This is the Invention Age. ... the FTC has now appealed its Qualcomm case to the full Ninth Circuit. I write about disruptive companies, technologies and usage models. On February 13, the Ninth Circuit heard oral argument in the FTC v. Qualcomm case. These include the citing of previous global FTC rulings against Qualcomm that had subsequently been overturned, the fact that competition in 4G and 5G was/is actually booming, the lack of actual demonstrable harm done by Qualcomm’s licensing practices to competition among chip vendors, to smartphone handset makers such as Apple, to consumers, the utilization of Huawei as a “star witness” when they, perhaps more than anyone else, would benefit from a weakened Qualcomm, and more. Nothing in these materials is an offer to sell any of the components or devices referenced herein. Patrick was ranked the #1 analyst out of 8,000 in the ARInsights Power 100 rankings and the #1 most cited analyst as ranked by Apollo Research. Net-net, I believe the FTC failed and continues to fail to make its case against Qualcomm. The official website of the Federal Trade Commission, protecting America’s consumers for over 100 years. The foundational technology and intelligence we put into 3G and 4G is bringing us 5G, connected cars, and a true Internet of Things. Last April, I believe Apple proved me right when an internal Apple document from 2016 called "Qualcomm Royalty Reduction" was presented in the San Diego ODM trial. Tim Cook illustrates this position in a CNBC interview here and forward to the 17-minute mark. FTC Request to Reconsider Qualcomm Antitrust Case Rejected by Appeals Court -- Update. Time will tell, but I think the appeal hearing signals at least a partial win for Qualcomm. Moorhead is also a contributor for both Forbes, CIO, and the Next Platform. Over 30 years of our mobile invention has led to the Invention Age. I believe that by destroying Qualcomm, it thought it could kill two birds with one stone. I’ve argued since the beginning that the filing was essentially a clown show—a “midnight” filing made right before the inauguration of the Trump administration, which only had the support of two of the five FTC commissioners. The company is known for its "no license, no chip policy" and it also charges royalties based on the retail price of a phone rather the price of the component used by the manufacturer. All Rights Reserved, This is a BETA experience. The FTC had to prove that Qualcomm’s royalty rates were the dominant factor keeping these other companies down, and I just didn’t see a convincing argument, especially when some of these companies had significantly more money than Qualcomm. Lawyers with the DOJ argued that if Justice Koh’s decision was upheld, it would potentially harm U.S. national security interests, given the importance of communications chips and Qualcomm’s position as the biggest modem chipmaker in America given its chief rivals, Samsung, Mediatek, and Huawei are based in in Asia. Today, Qualcomm has hundreds of agreements, and more than 13 billion licensed mobile devices have shipped worldwide. This surfaced many times in the initial FTC trial, where evidence showed that Qualcomm's customers stated in emails that it was light years ahead of the competition with its modems. The Federal Trade Commission had alleged the dominant cellphone chip maker engaged in illegal monopolization, but a three-judge panel on the Ninth U.S. If the case all sounds very confusing, it’s because it is. Dissenting Statement of Commissioner Maureen K. Ohlhausen regarding the FTC filing a case against Qualcomm. I’m sorry, folks, Apple was never the victim. The Federal Trade Commission (FTC) just can’t take “no, you’re wrong” for an answer. Development denotes expenditures to productize that research, which many companies invest in. Qualcomm called company executives, representatives from handset makers and chip rivals, and economics experts to dispute the FTC's allegations in the case. A good example is Broadcom, who made several poor wireless investments and acquisitions. Perhaps even worse for the FTC than the confusion, though, was that the judges seemed skeptical of the case at large. Qualcomm products referenced on this page are products of Qualcomm Technologies, Inc. and/or its subsidiaries. Qualcomm Inc. won a partial stay against the enforcement of a sweeping antitrust ruling in a lawsuit brought by the U.S. Federal Trade Commission (FTC), according to a court filing on Friday. The FTC had begun investigating Qualcomm in 2014, while governments in Asia and Europe have been looking into the company since around 2009, according to court documents. Research describes