Qualcomm gains backing of US DOJ, which cites 'likelihood of success' in appeal of FTC antitrust ruling

Citing Qualcomm’s “likelihood of success on the merits,” the US Justice Department asked a federal appeals court to delay a decision that would require the company to renegotiate its licenses worldwide and on fair, reasonable, and nondiscriminatory terms.

The filing from the DOJ came in support of the chipmaker’s request that the US Court of Appeals for the Ninth Circuit put on hold, pending its appeal, a ruling by US District Judge Lucy Koh that found the company's patent licensing practices violate antitrust law.

Judge Koh found Qualcomm violated the Sherman Act when it set the licensing terms for its standard-essential patents. Koh said Qualcomm’s practice of refusing to sell chips unless phonemakers agreed to patent licenses favorable to Qualcomm helped keep potential rivals such as Intel and Mediatek from gaining a foothold in the market.

The DOJ, in addition to arguing that the company would likely succeed upon appeal, said a stay is in the public interest. The US departments of Energy and Defense provided supporting statements.

“The district court’s ruling threatens competition, innovation, and national security,” the DOJ said in its filing. “Its liability determination misapplied Supreme Court precedent, and its remedy is unprecedented. Immediate implementation of the remedy could put our nation’s security at risk, potentially undermining U.S. leadership in 5G technology and standard-setting, which is vital to military readiness and other critical national interests.”

Qualcomm has said Koh's ruling will fundamentally change its business and drastically reduce its ability to compete as next-generation 5G networks are rolled out around the globe.

The Energy Department "believes that any remedy that causes undue financial strain on Qualcomm may result in undermining Qualcomm’s position in the growing 5G market (among other telecommunications markets) and ceding to foreign entities, in particular China, a dominant position in the development and expansion of 5G technology," said Max Everett, the agency's chief information officer, in a supporting statement.

"Given well-known U.S. national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States," said Ellen Lord, under secretary of defense for acquisition and sustainment.

The DOJ had already unsuccessfully tried to convince Koh to hold a hearing before issuing her ruling.

The divide over the Qualcomm case has also extended to internal rifts at the FTC. Commissioner Christine Wilson published an op-ed in the Wall Street Journal in May advocating that her agency's win be overturned.