Appeals court ruling for Qualcomm “a victory of theory over facts”

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A federal appeals court has tossed out a lower court ruling that Qualcomm abused its dominance of the modem chip market to force customers to pay inflated royalties for its patent portfolio. The appeals court forcefully rejected Judge Lucy Koh's 2019 analysis of Qualcomm's business practices and held that Qualcomm's behavior was merely "hypercompetitive," not anticompetitive.

The two rulings could not have been more different. In last year's 233-page ruling, Judge Koh explained Qualcomm's business practices in so much detail that it took us more than 3,500 words just to summarize her findings. This week's ruling by the Ninth Circuit Appeals Court was shorter-56 pages-and more theoretical.

The appeals court acknowledged that "from 2006 to 2016, Qualcomm possessed monopoly power in the CDMA modem chip market, including over 90% of market share." However, the court found that the Federal Trade Commission-which brought the lawsuit against Qualcomm-had failed to prove that Qualcomm had abused that power. The court reasoned that Qualcomm's licensing practices were simply designed to maximize the company's revenue-and that in itself isn't illegal.

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