Snapdragon chipset OEM Qualcomm is taking a victory lap, following the overturning of an earlier antitrust ruling. That’s according to a recent report from The Verge.
The decision could mean a return to old practices for Qualcomm. In particular, it appears to give the company free license to charge royalties for patents that standards-essential. Even when those patents are being used in competitors’ chipsets and hardware.
What antitrust ruling did the Qualcomm appeal overturn?
The ruling in question followed on an appeal filed by the company over an earlier decision back in 2019. At the time, another US court had sided with the FTC in deciding that Qualcomm could not charge licensing fees on standards-essential patents
For clarity, standards-essential patents are those that are used industry-wide. So, if Qualcomm patents a chip design that then becomes an industry-standard — essentially required for a phone or other piece of technology to operate at all — it was ruled that it couldn’t charge the above-mentioned fees associated with that. At least not where the royalty charges would be applied to rivals’ chipsets.
The practice, the district court ruled, was anticompetitive. In effect, the court found that the practice was limiting competitors in terms of pricing. Other areas where the royalties were anti-competitive were considered as well. But the argument chiefly fell to whether or not it was forcing other companies to charge higher prices. Thus making Qualcomm chips more appealing in the market.
The Judge in the appeals case sided with Qualcomm, determining that the court which had heard the initial proceedings had not been the proper court. Or the proper type of lawsuit. While the chipmaker may still be violating FRAND licensing terms that came along with its patents becoming standards-essential, it is not stifling competition.
What does Qualcomm have to say on the matter?
Now, the overturning of this case could potentially not come at a better time for Qualcomm. The company is a leading player in the 5G race and is presently looking to secure licensing approval from the US government to work with Huawei.
Simultaneously, the ruling comes amid a debate about at least some of its competitors. For instance, there is some debate about whether or not Samsung should continue using its own Exynos chips. One alternative would be for Samsung to just use Snapdragon SoCs in all of its flagships.
Conversely, the EU and several other regional governments have put Qualcomm on notice about this practice in the past. In one instance, it was forced to pay a nearly $1.23 billion fine in Europe, for example. And that’s not likely to change with this ruling, especially if it begins to engage in the practices more frequently with the backing of a US court.
In the interim, Qualcomm has lauded the unanimous decision from the Court of Appeals. The reversal, Qualcomm says, validates the company’s business model and licensing program. It also “underscores the tremendous contributions” the company has made to the industry.