expenditures that develop core IP and standards, which very few companies invest in. A key issue in the FTC case is how Qualcomm gets paid for licensing its technology. The foundational technology and intelligence we put into 3G and 4G is bringing us 5G, connected cars, and a true Internet of Things. Moorhead also has significant board experience. One presiding judge, Judge Conseulo M. Callahan asked if there was “a conflating of profitable and anticompetitive,” perhaps “over-capitalistic, but not necessarily anti-competitive?” Judge Murphy threw in his two cents, saying, “Anticompetitive behavior is prohibited under the Sherman Act. The judges appeared skeptical of the DOJ’s position, however, requesting more specific evidence from the DOJ’s attorney to substantiate the assertions. Today I wanted to talk a little bit about that appeal and how I felt it did not go well for the FTC. Patrick founded Moor Insights & Strategy based on in his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Patrick founded Moor. Qualcomm Technologies, Inc., a wholly-owned subsidiary of Qualcomm Incorporated, operates, along with its subsidiaries, substantially all of Qualcomm's engineering, research and development functions, and substantially all of its products and services businesses. Before Patrick started the firm, he spent over 20 years as a high-tech strategy, product, and marketing executive who has addressed the personal computer, mobile, graphics, and server ecosystems. It's important not to confuse "research" and "development". Koh's decision followed a 10-day non-jury trial in January, and is a victory for the U.S. Federal Trade Commission, which has accused Qualcomm in 2017 of violating antitrust law.. VIDEO 7:59 07:59 And the vote to bring the case was 2-1. Additionally, I believe it could potentially hurt U.S. competitiveness in 5G, autonomous cars, smart cities, and impact its national security and more. We don’t keep our inventions – covered by over 140,000 patents and patent applications – to ourselves. Qualcomm settled its differences with Apple in 2019, and last year won the FTC case in a federal appeals court. What's clear to me in this case is that Qualcomm invested billions in very risky research to get ahead in wireless innovations. In a recent article here, I wrote that two independent IP analyst firms give Qualcomm the highest value wireless portfolio. One of the more interesting behind-the-scenes sagas of the past several years has been that of Qualcomm versus the FTC, in which the latter has attempted to make the, in my opinion, flimsy case that the former is a monopolist who suppressed competitors in the wireless chip market. The FTC took a quick break during its presentation of witnesses to allow Qualcomm co-founder Irwin Jacobs to testify. He has nearly 30 years of experience including 15 years as an executive at high tech companies leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments. Apple believed what Qualcomm was charging was above and beyond what was fair, and that when it couldn’t agree to a fee, it had to let the court decide and held payments until that time because the company didn’t know what to pay. Original story below. I believe Qualcomm's advantage and investment simply made it more difficult for competitors to keep up. The Court could issue a ruling anywhere from 3 to 15 months from now. Commissioner Maureen Ohlhausen, the dissenting vote, issued a … Declaration of Department of Energy Chief Information Officer Max Everett, United States District Court – Northern District of California, San Jose Division. One thing that is extremely notable is that, in an unprecedented move, the Department of Justice appears to be openly going against the FTC in the case. Mobile has not only become the world’s largest technology platform, it has achieved that scale faster than any technology in human history. I am not a lawyer, but I’ve seen a lot of technology antitrust activity and feel experienced enough with the topic to speak on it. Thanks to the Qualcomm team and collaboration within the entire mobile industry, the next generation of wireless, 5G, debuted a year ahead of schedule. Opinions expressed by Forbes Contributors are their own. Just check out this Washington Post article. Qualcomm has told the Ninth Circuit that a recent decision reversing the Federal Trade Commission's win in a case accusing the chipmaker of monopolizing the market for … One was to remove the profits from wireless IP and modems which would lower its cost and make it easier to make its own modems and the second, a bit darker, was to hamstring the Android community. Jan 5, 2021 5:25 PM UTC ... and last year won the FTC case … What would be anticompetitive about that?”