In a major setback for Qualcomm, the chip maker saw a U.S. District Judge in California rule against the company in its ongoing antitrust lawsuit battle with the Federal Trade Commission. On Tuesday, Judge Lucy Koh ruled that Qualcomm must license some of its industry-essential patents to rival chip suppliers—a ruling that analysts believe poses a significant threat to Qualcomm’s business model.
For years, Qualcomm has licensed its smartphone chip technology to manufacturers and device makers, charging those companies a percentage of the price of the smartphone. However, according to a Wall Street Journal report, when Qualcomm’s intellectual property was incorporated into cellular communication standards, they made certain commitments with standard-setting organizations that it would make any relevant patents available for use. Qualcomm, though, was under the impression that those agreements didn’t necessarily require the company to license its technology to rival chip makers like Intel.
Koh shot down that argument, saying that court precedent showed otherwise and that the company had “an obligation to license to all comers, including competing modem chip suppliers.” Additionally and critically, she said, those licenses have to be offered on fair and reasonable terms.