Qualcomm will seek dismissal of FTC lawsuit, company VP says

By Karen Kidd | Apr 4, 2017

Technology innovator Qualcomm plans to ask a federal judge to dismiss an 11th-hour Obama administration Federal Trade Communication complaint about its business practices and how it handles licenses on technologies it developed.

Qualcomm already was operating on a March 27 nod from U.S. District Judge Lucy H. Koh who extended the company’s deadline to respond to the FTC's complaint. Qualcomm's motion for dismissal is expected to be filed early next week, according to a Marketwatch report earlier today.

The motion will "take on each one of [the FTC's] theories and explain why the theories don't support a proper claim," Qualcomm Executive Vice President and General Counsel Don Rosenberg was quoted in the Marketplace report.

The FTC's complaint is widely viewed as politically motivated because it was filed just prior to President Donald Trump's inauguration on Jan. 20.

On Jan. 17, FTC attorneys filed the commission's complaint against Qualcomm in U.S. District Court for the San Jose Division in California's Northern District. The FTC's complaint alleges that Qualcomm's business practices violate U.S. competition law. The FTC does not allege that Qualcomm charges too much in royalties. Rather, it alleges that Qualcomm charges smart phone manufacturers too much for the licenses required to use the standardized cellular communications technologies that Qualcomm developed.

Qualcomm is best known as developer of technologies that power smart phones and other industry innovations that connected billions of people worldwide. Qualcomm pioneered 3G and 4G and currently is developing 5G and other technologies for an even wider array of intelligent and connected devices.

The lone dissenting vote in the FTC panel's 2-1 decision to file the complaint was FTC Commissioner Maureen Ohlhausen, who commented that she isn't in the habit of dissenting in commission votes. "I do not depart from that policy lightly," Ohlhausen said in her dissent. "Yet, in the Commission’s 2-1 decision to sue Qualcomm, I face an extraordinary situation: an enforcement action based on a flawed legal theory (including a standalone Section 5 count) that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide. These extreme circumstances compel me to voice my objections."

The same day the FTC filed its complaint, Qualcomm publicly responded, saying the company would vigorously contest the case and defend its business practices. "The portrayal of facts offered by the FTC as the basis for the agency’s case is significantly flawed," Qualcomm said in its Jan. 17 statement. "In particular, Qualcomm has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms. The FTC’s allegation to the contrary - the central thesis of the complaint - is wrong."

The FTC's complaint is not the only legal headache for Qualcomm, which has been criticized by multiple countries for alleged predatory business practices concerning the licensing of its cell phone technology. Late last year, Qualcomm was fined $853 million by South Korea's Fair Trade Commission over negotiations of Qualcomm's patent licenses.

In February of 2015, Qualcomm announced it had reached a $975 million fine settlement over antitrust allegations by China’s National Development and Reform Commission, also over Qualcomm's patent licensing.

Only days after the FTC's complaint was filed in January, Apple Inc. filed a $1 billion lawsuit against Qualcomm in U.S. District Court for California's Southern District, alleging breach of contract, patent and antitrust claims.

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