Bargaining Chip

In FTC v. Qualcomm Inc.,¹ the Ninth Circuit granted a significant victory to Qualcomm and highlighted challenges in using U.S. antitrust laws to address standard essential patent (SEP) licensing practices. Qualcomm is both one of the world's largest cellular chipmakers and one of the largest owners of cellular SEPs. Qualcomm committed to license its SEPs on a fair, reasonable, and non-discriminatory (FRAND) basis. Qualcomm refused, however, to license chipmaker competitors, instead licensing cell phone original equipment manufacturers (OEMs). Under its "no licence, no chips" policy, Qualcomm also required OEMs to license its SEPs before it would sell them chips. The FTC contended,² and the district court agreed, that Qualcomm's licensing practices were anti-competitive. The Ninth Circuit reversed, focusing on two themes: lack of harm to chipmakers and neutrality of Qualcomm's licensing policies.