. South Korea's Fair Trade Commission on Thursday reduced damages in a decade-old antitrust case involving Qualcomm, with the U.S. chipmaker now facing penalties that amount to … © 2021 Forbes Media LLC. Update 1 (5/22/19 @ 9:50 AM ET): A US judge has ruled in favor of the FTC and now Qualcomm must stop bundling patent licensing deals with … “The fact that not one judge on the Ninth Circuit thought it necessary to consider the merits of the FTC’s petition or to even ask for a response from Qualcomm validates the strength and clarity of the panel’s thorough analysis and conclusions. If you take out the snake’s head, you take out the snake, which is Android. Update: Qualcomm unsurprisingly disagrees with the judgement and will be appealing the ruling to the US Court of Appeals 9th Circuit. You may opt-out by. Read how 5G is bringing the world a platform of innovations, redefining communication, powering the digital economy with the possibility of over $12 trillion in future growth, and much more. Does our technology transfer program work? Qualcomm Incorporated includes Qualcomm's licensing business, QTL, and the vast majority of its patent portfolio. If you look at most Android handsets on the planet, they contain Qualcomm silicon and IP. So, I'd like to think I have a pretty good idea how the tech industry really works and how interactions between companies relate to antitrust. We achieved this by investing more than $60 billion in research and development since our founding, and over the last decade we have committed approximately 20 percent of our annual revenues to R&D efforts. There could also be a sort of mixed ruling where the judges side with Qualcomm on one aspect, likely “duty to deal”, but kick the case back down to Judge Koh to have a second go at the FTC’s assertion that Qualcomm’s practices are anticompetitive. People scoffed at me early on when I suggested that Apple was trying to destroy Qualcomm at the beginning of the suit, but unfortunately, I believe I was proven right. While Qualcomm’s attorneys were certainly also questioned by the judges, it seemed to me as though there was not the same level of skepticism underpinning these lines of questioning. He went on to say that it was a “challenging” case that could take some time to rule on. Now that both sides have presented their arguments, it’s a bit of a waiting game. He served as an executive board member of the Consumer Electronics Association (CEA), the American Electronics Association (AEA) and chaired the board of the St. David’s Medical Center for five years, designated by Thomson Reuters as one of the 100 Top Hospitals in America. He is grounded in reality as he has led the planning and execution and had to live with the outcomes. Materials that are as of a specific date, including but not limited to press releases, presentations, blog posts and webcasts, may have been superseded by subsequent events or disclosures. I’ll continue to keep an eye on this as things develop, but if I were Qualcomm, I’d be feeling pretty good right now. In a word, yes. Qualcomm presented its key arguments to the Ninth Circuit Court of Appeals several weeks ago on February 13th. We are pleased with the Court of Appeals’ complete, unanimous reversal of the district court’s judgment. The other laughable idea was that Qualcomm took advantage of Apple. I'm not a lawyer and don't pretend to be one, but I do have 30 years of tech industry experience as an OEM, chipmaker and now a technology industry analyst. 28/10/2020 10:02pm Dow Jones News ... year to throw out a government antitrust case against Qualcomm Inc. Even if the Court accepts everything the FTC presented to be fact, it could still decide that no antitrust violation happened, at which point the case would be over, though the FTC could then appeal to the Supreme Court. Qualcomm’s business model often prompted conflict with phone makers, most notably Apple Inc, which supported the FTC’s case and mounted a separate antitrust lawsuit against Qualcomm. In what I’ve seen previously, confused judges are never a good sign for the prosecution. The FTC rested its case shortly before 3:30 p.m. PT on Tuesday. If the judges seemed skeptical of the DOJ’s assertions that the ruling would affect national security, they seemed even more suspicious of the FTC’s case for Qualcomm’s anticompetitive behavior. What struck me at the outset of the hearing, was that even the judges were confused about the case! That commitment has enabled us to invent many of the foundational technologies at the heart of 3G, 4G, and now 5G wireless products and networks. My personal read on this