Qualcomm Inc. can’t avoid renegotiating many of its licensing agreements while the company appeals a judge’s ruling that its business model is anti-competitive.
The order comes six-weeks after U.S. District Judge Lucy Koh sided with the Federal Trade Commission and issued a series of injunctions against Qualcomm’s licensing and sales practices. Koh concluded Wednesday there’s no reason to halt the injunctions while the appeal is pending.
Koh found that Qualcomm’s “no license, no chips” policy unfairly leveraged the company’s market position to force customers to pay inflated prices for chips and royalties for their technology. She ordered the company to end the policy and renegotiate some of its contracts for chips and royalties.
Qualcomm said it will immediately ask San Francisco’s federal appeals court to stay Koh’s May ruling.
Qualcomm faced off with the FTC in an 11-day trial in January. Koh’s May ruling provided near blanket support for the FTC’s arguments. The decision not only raises uncertainty over the future of Qualcomm’s business model, but it threatens to upend the smartphone industry now in the early stages releasing new 5G mobile technology worldwide.
The order was a shock to Qualcomm and investors who expected a softer touch by Koh after the chipmaker and Apple Inc. struck a settlement in a similar lawsuit less than a month before her opinion. Instead, Koh described Qualcomm as having ”strangled competition…for years” by requiring customers to pay licensing royalties when ordering new mobile phone chips.