it never had any opportunity to study the details of the chip in question, only a teardown report.  The chipmaker, Qorvo, was willing to provide access to the details to the court, but Qualcomm refused to agree to the protections Qorvo asked for to prevent its confidential information winding up in the hands of Qualcomm’s engineers. As a result, that information wasn’t presented in court.  This is significant because in the U.S., the International Trade Commission determined that the U.S. equivalent to the European patent in question was not infringed—and the ITC had access to the details of the chip.], its more important cases, claiming that all of Apple’s phones infringe Qualcomm patents, have run into a wall.  Half of the cases were thrown out, with the court deciding that the patents simply weren’t infringed.  And in the other half of the cases, the German court invited Qualcomm to submit its response regarding the European Patent Office’s determination that the patents were not valid.

USPTO

It’s not just in Europe that Qualcomm’s patents are seeing scrutiny and failing to hold up.  In the U.S. Patent and Trademark Office, eight of Qualcomm’s patents have already been deemed reasonably likely to be proven invalid in IPRs.  There are another 10 Qualcomm patents awaiting preliminary decisions. But so far, none of the IPR petitions filed against Qualcomm’s patents have failed at the threshold question of a reasonable likelihood of invalidity—even though approximately 40% of petitions fail at this stage.

Qualcomm may have good technology, but more and more, it’s looking like that technology has been marred by its association with questionable business practices and poor quality patents.

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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