was that the judges were very focused on case law and trying to avoid a scenario where they were creating a new precedent. Tom Goldstein, representing Qualcomm, delivers remarks to the three judges overseeing the appeal. I have also served as a “key witness” (legal term) in one of the largest antitrust cases between Intel and AMD. Patrick was ranked the #1 analyst out of 8,000 in the ARInsights Power 100 rankings and the #1 most cited analyst as ranked by Apollo Research. But more than that, our history of invention is kick-starting a new age of possibility. A U.S. appeals court on Wednesday handed a victory to Qualcomm Inc , declining to reconsider an August decision that dismissed the U.S. Federal Trade Commission's antitrust case … This never happens and could ultimately help Qualcomm. I will let you make the choice- Apple the victim or the victimizer? The crux of the question being litigated is whether or not Qualcomm’s tactics are anticompetitive or simply capitalistic and profitable. Qualcomm to ask appeals court for vindication in FTC antitrust case Qualcomm Inc will urge a US appeals court to reverse a ruling that it abused its position as a giant of the semiconductor industry and overcharged smartphone makers for access to its patented technology. I believe one of the tactics to reach its objective was to bring a complaint and manufacture evidence to the FTC to trigger this suit. Qualcomm (ticker: QCOM) quickly sought an expedited appeal, asking Koh to stay, or hold, her decision until the case could be heard. For a reprint of this article, please contact reprints@law360.com . Other evidence in an internal Bain report commissioned by Qualcomm’s competitor that showed that Qualcomm was twice as efficient in R&D as its next-best competitor. Knowing what I know about Apple CEO Tim Cook (we worked at Compaq at the same time, for a very short period of time) there is no possible way that any vendor could push this trillion-dollar company around. To sum up, all three judges seemingly cast doubt on the FTC’s case through their line of questioning. Update: Qualcomm has announced that it will immediately seek a stay of the ruling and an expedited appeal to the U.S. Court of Appeals for the 9th Circuit. The current FTC v. Qualcomm case is vastly different, in that the two companies that apparently have been screaming they were damaged are four times and 10 times larger than Qualcomm… Here are some choice quotes from that article I believe illustrate what was really going on: Please read the full Washington Post article and the presentation so that you get the full perspective. We invented foundational technologies of 5G, which is creating an intelligently connected future for people and things. The FTC and Apple sued the company in 2017, alleging it leveraged its status as a key supplier of mobile-phone chips to extract unfair fees for its licensing division. He runs MI&S but is a broad-based analyst covering a wide variety of topics including the software-defined datacenter and the Internet of Things (IoT), and Patrick is a deep expert in client computing and semiconductors. Update: This story has been updated to include more information from the order and comments from the FTC and Qualcomm. United States Court of Appeals for the Ninth Circuit, Declaration of Under Secretary of Defense for Acquisition and Sustainment Ellen M. Lord Brian Fletcher, the attorney representing the FTC, made the counterargument, that it was Qualcomm’s supposedly anticompetitive practices that nudged Intel out of the market and made Qualcomm the dominant force in the U.S. FTC Request to Reconsider Qualcomm Antitrust Case Rejected by Appeals Court -- Update. Overall, the tenor of the judges’ questions seemed to indicate a significant skepticism of the FTC’s arguments and the merits of its case against the semiconductor company—particularly in the question of whether or not the company’s practices go beyond hyper-competition into something that could be considered anti-competitive. The decision validates our business model and licensing program and underscores the tremendous contributions that Qualcomm has made to the industry. At the time, there were only three of the usual five members at the Federal Trade Commission, or FTC. Unlike other analyst firms, Moorhead held executive positions leading strategy, marketing, and product groups. The company on May 21 lost in an antitrust lawsuit and has been fighting to have the ruling put on hold while it pursued an appeal. We thank the court for its time and efforts,”, - Don Rosenberg, executive vice president and general counsel of Qualcomm. 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